Layaway is Making a Comeback

I read an interesting article in the Detroit News about layaway. Before there were credit cards, stores offered layaway as an option to consumers who may not have had the money right away to purchase something. The customer would put money down on the item and submit payments, including a fee for the layaway option. Once the item was paid off, it is released to the customer.

Now banks are lowering credit card limits and home equity lines, and even consumers who have credit are reluctant to add to their balances during the economic downturn. That has layaway returning as an increasingly popular alternative.

Via [Detroit News]

I’m on the fence with layaway. Is it better than credit cards or are you still spending money you don’t have? I mean, less the layaway fee (according to the article it is typically $5), I can see layaway as sort of a forced savings account for an item. Then again, you are entering a committment to purchase an item and you may be hit with cancellation fees if you cannot make all of the payments.

What do you think?

Posted by Tricia on December 14, 2008 at 1:13 AM in Spending Money | 16 Comments »
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Nancy responded:
Posted: December 14th, 2008 at 9:27 am
I absolutely loved layaway and miss is it very much…not just at Christmas time, but throughout the year for kids clothes or a large item I am wanting to buy. Using layaway forced me to put away a little to buy the item rather than just swiping the old plastic…hope layaway makes a comeback!
FutureShock responded:
Posted: December 14th, 2008 at 10:45 am
Layaway is much better then credit cards. It forces people to save for something that they most likely “want” versus “need.” I think people will also make a more conscious decision up front about the purchase. Plus it benefits the store versus the Banksters™.
CanadianKate responded:
Posted: December 14th, 2008 at 12:43 pm
The layaway program I was familiar with also allowed you to go in when the item was on sale and have your original price reduced to the sale price. So you were guaranteed the item, at the lowest possible price between the time you selected it and when it was paid off.

It is incentive to plan ahead and pay for things in full before getting to enjoy them. Both virtues to my way of thinking.

For people who don’t quite have the internal discipline, it is a wonderful alternative to getting into debt. And teaches, or reinforces, delayed gratification.

Compared to the rent-to-own programs or the buy now/pay later programs, this is a wonderful way to help people buy things without credit.
HisHersMoney responded:
Posted: December 14th, 2008 at 2:19 pm
Growing up I remember my Mom using layaway at Christmas time. They didn’t use credit cards on a regular basis, in fact the only use of credit I can ever remember was the Sears card when purchasing an appliance or something like that.

I think it’s great that it’s making a come back. People get the items they want in the time frame they want them and end up with zero debt because of it.

