How to get Iceland interest-free loan, who is eligible for Food Club card, and how do I apply?

Credit: PA

by ITV News Content Producer Elaine McCallig

Supermarket Iceland has rolled out an interest-free loan scheme to help shoppers stock up on everyday items amid the cost-of-living crisis.

The budget frozen food chain's new initiative allows customers to take out interest-free "micro loans" on a pre-loaded card of up to £100 to cover their grocery shop.

The supermarket today and its partner in the scheme, the not-for-profit lender Fair for You, today launched details of the scheme - including who is eligible, how it works, and how to apply.

The offer comes as grocery bills have surged at the fastest rate since 2008 as grocery price inflation jumped to 11.6% for the four weeks to August 7, compared to 9.9% in the previous month.

Research firm Kantar said this equates to a £533 annual increase in the average UK household’s grocery bill, with butter, milk, and poultry leading the price hikes.

What is the new Iceland scheme?

The grocer's scheme, in partnership with not-for-profit lender Fair for You, allows shoppers to initially apply for a pre-loaded Food Club Card of between £25 to £75.

Further credit for additional Iceland shops (six times per year when notified by Iceland) can also be taken out, up to a total limit of £100 outstanding at any one time.

It aims to offer customers in the UK an affordable, flexible credit solution to allow them to avoid food poverty, particularly over school holiday periods when expenses rise.

It comes after a regional trial found that 95% of participants said the scheme was helpful, with 71% less likely to fall behind on rent, council tax, and other bills.

The majority (92%) of members said access to the scheme stopped or reduced their use of food banks.

Over half (57%) said the trial made them feel less "stressed, anxious or depressed" about their finances, while 65% said their diet had improved.

Iceland Food Club is part of the retailer’s "Doing it right: right now" response to the cost of living crisis. The initiative has been supported by HM Treasury, NESTA and the Esmée Fairbairn Foundation.

How does it work?

Customers can only take out one loan at a time, during six windows throughout the year that coincide with school holidays.

This is to help parents keep cupboards stocked at a time when children on free school meals are at risk of hunger during the holidays.

By limiting loans to these periods, the supermarket hopes the scheme will allow customers to use them to smooth out incomes, rather than rely on them year-round.

Iceland is offering people of pension age a £30 voucher for food and other essentials between 1 August and 16 September. Credit: PA

Who is eligible, and how can I apply?

New customers are eligible, and the scheme is subject to availability. An eligibility checker, which will not leave a footprint on your credit file, is available online.

Those on benefits are eligible to apply, provided you have a stable, regular income and a bank account you can make your repayments from.

Shoppers can apply online and may receive a decision within an hour during business hours.

If successful, you will receive a preloaded card within five to seven business days, and you can then use the balance on your card to shop in store or online at Iceland.

To apply, visit Fair For You's website.

How much are the repayments?

Repayments are set at £10 per week. You can choose which day of the week you make the repayments, and you may overpay when it is convenient.

Fair for You says they understand that circumstances can change, and if you are struggling with repayments they say they will work with you to rearrange a payment plan to help you get back on track wherever possible.

The initiative aims to help households manage their finances as the cost of living continues to rise. Credit: PA

Is it really interest-free?

Yes. During the initial trial, customers paid interest on the loans, but Iceland decided to invest in making all loans interest-free for the national roll-out to help people manage the rising cost of living.

When will it be rolled out?

The initiative has now launched nationally, as of August 2022.

Want a quick and expert briefing on the biggest news stories? Listen to our latest podcasts to find out What You Need To Know

“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," Managing Director of Iceland Foods Richard Walker said.

He added: “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.”

Richard Walker pictured in June as the supermarket launched a new campaign supporting the NHS Healthy Start scheme. Credit: PA

Fair for You CEO Simon Dukes said: "Nobody should have to go hungry in order to feed their kids, or be forced into making impossible decisions between putting food on the table or having hot water.

He added: "Now that it has launched nationally, it gives plenty more families the opportunity to get the groceries they want, improve their diet and enjoy family meals together, while also getting a better handle on their finances."