Right now, with the news of the economy scaring quite a few people, substantial changes are being made in many people’s lives. Consumers are consuming less, cutting back on the non-essentials. And many are taking a looking at their debt situation and beginning to rethink rampant credit card use.
It is in this climate, and as the holiday solution approaches, that many people are turning to layaway. Layaway programs have been falling off in popularity, since it works on a delayed gratification model:
- You choose a big ticket item that you do not have the money for.
- You have the store put it on layaway for you, with a certain amount of money down.
- You make payments (it can be weekly or monthly or occasionally — depending on the store’s policy) on the item.
- When it is paid off, you can take it home.
The main advantage to layaway is that the stores do not charge interest. Some stores charge a small layaway fee, but many do not even do that. You don’t get to take the item home immediately, but you can pay it off in manageable installments. Consumerism Commentary makes this observation about layaway programs:
Layaway seems to be a reasonable solution for making large purchases without credit cards. The fees are low and customers won’t get trapped into debt. In a retail environment when supplies of the most popular items can’t match demand, it’s an advantage to have the ability to reserve your purchase ahead of time while you pay over time.
Some stores, however, do not allow layaway. This is because in their minds, it is much more profitable to have someone buy the item immediately, rather than have it take up room in the back as storage. Other stores will put a time limit on how long they will keep items in layaway — this can be from as little as two weeks to as long as six months.
If you are interested in using layaway programs as an alternative to credit cards, check with your preferred store and see if a program is offered.