A zero-interest micro loan scheme aimed at helping thousands of people who are struggling to put food on the table, is coming back this December.
The zero-interest 'micro-loan' scheme, the result of a link-up between the supermarket chain Iceland and a charity-owned lender, Fair for You, re-opened on December 16th, 2024. It aims to help UK households struggling with the cost-of-living crisis.
Typically, people with limited funds are unable to secure loans or credit from conventional lenders, which puts these households at risk of being unable to meet their financial obligations.
To help out these people, Iceland 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.
The scheme was initially tested with 5,000 participants in 2022, and by September 2023, Iceland said the Food Club had helped over 23,000 families, and to date, it has lent over £5M to qualifying customers.
Iceland has decided to re-launch the scheme nationally in time for Christmas, again with no interest being charged, and the supermarket expects to keep it running throughout 2025.
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.
Those customers who already have the loan set up can re-apply for another top-up from December 16th.
Iceland executive chairman Richard Walker told The Grocer magazine :
“For many families, Christmas is shaping up to be one of the hardest in recent years.
“While other businesses have been very vocal in feeling sorry for themselves of late, Iceland decided that we need to roll up our sleeves and get on with the job of supporting our customers.
“The launch of the next phase of Food Club will help families afford a proper Christmas, giving them peace of mind and helping fight the scourge of predatory loan sharks and unregulated money lenders.”
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. If your application is successful, you will receive an email to confirm your acceptance within 24 hours, sometimes as little as one hour.
You will receive your preloaded card within 5-7 business days, and then you can use the balance 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 families during this tough time. 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 8th December 2024, but is subject to change.