Iceland launches interest-free loans amid cost of living crisis
// Iceland is set to launch an interest-free customer loan scheme to help home buyers during the cost of living crisis.
// During a pilot phase of the program, customers paid interest on the loans, but the retailer has now decided to make all loans completely interest-free for the national rollout.
Iceland will launch an interest-free customer loan scheme to help people through the cost of living crisis, in partnership with ethical lender Fair for You.
The frozen food retailer will initially provide small loans with interest-free credit of £100.
Customers who join Iceland’s Food Club can take advantage of micro loans available on a preloaded card, with repayments set at £10 per week. They can then choose the day of the week when they make their repayments and can also overpay.
Iceland said it had worked with Fair to You and tested different options over the past two years on a pilot project with more than 5,000 buyers.
The program is part of the wider framework of Iceland Doing it right; strategy right now, designed to support the communities it serves.
Iceland clarified that customers can only take out one loan at a time during six windows throughout the year that coincide with school holidays.
The company said that by limiting loans in this way, it will ensure that they are only used to “smooth” income rather than being used throughout the year.
He added that his trial micro-loans of between £25 and £100 had enabled 92% of customers who had turned to food banks to quit or reduce their addiction.
Another 71% said they were less likely to fall behind on rent, council bills and other essentials.
Iceland Foods chief executive Richard Walker said: “More than ever, people are struggling to buy essential everyday items during this relentless cost of living crisis, and businesses and government have need new thinking to find workable solutions.
“At Iceland, as part of our Doing it right strategy: Right now, we are constantly exploring new ways to help our customers with innovative solutions that have real impact.
“With Fair for You, we’ve rolled out Iceland Food Club to offer even more support to our customers, helping them manage essential expenses on their own terms. For those struggling to worry less about how they will buy essential goods, this ethical credit program provides real help when they need it most and I believe it will make a valuable contribution to breaking the cycle of food poverty in this country.
Last week the supermarket revealed a partnership with the Rothesay Foundation to provide pensioners with a voucher worth £30, which can be used to buy food and essentials.
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