Fewer consumers in trouble, businesses struggle

Posted in 'Personal Finance' by Barry Stamp

06 January 2012

Fewer consumers are defaulting on their mortgages, loans and credit cards, according to the latest Bank of England economic conditions report. It expects this trend to continue to improve in the coming months, despite the usual annual seasonal peak of missed payments that happens every February.

In contrast, businesses were found to be struggling. Demand for loans from small companies has fallen sharply and is expected to fall again.

For the first time in two years, the number of medium and large sized firms defaulting on their loans has increased.

The Bank of England puts this down to the continued economic downturn and also that many firms have now used up the additional help facilities provided by the Banks to businesses to help them get through the downturn.

In contrast, consumers are now being offered unprecedented credit card offers which enable them to switch balances to 0% balance transfer deals, so that all repayments made for up to almost 2 years are used to reduce debt levels rather than to service interest.

One of the most attractive of the many deals on offer is from Halifax, which offers a 22 month 0% balance transfer deal, with a fee of 3.5%. The APR after the 0% period is 17.9%.

A slightly better deal is from HSBC, which offers a 0% balance transfer deal for 23 months, with a fee of 3.3%. The APR after the 23 month period is 16.9%.

Such deals are not of course available to businesses, and many consumers are taking advantage of these outstanding opportunities to make a real impact on old credit card debt.