While watching television recently, I stumbled across a K-Mart commercial advertising their layaway program. My first thought was, ‘Oh crap, are we really going back to putting things on layaway?’ I was under the impression that layaway was resting in a grave somewhere in the Middle East. I had heard that Wal-mart and quite a few other large national retailers and abolished the program all together. I am left wondering if any of these retail chains are planning on bringing the layaway program back.
When I really put some thought into layaway, I realized how beneficial layaway is compared to credit cards. Sure, most stores charge a nominal fee to use their layaway program but it certainly isn’t the outlandish 20% + interest rate that the credit card companies are charging these days. In comparison, I could only think of two ways that using a credit card is superior to layaway: 1) credit cards provide instantaneous satisfaction while layaway usually takes week before a purchased item is in the hand of a consumer 2) credit cards build credit. And the latter of the two is only true if the credit cards are kept under the established credit limit and paid on time.
According to a recent article published by the Wall Street Journal demand for layaway is stronger than it has been in years. Apparently the demand is so high that Kmart has produced and started running their own layaway advertisements on television, which is a very clever move on Kmart’s part in these troubling economic times. The fact that layaway programs are on the rise doesn’t surprise me at all due to the alarming state of the U.S. economy and rising consumer debt. Layaway is probably the safest way to purchase Christmas gifts this year if one does not have the means to purchase the items out right.
There have been quite a few internet retailers that have added a layaway program to their websites. Adidas, Apple, Bass Pro Shops, Buy.com, eBags, GAP and HP are just a few internet retailers I found that provide eLayaway to their patrons. This takes the embarrassment out of actually going to the store and walking into the layaway department because it is discreet and convenient.
Layaway has long been a term that reminds me of working class and underclass families. However, using layaway is not something that one should be ashamed of. In my opinion, people using layaway programs as opposed to credit cards are making a much wiser financial decision. If nothing else, layaway will make one appreciate the hard work put into buying the item. Using layaway could also be a great lesson for teaching young children and teenagers on how to manage money and make payments.