Layaway Making a Comeback?

While perusing The Wisdom Journal, I ran across an article predicting the return of layaway. For those of you that aren’t familiar with the concept of layaway, it refers to the service where customers are allowed to ‘reserve’ a product at a store by making a deposit, paying off the purchase price over time, and then picking up the item when the balance hits zero. It’s a bit like a highly targeted savings account.

While layaway used to be a big deal, it seems to have fallen into disfavor in recent years. In fact, Wal-Mart ended their layaway program two years ago. But now that credit is hard to come by and the economy is stumbling into oblivion, layaway is apparently back in vogue. In fact, retailers including K-Mart, TJ Maxx, Burlington Coat Factory, and Sears are pushing layaway as an alternative to credit cards.

It’ll be interesting to see if this catches on. As far as I’m concerned, anything that encourages people to actually pay for things before taking possession of them is a good idea.

14 Responses to “Layaway Making a Comeback?”

  1. Anonymous

    I must say that I was VERY disheartened when Walmart did away with their layaway! It was a way that I could shop for everything all at one time, put it into layaway with a deposit, and make resonable payments and solving my problem of WHERE to store the items until ready for wrapping. I was able to be done with my shopping early, had a set amount to pay instead of impulse buying along the way. Although the other stores mentioned do provide the layaway a previous poster stated, they charge fees and in general are higher than Walmart to begin with (often times with less variety to choose from). Which defeats the purpose of trying to save money by using layaway as opposed to paying interest for the charges on a credit card.

  2. Anonymous

    I shop at Discount Retailers from time to time such as Ross, Marshalls and T.J. Max and from my knowledge they all have Layaway Plans.

    I wonder if Layaway Plans have a time limit so that if you don;t pay by a certain date then you loose your deposit.

    I’ve never used it.

  3. Anonymous

    I’m sure the stores that are introducing this again are loving it. They get some money up front, without ever giving up any merchandise. Of course the products lose some of their utility, but they can still look good on shelves!

  4. Anonymous

    yeah, i don’t see the point of layaway either. why pay to reserve something until you can afford it? unless it is some rare antique or something, there is no need.

  5. Anonymous

    I don’t personally see the point of layaway. I wouldn’t use it for my personal benefit. I’d much rather just save the money in my checking account until I have enough to pay for it in one fell swoop. Especially considering you don’t get the item until you’ve completely paid it off, for obvious reasons.

    But I see the point of layaway from a retailer’s perspective. It gets people cemented into a sale even if they don’t have the credit for a store credit card or the cash on them right now. Especially with the holiday season right around the corner.

    I think over the long term it actually wastes money, though. You have to find the time to make each payment, not to mention the added fuel costs of going to the retailer for each part of the layaway.

    So practical, I think. But only to a few.

  6. Anonymous

    I use lay away plan when purchasing jewelries. They would give me 5 months to pay for the item I reserved. But be sure that you will fully pay the amount on the given period of time. If not, your payments are forfeited and the item will be sold again.

  7. Anonymous

    To me, the only useful aspect of a layaway plan would be to reserve an item or guarantee its availability. If I want to save up for something, that’s why I have a budget, a checking account, and a savings account. But to each his/her own. At my job we offer the option of reserving an item for future purchase (for a period of a week or two)…if we went to layaway, it would protect us from the possibility of someone tying up our stock and then not actually buying it from us. Which I suppose is one of the reasons for the invention by businesses of layaway in the first place.

  8. Anonymous

    It’s certainly not surprising. Credit is becoming increasingly more expensive, especially consumer credit in the form of credit cards. Just look at the news about American Express today. Further, with consumer spending down to historic lows (at least since 1980), I imagine we’ll start seeing a lot more options for payment from retailers. They’re starting to get desperate.

    Overall, I couldn’t agree with your last point more – the mindset change of actually paying for something outright before you own it is a needed one.

  9. Anonymous

    So I’m not the only one who noticed?

    I heard an add on the radio yesterday for layaway at Kmart. I was pleasantly shocked. We used layaway for presents and winter coats every year when I was a kid. Hurray for responsible payment plans!

  10. Anonymous

    Hey Nickel — Thanks for bringing up this latest trend in the midst of our economic crisis. I agree with you that layaway can be a sensible choice, especially when the alternative is to rack up credit card debt that cannot be repaid. I was wondering about your thoughts on stepping back even further from the problem and looking at shopping habits in the run-up to the Christmas season. At my work we’re trying to design a product that effectively gets people out of debt and many are concerned with teaching the right values to their kids at a time like this. Should children be taught about layaway and its place in responsible money management, or does that spoil the holiday fun for the kids?

    All the best,

    Raj Patel

  11. Anonymous

    This is interesting.. I’m up in Canada, and I was just in Walmart last week and I noticed they had a sign saying it was ending its layaway program at the end of 2008!

    It’s a great idea in theory, but I’ve never actually done it myself. Definitely an impulse/instant gratification shopper (with a big credit card bill to prove it)

  12. Anonymous

    It’s a modest comeback. Walmart, for instance, has no intention of bringing it back. The retail analysts I’ve seen commenting on the issue say that we’re still too hooked on instant gratification to do something as old fashioned as save, and the KMart program has its own hassles. You have to trek in there to make a payment every two weeks, there’s a nonrefundable $5 service fee, a nonrefundable $10 cancellation fee and a long list of items you can’t buy. Beer and wine, for instance. Darn! I was hoping to score a bottle of that special KMart brand beaujolais.

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