A showcase of banking security, the term account (CAT) promises a rate known in advance over a locked period. But between notice period, penalties in the event of withdrawal before maturity, automatic renewal and default taxation, the remuneration displayed can turn into a much more modest net return than expected. Hence the importance of read the contract line by line and anticipate possible scenarios.
” THE term account remains above all a very short-term investment solution, with often modest levels of remuneration over periods of 1 to 6 months. It may make sense to temporarily secure liquidity, but above all you must commit to a period consistent with your real investment horizon to, of course, avoid exits before the end of the contract.underlines Jérôme Robin, founder of Nousassurerons.
Releases and renewals to watch out for
Withdrawal before maturity often requires 30 days notice and penalties with interest reduced to a minimum, or even canceled. Remember to ask for the exact formula (rate applied in the event of departure, unpaid days) and the cases of exemption. Over a few months, the cost frequently exceeds the expected gain. On the other hand, when they expire, many CATs renew automatically.
Without opposition within the stipulated period, the contract can start again with a less favorable rate and conditionswhile blocking you again. Note the deadline, require written notification, and check the renewal rate. Anticipate this renewal by writing an opposition letter or e-mail as soon as it is opened.
Binding conditions and taxation
“Premium” offers often require 50,000 euros (or more) when opening. Small savers are excluded from the best rates and must make do with less generous scales. The option progressive CAT can also seduce you with a final high level. In this case, be careful not to exit before the last year, because the final bonus concentrates most of the return.
Finally, on the tax side, don’t forget that the interests of the CAT are subject by default to tax and social security contributions. Opting for the progressive scale (via box 2OP) can be a good option in certain cases, depending on your income for the year and your other taxable income.
Alternatives to consider
In the short term, a promotional booklet on 3-4 monthsor monetary funds via life insurance or capitalization contract, may prove more interesting than an inaccessible CAT. “The term account is a product to know, but rarely the most efficient. There are often better alternatives, such as the capitalization contract and certain funds adapted to the saver’s profile. On these short-term investments, you must remain attentive to the offers and carefully compare the real net return”concludes Jérôme Robin.
