Iceland offers interest-free loans for shoppers struggling to pay for their groceries

Shoppers struggling to pay for groceries due to the cost-of-living crisis are increasingly turning to loans offered by supermarkets and ‘buy now, pay later’ companies. 

Last month, Iceland received 50,000 applications for its newly launched Food Club, which offers customers loans of £25 to £100 to pay for groceries at the retailer. The interest-free loan is given on a pre-loaded card and can be repaid in instalments of £10 per week. Iceland launched the Food Club, with non-profit lender Fair For You, in the summer specifically to help families unable to access free school meals during the long holiday. 

Similarly, a number of ‘buy now, pay later’ companies have also launched, enabling customers to pay for groceries at a later date. One company, Flava, claimed it offered “a full range of groceries” found at a supermarket or local store, and £100 interest-free credit. 

Both models have faced criticism, with MP Stella Creasy criticising Iceland of increasing debt for customers. However, responding to criticism, Iceland managing director Richard Walker said: “Some critics have been quick to come forward and say that buying food on credit cannot be the answer.

“Usually, I note, these are middle-class people, who have no difficulty accessing mainstream banks themselves and would not think twice about paying for their own weekly shop with credit cards.”

Read more cost-of-living crisis news and advice for retailers


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