Iceland's new pay later shop scheme launches today

Supermarkets up and down the country are doing their bit to help people navigate the cost of living crisis, and now Iceland is helping out too.

This is being done via a new 'buy now pay later' scheme which offers customers zero-interest small loans from £25 to £100, and it is launching today.

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The scheme is the result of the supermarket joining forces with the charity-owned lender, Fair For You, and it is being launched today after an initial trial involving 5,000 customers.

The Iceland Food Club uploads the loans to the Food Club card, which customers are able to pay back at a rate of £10 a week.

While the scheme did initially require interest to be paid on the loans, this is no longer the case after the supermarket invested into 'making all loans completely interest-free for the national rollout.'

So far, £1million has been lent to Iceland customers in this way.

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Iceland have already been looking into the effect that the Iceland Food Club has on its customers and the results appear to speak for themselves.

In a survey, 83 percent of people said the scheme meant they didn't need to use food banks, 80 percent saw their mental health improve, 85 percent said the felt less pressure when it came to their monthly expenses, and 75 percent said it meant their children were now eating better, StokeOnTrentLive reports.

According to The Guardian, an independent review of the pilot that found that it had helped 92 percent of food bank users either stop or reduce their use.

Meanwhile, 71 percent of people said it meant they were less likely to fall behind with other bills because of the cost of food.

Customers accepted for the scheme will have a £100 credit limit, and they can load an initial top up between £25 and £75 to their card.

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Iceland said via Fair For You: "We do perform credit searches on an application, but we don't do generic credit scoring - we prefer to look at how you're repaying things now rather than something that may have happened many years ago."

Richard Walker, the managing director of Iceland, said that businesses need 'fresh thinking' to give their customers realistic solutions to the cost of living crisis.

As it stands, inflation is at its highest rate in 40 years, and there is even a Don't Pay movement in light of further expected energy bill increases.

If you are interested in potentially using Iceland's new scheme, you can check if you are eligible here.