Iceland is testing loans through its new Iceland Food Club, run by the charity Fair for You, but families may be able to get free help to cover food costs elsewhere
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Iceland offers loans to customers who cannot afford to eat, but buyers are still advised to borrow only if they are in serious difficulty.
A trial program allows borrowers to apply for short-term “microloans” through the Iceland Food Club, operated by charitable lender Fair for You.
Families can apply for between £ 25 and £ 75, which are 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 online or in-store purchases at Icelandic supermarkets and The Food Warehouse.
Iceland Managing Director Richard Walker said a £ 75 charge repaid over eight weeks would see the borrower pay interest of £ 2.89.
IAN COOPER / NORTH WALES LIVE)
If someone borrowed the minimum of £ 25 it would attract interest of 40 pence, he said.
The interest rate payable is 45%, equivalent to 55.6% APR, according to Fair for You.
In comparison, some short-term loan providers, guarantors and door-to-door can charge interest of up to 1,557.7% APR.
The Mirror has asked Iceland how interest is charged and if late penalties are charged on refunds and we’ll update this article when we know more.
We also check how Iceland decides who is eligible for a loan.
But struggling families can get free help to cover the cost of food, meaning they wouldn’t need to borrow.
Do you think Iceland should offer loans to people? Let us know in the comments below.
For example, Sara Williams from Debt camel The blog says some councils have received money from the government to help residents in the form of a £ 500million household support fund.
As this money comes in the form of a grant, you do not need to repay it if you are eligible for assistance.
Some tips give families food stamps to spend at supermarkets like Tesco, Morrisons, and Asda – but that’s a postcode lottery and it depends on where you live.
Ms Williams said: “Fair for You is an ethical lender that offers a much cheaper alternative to expensive ‘weekly pay’ stores for people in need of white goods and furniture.
“Their new food micro-loans only have very low interest rates added, although the interest rate may seem high. If any of these loans get you out of a tough spot, then that’s great.
“But in the long run, it’s not good to have to keep borrowing to buy food. The councils are providing additional support this winter through the Household Support Fund which could help you with grants that don’t. do not need to be reimbursed. “
You can also get free help through your local food bank if you are really having difficulty.
Mr Walker said in his blog post: “Before launching the Food Club, 84% of the participants went without because they could not afford to buy food, and half were referred to food banks – even among those who meet the strict food bank eligibility criteria, many are just too embarrassed to use them.
“However, since joining the Food Club, 83% of participants tell us they no longer need to access food banks, 80% report improved mental health, 85% say they are less concerned with meeting their monthly expenses, and 75% say they feed their children in a healthier way.
“These are remarkable 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.
Iceland first piloted its Food Club initiative in two communities in Yorkshire and North Wales in 2020.
It has now rolled out across North West England and South Wales, offering more than £ 1million in loans so far.