Despite the rate freeze at 3%, the Livret A account was full in July with a monthly net inflow of 2.16 billion euros. Significant savings that new players try to capture by offering better remuneration. Among them, the British company Revolut, which launched its first savings product in France on Tuesday, presented itself as an alternative to the regulated passbook.
This solution, called “flex account”, which depends on monetary funds, offers a gross return of up to 5.32% with no deposit limit. By way of comparison, Passbook A has a limit of 22,000 euros in circulation.
compensation not guaranteed
However, this attractive presentation hides some drawbacks. First point, the 5.32% return promised by the Revolut Flexible Account is expressed on a gross basis, that is, before taxes. “At 5.32% gross with the flat taxthis gives a net rate of 3.72%, above what the livret A offers today”, underlines the vice president of Revolut world, Antoine Le Nel, in BFM business.
Secondly, this remuneration is not guaranteed, unlike the one in brochure A. “Its model works with a variable rate that varies daily and that follows market trends,” explains the fintech leader.
Points that should encourage savers to be prudent, according to the director of the Círculo de la Épargne, Philippe Crevel, questioned on Tuesday BFM business.
exchange risk
This is another unique feature of the Revolut product: it is backed by multiple currencies (with flexible accounts in Euros, GBP and US Dollars) resulting in different returns. “As rates are more or less linked to central bank rates (higher in the US than in the euro area), we managed to capture higher rates by turning to the US dollar,” explains Antoine Le Nel.
But the global vice president of Revolut downplays this level of risk. “We are in monetary funds, that is, funds backed by loans granted by governments, by banks and by very large companies”, he explains. “This is the reason why these are rates closely linked to those of central banks,” he says, referring to “infinitesimal daily changes.”
Above all, as its name suggests, the flexible account has the advantage of offering great flexibility to savers to withdraw their funds in the event of a drop in the rate of return. “There are no entry or exit fees and interest is paid daily,” he explains.
Still, for those who want to play it safe, the euro account is much less profitable than its dollar premium. The maximum rate of remuneration is 3.73% gross or 2.61% after taxes. Lower profitability than booklet A.
An alternative to traditional banks
With the flexible account, the British fintech intends to bring “a wind of innovation to savings” and compete with traditional banks in this market. “Today they are on mountains of deposits that do not contribute anything to the clients and contribute to the banks”, laments Antoine Le Nel.
With this offer already available in Spain and Germany, Revolut could hit the mark. Because if the French seem attached to the A booklet, the Banque de France figures also show an appetite among savers for term accounts and other types of booklets, fueled by inflation and rising rates. Outstanding balances of non-regulated savings products increased by 11,000 million euros in the second quarter.
Source: BFM TV
