Island UK boss Richard Walker says the move will help consumers struggling to pay for groceries amid the cost of living crisis
Some private companies are also trying to help, with Supermarket Island announcing a partnership with Fair For You to allow shoppers to get microcredit for groceries during the school holidays.
So how will the Iceland Food Club program work?
Here’s everything you need to know.
What is Iceland Food Club?
Iceland’s Food Club program is a lending initiative aimed at providing financially vulnerable customers with interest-free micro-loans for their grocery business.
The supermarket says people may need the loans to bridge income gaps during school holidays.
It is operated in partnership with Fair For You, an ethical charitable-owned lender that aims to help households that have been “financially excluded” buy essential necessities.
These people may not be able to get other loans because of bad credit.
Originally a pilot scheme launched in Yorkshire, the North West and Wales in 2020, the Food Club became a UK initiative on 16 August 2022.
Iceland said in January 2022 that it had already provided more than £1million in microloans to more than 5,000 customers during the pilot.
The scheme was supported by the UK Government, social innovation charity Nesta and community not-for-profit Esmée Fairbairn Foundation.
How does the Iceland loan program work?
The Iceland Food Club enables all consumers to get credits between £25 and £100 to use to buy groceries in Iceland during the school holidays.
This money is held on a pre-loaded card operated by Fair For You.
It then performs an affordability check on your finances, with the checks potentially taking as little as an hour to complete.
If your application is successful, you will receive an email confirmation from Fair For You and it will then take five to seven working days for your card to arrive.
With an initial amount of between £25 and £75, the cards can be used to buy anything in Icelandic shops or online at the supermarket.
They can also be topped up six times a year via the Fair For You digital dashboard, up to a maximum of £100.
Within the six top-up periods – all of which coincide with the school holidays – you can only take out one loan at a time.
Fair For You says it will notify its Food Club members when they can recharge.
Refunds are set at £10 per week and you can choose which day of the week they are taken from your account.
You can pay back more if you wish.
All loans are interest-free, which means you only pay back the amount you borrowed through the program.
This practice differs from that of most commercial lenders, who add interest to the repayments to protect the value of the money borrowed.
What did Iceland CEO Richard Walker say about the Food Club?
Iceland chef Richard Walker said he hopes the new Food Club scheme will help consumers across the UK.
“More than ever, in this unrelenting cost-of-living crisis, people are struggling to buy much-needed everyday items, and businesses and governments are having to rethink to find workable solutions,” he said.
“At Iceland, we’re always looking for new ways to help our customers with innovative solutions that make a real impact.
“With Fair for You, we launched Iceland Food Club to offer our customers even more support and help them manage important expenses on their own terms.
“For those who would like to worry less about how to afford basic necessities, this ethical lending program offers real help when it’s most needed and I believe it will make a valuable contribution to breaking the cycle of life.” to break through food poverty in this country.”
An independent evaluation of the Icelandic pilot program by the Center for Responsible Credit found that the Food Club enabled 92% of people who used the microcredits to stop or reduce their use of food banks.
Another 71% of consumers surveyed said it helped them keep up with rent, council tax, and other household bills.