Cash-strapped consumers will find that paying for holiday purchases could become a lot easier this year thanks to the resurgence of layaway payments.
To prepare for the upcoming holiday season, retailers like Sears, TJ Maxx, and Toys R Us have started accepting layaway payment plans.
Heading into the critical holiday shopping season, more retailers are starting layaway programs, an old-fashioned retail practice last popular in the 1960s and 1970s, to entice cash- and credit-strapped shoppers into their stores.
Burlington Coat Factory, Kmart, Marshalls, Sears, T.J. Maxx and Toys R Us are among the retailers offering layaway programs, and a growing number of Web sites have jumped into the business. An alternative to using credit cards or cash to pay for merchandise, layaways require shoppers to make a down payment followed by additional payments until the item is paid for in full.
As it stands, experts predict that around 7% of consumers will use layaway this holiday, with the rest split evenly among cash and credit cards.
Layaway is a reversal of the standard way of financing things for the American consumer. Instead of ‘buy now and pay later,’ layaway requires payments in advance of purchase. It is delayed gratification rather than instant gratification. Unfortunately, many layaway customers still find themselves trying to buy more than they can afford and getting stuck with hefty fees when they try to cancel the program and reclaim down payments.
Some of the increased interest in layaway may be due to a renewed frugality on the part of some Americans. But most of it is probably due to economic necessity. Jobs are becoming scarce and credit card rates have been hiked or cards canceled altogether. Extended payment plans may be the only way for many Americans to buy holiday gifts this year.
Or, you know, they could try saving the money themselves.