Iceland’s frozen food retail giant is offering “micro-loans” to customers as the inflation rate hit 6.2% in February according to official national statistics.
In a bid to help those paying for grocery stores, which continue to rise, Iceland is offering customers between £25 and £75 through the Iceland Food Club, run by charity lender Fair For You .
As the The mirror. reports, families can apply for between £25 and £75, which is repaid in weekly installments of £10, and there is a maximum credit allowance of £100 at any one time.
Once approved, the loan is transferred to a Food Club card, which can be used to pay for purchases online or in-store at Icelandic supermarkets and The Food Warehouse.
READ MORE – Experts explain how to save money on energy by using a £2.99 household item
As it is a loan, an interest rate is added. Iceland’s chief executive Richard Walker explains that a £75 charge paid off over eight weeks would see the borrower pay £2.89 in interest. This means that if someone borrowed the minimum £25 it would attract 40p interest, he said.
According to Fair For You, the interest rate payable is 45%, which equates to 55.6% APR.
Get all the latest Glasgow news and headlines straight to your inbox twice a day by signing up to our free newsletter.
From breaking news to breaking news on the coronavirus crisis in Scotland, we’ve got you covered.
The morning newsletter arrives before 9 a.m. daily and the evening newsletter, hand-curated by the team, is sent between 4 and 5 p.m., giving you an overview of the most important stories we covered that day.
To register, simply enter your email address in this link here.
However, families can avoid borrowing and can still get help with the cost of food, eliminating the threat of further debt.
For example, Sara Williams of Debt Camel The blog says some councils have received money from the government to help residents in the form of a £500m household support fund.
In Scotland there is the Scottish Welfare Fund and The Home Heating Assistance Fund which is open until March 31, 2022 and can help reduce energy costs.
As this money comes in the form of a grant, you do not need to repay it if you qualify for assistance. Some advice gives families food stamps to spend at supermarkets like Tesco, Morrisons and Asda – but this is a postcode lottery and depends on where you live.
Ms Williams said: “Fair for You is an ethical lender that offers a much cheaper alternative to expensive ‘paid weekly’ shops for people in need of appliances and furniture. Their new micro loans for food have no only very small interest added, although the interest rate may seem high, if one of these loans gets you out of a tight spot, then that’s fine.
“But in the long term it’s not good to have to keep borrowing to buy food. The councils are providing extra support this winter through the Household Support Fund, which could help you with grants that don’t don’t need to be repaid.”
You may also be able to get free help through your local food bank if you are really struggling.
Simon Dukes, CEO of Fair for You, said: “While some people depend on subsidies for food, many families struggle to put food on the table during the school holidays and are unwilling to go to the banks food or are not eligible.
“An independent social impact report shows that Food Club provides a lifeline for these families. Food Club can only be used a few times a year and therefore cannot be used as an ongoing, long-term means of purchasing food Affordability checks are carried out to ensure that microcredit is only offered to people who can demonstrate a means of repayment Fair for You, as a charity-owned lender, offers support and flexibility to help customers make their repayments.
Iceland first piloted its Food Club initiative in two communities in Yorkshire and North Wales in 2020. It has now been rolled out to North West England and South Wales, offering more than £1m in loans so far.
Mr Walker said in his blog post: “Before launching the Food Club, 84% of participants went without because they could not afford food, and half were referred to food banks – although even among those who meet the strict eligibility criteria for food banks, many are simply too embarrassed to use them.
“Since joining the Food Club, however, 83% of participants tell us they no longer need to access food banks, 80% report improved mental health, 85% say they are less worried about meeting their monthly payments. their expenses and 75% say they feed their children healthier.
“These are exceptional improvements, but based on a small number of people over a short period of time. A more detailed and independent social impact report will be produced this year, which will tell us more.