Cost of living: Iceland launches interest-free loans

Iceland is offering a zero-interest loans scheme designed to help struggling families across the UK to deal with the ongoing cost-of living crisis.

The frozen food retailer will now provide customers with small loans ranging from £25 to £75 to support parents to help bridge the gap in income over the school holidays.

In partnership with charity-owned lender, Fair For You, the Iceland Food Club scheme will offer loans to a Food Club card, repaid at the rate of £10 per week.

The move follows an initial pilot phase which was available to 5,000 customers. As a result, the grocer has given out £1 million in loans.

Iceland was going to originally charge interest, but has now invested an unknown amount into “making all loans completely interest-free for the national rollout”.

This comes as research by Iceland found 92% of customers of customers using food banks previously had stopped or reduced their food bank use, while 71% said they were less likely to fall behind on rent, council tax or other bills.

READ MORE: Cost of living: Iceland gives pensioners £30 voucher to buy essentials

Some 80% reported an improvement in their mental health, with 85% saying that they were less worried about meeting their monthly expenses.

Around 75% also reported that they are feeding their children more healthily.

According to Icelands managing director Richard Walker, “fresh thinking” was required from the business and government to find workable solutions to the cost of living crisis.

“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,” Walker said.

“At Iceland, as part of our Doing it right: right now we re constantly exploring new ways to help our customers with innovative solutions that deliver real impact.

“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.

He added: “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.”

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