Debt is not evil. It can be extremely useful and sensible.
But debt should not be taken out lightly or without doing your homework.
I object to suggestions that people take out loans for that “extra special gift or festive family getaway” - as my bank did the other day. The Money Advice Trust worries about this as well.
I accept, though, it’s partly a good sign that people are spending again, and that banks are lending again. Although that’s a very mixed picture too…
A personal loan offer of 3.3 percent is “representative” only - double that is surely more likely, once you’ve got to the end of the paperwork and secured some kind of offer. I note too that UK high street banks' credit cards are still charging an APR of closer to 20%, at this time of record-low interest rates.
Great for those who get into debt, eh?
And smaller companies are still complaining to me that they can’t get the loans they’d like, under conditions they can accept, from the main banks. That goes for people I’ve spoken outside the UK too - like a boat-builder in Italy and a supermarket operator in Poland.
That’s where companies get loans directly from someone or some entity directly, signing a contract to do so - avoiding bankers altogether.
In a way, that’s how my Mum and Dad got one of their many mortgages in the 1960s… In a private agreement with a wealthy local couple.
Direct Lending in the United States, in the last decade, has gone from providing 50% of corporate loans, to 80%, and growing.
That’s surely a response to traditional lines of credit drying up, new technology making it easier to arrange, and a willingness by new investor-lenders to make better money this way.
Maybe UK high street banks are looking for easier pickings in the retail market in response. You and me.