Cost of living: Iceland launches interest-free loan scheme to help with food costs

The scheme will provide an affordable, flexible credit solution enabling people to avoid food poverty, particularly during school holiday periods.

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Iceland Food Club is part of the retailer’s ‘Doing it right: right now’ response to the cost of living crisis.

The scheme’s pilot has had a significant social impact and has been shortlisted for a Global Good Award, and the Iceland Food Club will now offer ethical credit to customers across all UK stores and online.

The Iceland Food Club originated from a task force of Iceland colleagues dedicated to finding a way to support children at risk of hunger, particularly when those on free school meals were at extra risk during school holidays.

READ MORE: Iceland is giving away £30 vouchers to pensioners to help with the cost of living

The initiative has been supported by HM Treasury, NESTA and Esmée Fairbairn Foundation.

What is the Iceland Food Club?

(Canva) (Image: PA)

The Iceland Food Club will see micro loans being made available to those in need on a pre-loaded card.

Repayments are set at £10 a week and customers are able to choose what day of the week they make the repayments.

While during the pilot phase, customers paid interest on loans, Iceland has decided to invest in making all loans completely interest-free for the national roll-out, helping even more people manage the rising cost of living.

Customers may only take out one loan at a time, during six windows through the year which coincides with school holidays.

Limiting loans to these periods ensures customers only use them to smooth out incomes, rather than relying on them year-round.

By providing micro loans of £25-£100 with a minimal amount of interest to more than 5,000 customers during the Food Club’s pilot phase, findings from the Centre for Responsible Credit showed:

• 92 per cent of customers using food banks previously had stopped or reduced their food bank use;
• 71 per cent of customers said they were less likely to fall behind on rent, council tax or other bills;
• 71 per cent of customers said they were better able to pay for food and other essentials;
• A reduction of more than 80 per cent in the number of customers using loan sharks;
• 65 per cent of customers said their diet had improved;
• 57 per cent of customers felt less ‘stressed, anxious or depressed’ about their finances.

Richard Walker, managing director of Iceland Foods, said: “More than ever, people are struggling to purchase much needed everyday items during this relentless cost of living crisis, and fresh thinking is required by business and government to find workable solutions. At Iceland, as part of our Doing it right: right now we’re constantly exploring new ways to help our customers with innovative solutions that deliver real impact.

“With Fair for You, we have rolled out Iceland Food Club to offer our customers even more support, helping them manage essential spending on their own terms. To those striving to worry less about how they will afford essential goods, this ethical credit scheme delivers real help when most needed and I believe it will make a valuable contribution to breaking the cycle of food poverty in this country.”

How to apply for Iceland’s Food Club?

Anyone can apply for the scheme, and, if successful, credit can be used in-store and online using a preloaded card, allowing customers to stock while spreading the costs.

Successful applicants receive a £100 credit limit, and on joining Food Club can load an initial top-up of £25–£75 onto their cards. They will receive a preloaded card within 5-7 business days. It is interest-free.

For more information about the Iceland Food Club visit the website here.

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