The Icelandic supermarket giant has set up an interest-free loan scheme to help parents with the extra costs of feeding their children during school holidays.
The supermarket, which has launched other schemes to help hardship shoppers’ money go further during the cost of living crisis, will allow customers to take out interest-free ‘micro-loans’ on a preloaded card up to at £100.
The scheme, which is in partnership with non-profit organization Fair for You, allows shoppers to apply for a pre-loaded Food Club card ranging from £25 to £75. They can then take out additional credit, totaling up to £100 at a time. Customers can only take out one loan at a time, at six different times throughout the year which coincide with school holidays. Benefit recipients can apply, provided they can provide proof of stable and regular income and a bank account from which to make repayments.
The aim of this scheme is to enable people to avoid food insecurity at a time when costs are so high, and comes at a crucial time when expenses increase during the summer holidays. Iceland’s chief executive, Richard Walker, took to Twitter to say: “Iceland is playing its part in easing the cost of living crisis by launching the Iceland Food Club with Fair for You. . It’s about giving people choice and helping families avoid going hungry – with compassion and respect.
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The new program comes amid soaring grocery bills. The annual price in the average household for grocery bills per year has risen by around £533, with items such as butter, milk and some meats leading the price increases, the highest since 2008.
Iceland first piloted its Food Club initiative in two regions of Yorkshire and North Wales in 2020, and it has rolled out to North West England and South Wales. earlier this year. Customers paid 45% (APR 55.6%) interest in the trial, and this has now been reduced to zero percent.
Ninety-five percent of people who had taken out a loan said the program was helpful, with 71 percent saying they are now less likely to fall behind on rent and other bills. The trial also found that 92% of participants said access to Iceland’s new program stopped or reduced their use of food banks.
However, Iceland’s zero-interest loan scheme should not be seen as “a silver bullet” for families struggling with food poverty, Simon Dukes, CEO of Fair For You, told Grocery Gazette.
“This loan is for those who can’t get credit anywhere else, who just need a little extra cash to smooth over the holiday season,” he said. “Households must repay loans at £10 a week, which can be frozen or overpaid, depending on the individual situation. It’s not a magic bullet, but it gives people a choice if they don’t want to go to the food bank to feed their families.
“Food poverty is a major problem for our society. It is not the only solution. But it does provide people with a solution that might work for them,” Dukes said, although he said the new Icelandic program “won’t work for everyone” because the company rejects many people for reasons. of price. “It would be a mistake on our part to give people a loan they cannot repay, it would make society’s debt problem worse. We give loans to people who can afford to pay them back and need a little smoothing over that extra expense.