My first personal experience with layaway was during my first year out of college, working my first job. I would often time walk down the street from my job and window shop. One day, after seeing a sweater in the store window over several weeks that I desperately wanted, I went inside to inquire about the price; a price which I knew I could not afford. Upon sharing this with the store manager, he advised that I could put it on layaway and provided the details for the layaway plan. I agreed to the layaway plan for the sweater and was given a deadline by which the full payment had to be made. I was given a receipt with my initial payment and each time I made a payment, it was recorded on the same receipt. I was told that my purchase would be held in the store’s layaway room. You may recall that stores had a separate room for layaway purchases. You can imagine my anticipation of getting my sweater once all payments were made and the gratification once I was able to take it out of the store. While I paid no additional fee for the layaway purchase of my sweater, it did open the door for a problem that some of you may have encountered under layaway plans. The ease and simplicity of making these layaway purchases, especially of pricey items, appeared to be quite manageable. However, this plan actually enticed me to overspend, overextend and overcommit myself by making unnecessary purchases, back in the day.

Layaway plans were also used for purchases other than clothing. If it was a television, you turned to layaway; a refrigerator, it was layaway; a sofa or dining room set, again it was layaway. If it involved toys that you told your children they would find under the Christmas tree as gifts from Santa Claus, often times, they got there by way of the layaway plan. The major problem was that if the item was being purchased for a special occasion such as Christmas you had to start making payments weeks, even months, far in advance. Interestingly, the reason why layaway plans came into existence in the past is the same reason why we see a resurgence of layoff plans in today’s retail environment.

An article by Bill Hazelton, CEO of Credit Card Assist, provides some background with regard to layaway. He indicates that layaway first became popular in the 1920s and 1930s when the Great Depression was in full bloom. It provided a way to make large purchases possible by breaking the purchase price down into more manageable payments. It is no secret that layaway plans started to disappear in the 1980s with the increase in the availability and use of credit cards. Thus, it should not be surprising to learn that layaways are returning because of the high interest rates that are now being charged for the use of credit cards. The return to layaway is welcomed news for some consumers who may have missed credit card payments and have poor credit. Missing a payment on a layaway plan has no impact on one’s credit score.

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