Remember the good ol’ days, when there was a handful of Crisco in every cake and a layaway desk at every department store? Mom would drag you along once a week to that crummy counter you couldn’t see beyond, where she’d pay for a longed-for item bit by bit until that one fruitful day when she could take home a hot-roller set of her very own. The idea of waiting for something, actually budgeting and using real currency to pay for something, seemed so…grandma. Now with credit drying up and department-store credit cards going the way of the Golden Toad, layaway is making a resurgence like leggings and Rick Astley.
According to a story in this week’s Wall Street Journal, consumer demand for lawaway is the strongest it’s been in years. And as Credit Slips notes, K-Mart is running a new ad promoting its layaway option. “Now you can pay for an item over an eight-week period,” the web site promises, among pictures of a diamond ring, a bike, and a crib. Layaway always seemed like one of those things people who couldn’t trust themselves with cash did. Hording it under a mattress or in a cookie jar wasn’t good enough: It had to ferment at the actual store for two months.
For decades companies like Macy’s and Target have relied on credit card ease-of-use. Plus, interest and other fees have helped rake in beaucoup bucks for them. But recently, default rates have soared and department-store credit cards, once a boon, are becoming a liability. Target reported on Wednesday that writeoffs of uncollected credit card bills were up 10.1 percent in September. Target has responded to the crunch, and their dipping stock price, by changing card terms and reducing credit lines. But analysts say it might be too little too late.
A layaway option doesn’t extend credit to the consumer, and it doesn’t include the high interest and inconspicuous fees charged to consumers and added to department-store bottom lines. But as Credit Slips notes, layaway does offer an option to cash-strapped consumers who couldn’t afford the goods otherwise.
But here’s an even better option: Maybe, before you put Wii on layaway, opt for a cookie jar instead. They make for great banks. Plus, you could put real Crisco-free cookies inside of them! Grandma would be so proud.
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