A zero-interest loans scheme aimed at helping thousands of people who are struggling to put food on the table is being rolled out across the UK, and unusually this scheme has been launched by a supermarket!
The scheme, the result of a link-up between the supermarket chain Iceland and a charity-owned lender, Fair for You, has been launched as a way to help UK households who find themselves struggling with the cost of living crisis, with limited funds and the inability to be able to secure loans or credit from conventional lenders.
The supermarket will provide interest-free “micro-loans” of between £25 and £100 to buy everyday items from Iceland stores and its sister store, Food warehouse.
Qualifying customers will be supplied with a preloaded card of up to £100, which can be used in a similar way as a gift card to make payments for groceries, with customer's repayments set at £10 a week, but with the ability to make additional payments, if wanted, with no fees etc.
The scheme was initially tested with 5,000 participants earlier in the year, and these participants paid a small amount of interest on the 'loan'. However, Iceland has decided to launch nationally, with no interest being charged.
Anyone can apply for the scheme, and if successful, credit can be used both in-store – Iceland has nearly 1,000 outlets – and online using the preloaded card. Successful applicants receive a £100 credit limit and, on joining the programme, which is called Iceland Food Club, can load an initial top-up of £25 to £75 onto their cards.
Richard Walker, managing director of Iceland Foods, said “fresh thinking” was required from business and government to find workable solutions to the cost of living crisis. Walker told the BBC that the pilot research showed “people’s reliance on food banks, who take out these loans, has reduced by 90%” and that participants were less likely to fall behind on council tax, rent, and other bills.
It's worth noting, of course, that the loans do need to be repaid, and those people in financial difficulty do need to bear in mind that they will need to repay a minimum of £10 a week to repay the loan, which may, in some cases, lead to further financial issues.
You can apply for the card via the Fair For You website, and If your application is successful, you will receive an email to confirm you have been accepted within 24 hours, sometimes as little as one hour.
You will receive your preloaded card within 5-7 business days & then you can use the balance on your card to shop in-store or online at Iceland.
Initially, you can apply for up to £75 credit. Then you can take out further credit for additional Iceland shops (6 times per year when notified by the company, generally in line with school holidays), up to a total limit of £100 outstanding at any one time.
Not everyone will be accepted for the loan scheme, but providing you have a stable, regular income and a bank account you can make your repayments from, you have a better chance. The company will carry out credit and affordability checks as part of its loan application process. As a responsible lender, you may be denied the loan if the lender does not think the loan will be affordable for you and your financial circumstances, which sadly may mean that those people with the greatest need may actually be the ones unable to access the loan.
The scheme will be of help to many during this current tough time for many families. On the other side of the coin, it's a clever way for the retailer to tie customers into purchasing from them rather than a rival, so it's a win-win for everyone involved! 🤔
The information is correct as of the 16th of August but is subject to change.