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UK Supermarket Starts Issuing Microloans to Pay for Groceries

Victor Westerkamp
Victor resides in the Netherlands and writes about freedom and governmental and social changes to the democratic form of nations.
Published: August 23, 2022
A UK Supermarket chain launched a microloan program to keep business going amid inflation.
People huddle together outside an Iceland supermarket on Roman Road in Bow on March 21, 2020, in London, England. Iceland Foods claims to be offering a helping hand to those in need by furnishing them with more debt, handing out a “Food Club Card,” a prepaid loan program that allows the underprivileged to take up a maximum of £600 in annual loans. (Image: HOLLIE ADAMS/Getty Images)

British supermarket Iceland has introduced a — for the time being — interest free microcredit system for those having difficulties making ends meet, but critics warn of the potential downsides of the plan.

The plan entails handing out a prepaid top-up card to cover the most dire grocery necessities with a small spending cap and a limited number of annual disbursements.

Iceland Foods said its initiative was to come up with a strategy to help deprived customers cope with the soaring costs of living.

“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,” Iceland Foods Managing Director Richard Walker said in a statement cited by Reuters.


Applicants must first prove they meet the requirements and are at or below poverty standards. Once approved, they can apply for an initial drop of between £25 and £75 that will be transferred to their card.

The payments will be wired by Fair For You, a non-profit tasked with the administration and coordination of the program.


You can take out loans with a maximum of £100 up to six times a year. The time window for applying to borrow coincides with school holidays when people tend to spend more. 

Also, there’s a limitation of £100 outstanding at any one time, and the credit can only be spent at Iceland’s, be it online or at any of the brick and mortar stores.

The grocer said it piloted its project among 5.000 volunteers and claimed that some 75 percent of the customers felt stress relief about managing their day-to-day costs, while 92 percent claimed to be less dependent on foodbanks.

The other side of the coin

Iceland’s gesture seems benign, but the philanthropic move has its downsides too. The initiative is hardly generating wealth — quite the opposite.

Weekly repayments at £10 must commence after the first week and will be withdrawn from customers’ debit cards, with participants given the ability to choose the day of the week the money will be debited from their accounts.

Fair For You will perform a hard credit check on the candidate’s first application, an action that registers on one’s credit file. Furthermore, every missed weekly payment will also be recorded, which will negatively influence a delinquency’s credit rating.

While the loans are interest-free, they’re not penalty-free. If one fails to pay for four consecutive terms and fails to pick up the phone or an admonishing letter from one’s doormat, the consequences are a £9.50 charge. 

Deeper into the bog 

Not only do loans enhance the risk of people getting stuck deeper in the bog of debt slavery, but they also make them more dependent on government programs.

Helen Saxon, Deputy Editor of, warned about engaging too eagerly in these kinds of seemingly harmless loan programs, “If you’re struggling for money to pay for groceries, think very carefully before applying for one of these loans,” she said, according to her outlet.

“If you’re doing it because money’s tight now, but you know you’ve cash coming in to pay it off in a week or two’s time, that’s one thing,” Saxon continued. 

“But if you’re doing it because money’s tight now, and there’s no real prospect of it being less tight in the coming weeks, you’re just kicking the can down the road and storing up problems for future weeks when you’ll need to both pay back the loan and also find money for that week’s food.”

Saxon admitted, however, that, “If you are going to borrow to cover your supermarket shop, it’s better to do it interest-free with one of these loans than it is to take a payday loan or any other loan with high interest or fees,” she said. 

“Just keep in the back of your mind that you will need to find a way to pay this loan back, starting the week after you take it,” she reminded prospective takers.