by Alonzo Kittrells
Special to the NNPA from The Philadelphia Tribune
This year is going extremely fast. Some homeowners have already started to put up their Halloween decorations. Merchants, far ahead of themselves, are advertising Thanksgiving food items. Here in September, some of you may already have Christmas on your minds. While I recognize that layaway plans are not as prevalent today as in the past, it is obvious that such plans still exist in some establishments. This was readily apparent from an email I recently received which emphasized free layaways for up to thirteen weeks. The national chain superstore which advertised this layaway plan has several locations here in the Greater Delaware Valley. If you grew up during the period when many of us had limited resources, yet had many needs as well as desires, you must recall that you could purchase almost anything by placing it on layaway back in the day.
Even if you did not engage in purchasing items under a layoff plan, I suspect that you have memories of your parents, other family members or friends making purchases through this delayed payment arrangement. It was commonplace for stores to arrange for shoppers to place merchandise on hold while making small payments until the cost was completely paid. I still recall signs in stores advertising that layaway was available to shoppers. If there was no sign, I remember my mother asking the salesperson if the store offered a layaway plan. If so, the purchase of a desired item was held by the store with a deposit and a specific payment plan. I understand from some of my friends that a fee was added to layaway purchases for the opportunity to make a purchase under a layaway arrangement but I do not recall such a fee.
Layaways were easy; everyone qualified for a layaway since there were no credit checks. Such arrangements involved no risk for the merchant. However, layaway involved some risks for the consumer. Perhaps you recall someone that signed up for a layaway plan and failed to make regular payments or failed to complete payments by the designated time. This happened quite often around holidays, in particular, Christmas. If you failed to make payments you lost the merchandise and also any money paid into your plan at that point. Since credit cards were not readily available, in the absence of cash, the layaway plan was the only way many of us were able to make a purchase, in particular the purchase of “big ticket items” back in the day.
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.
If you grew up back in the day and relied on layaway to make purchases on a regular basis, I know that you had some unexpected challenges. Did you ever have an item on layaway and the store went out of business? The reality is that you ended up without your merchandise and without your money. What happened after you made several layaway payments and then as sometimes happens your money became real tight and you were unable to complete the purchase? In some cases, because you did not have clarity with regard to the layaway rules, you forfeited the item as well as your money. Has anyone had an item on layaway only to have it go on sale? So, what occurred if a young lady made a layaway of a dress at this time of the year for New Year’s Eve and her eating habits were out of control? I do not know what happened when the new requirement is for a size 10 dress when the dress on layaway is a size eight.
While layaways of the past have seen a re-launch in recent years, such plans have drawn the scrutiny of congressional leaders such as U.S. Sen. Charles Schumer who is a staunch opponent of layaway plans.
Because there are no federal laws that control layaway plans, consumers must rely on the Federal Trade Commission Act against unfair and deceptive practices. The Federal Truth in Lending Act also comes into play if the consumer must agree to terms in writing to make all payments until an item is paid in full. Furthermore, there are those that argue that layaway plans are far worse in making purchases than credit cards.
Think about the old adage, “What goes around comes around,” as this is the case with the return of the concept of layaway today. If you are considering the purchase of something today, and you do not have cash and using a credit card may not be something that is available to you, layaway may be your only option. Just consider that it is one of those old fashioned ways to get things that you want and to get things you need today, just as our parents did, back in the day.
Alonzo Kittrels can be reached at email@example.com or The Philadelphia Tribune, Back In The Day, 520 South 16th Street, Philadelphia, PA 19146.