It’s the same thing as starting a saving account for the item and with the extra perk of getting the lowest sale price the fee ($5 or whatever it is) is easily negated.
Lynn responded:
Posted: December 15th, 2008 at 9:58 am
I remember when Wal-Mart did away with layaway. I was sad although I never used it but I know many people that did. It’s a great way to get what you want and not use a credit card to get it. I have used layaway before and loved it. It was peace of mind to know the item that I wanted was mine and I’m paying for it as I can.
LL responded:
Posted: December 15th, 2008 at 1:54 pm
I LOOVE layaway and it is way better than credit cards. I was able to buy my $500 Vitamix blender that way; the store was only doing a promotion on them (they never sell them regularly) so I put it on layaway and just saved up cash for it. So nice to finally get my blender at an awesome price and not have to put it on my credit card. I will take layaway any day! oh, and my fee was only $3.
anonymous responded:
Posted: December 15th, 2008 at 2:59 pm
I don’t understand why you wouldn’t just create your own little “layaway” program at home. Decide what item you are going to buy, create an ING account for that item, and transfer the same amount as the payments you would make to the store. You’ll get the item at the same time, without fees if you decide not to buy it, and you can earn interest while you’re saving.
Do people really need so much help saving that they need a layaway program to do it?
Stephanie PTY responded:
Posted: December 15th, 2008 at 3:22 pm
@anonymous: the difference is that, if you save for it yourself, the item might be sold out by the time you’ve saved up for the item. This is why we mostly hear about layaway at Christmas time – when there are hot items that people worry about selling out
Craig responded:
Posted: December 15th, 2008 at 4:24 pm
Do you agree with this? In a time when people need to spend more and people are more and more in debt. Layaway is just another excuse to buy something you really can’t afford. People have to be smart about it this time around.
Tabitha responded:
Posted: December 15th, 2008 at 7:11 pm
I recently used layaway to buy workpants for my husband that were on sale. He is a carpenter and needs really heavy duty (read: heavy expensive) pants to stay warm and not wear out. He is also in a hard to find size. We happened to find two pairs on sale in his size. We put 25% down and paid for the rest on payday. By then, the sale was over and his size were gone (I checked!), but he had his pants thanks to layaway.
abe responded:
Posted: December 16th, 2008 at 11:29 am
I feel that layaway is credit in disguise. Fees to participate, fees to cancel, etc. can more than offset any price ’savings’.
The Frugalist responded:
Posted: December 16th, 2008 at 2:03 pm
I am a fan of layaways. It encourages you to save and pay the item off as quickly as possible since you can’t have it until it is paid in full thereby eliminating the use of credit.
young snowbird responded:
Posted: December 16th, 2008 at 11:42 pm
I recall putting all four tires for my pickup truck on layaway. I didn’t have much credit, so couldn’t afford to buy all four tires outright. Knowing that I needed those tires in a few months, and knowing that they were a size that sometimes sold out, having them on layaway, safe from others being able to get at them, was a godsend! I paid a little bit on them each pay period and had them for winter when I needed them most.

When I was a kid my parents bought alot of stuff on layaway. It was exciting to chip away at the balance until finally the item was ours. It helped teach us selectivity and to not buy impulsively, for if we put something on layaway and then later didn’t want it, we lost some of our hard earned money.
I say hooray, bring back layaway!
Colleen responded:
Posted: December 17th, 2008 at 1:42 am
When I was a kid in the 1960’s and 70’s my mom always put our back to school clothes (six kids) on layaway as well as Christmas presents. In the eighties my husband and I also used layaway. Back then, there weren’t any fees associated with the layaway plan other than making sure you made your weekly payments on time. I think it is a great idea, and if it was used by more stores today there would be fewer people struggling with credit card debt.
Katie responded:
Posted: December 18th, 2008 at 2:13 pm
I like layaway. I used it at Walmart for Christmas gifts before they did away with it. For me, I got to shop in September, well ahead of the rush of Christmas shopping so I didn’t have to contend with that mess AND the presents were stored at Walmart until a week before Christmas so I didn’t have to hide them for months. Also, when the items were scanned at final payment (pickup) if the items were on sale or clearance, you still got the discount.

Layaway can be tricky though. Since you are making installment payments, some people may just throw everything they want at the time into layaway, spending a heck of a lot more than if they saved up some money to purchase items for Christmas or whatever event they are using the option for. Kinda like how people spend more with credit cards.

The difference, however, is when things are being rung up and you see how much your total is, you can ask for things to be taken off before they are stored, and if you offer to put the items back, NO restocking fee. Also, you do not incur credit card debt and you do have delayed gratification. If you want the item sooner than the layaway period, you have to pay for it faster. If it is a larger ticket item that you know you will need in a few months, you don’t have to worry about the item you want not being in stock, or you can place it in layaway at a sales price instead of retail price.

I guess it really just depends on the person and their own shopping habits. I will say that when I used layaway I spent less on Christmas shopping than when I dont. Perhaps its because I buy everything at once and I actually *SEE* how many things I am going to be purchasing all at one time instead of a few things here and there?
Jason Kuiper responded:
Posted: December 21st, 2008 at 9:28 pm
I think layaway is just another american way of getting around the fact that you cant afford it!People, if it isnt in your bank account, dont buy it!