Is Layaway the new credit card?

In case you don’t remember installment payments from your childhood, installment payments are a way to buy an item without paying the full price up front. Instead of taking the item home and paying with a credit card or some other installment plan, the customer does not take the item home until all payments are complete. The client pays a non-refundable fee up front and has a payment plan to pay the amount due. If the customer does not pay all fees, the customer will generally still receive a refund of the payments made minus the non-refundable fee and the item is returned to the shelf.

Layaway goes back. People bought farm machinery and sewing machines on installments. It was also popular after the Great Depression in the 1920s and 1930s. Some stores carried on the tradition, but it had fallen out of favor, probably because we’ve become a nation of people who want instant gratification and don’t want to wait to get it. item to take home. They prefer to just use a credit card and be done with it.

But Layaway has returned. Because many vacation shoppers are cash-strapped, many stores are bringing back the layaway concept, and many people are discovering it again. There are even some modern twists. There are now websites where you can choose your item, sign up for a pre-order plan, and when you’re done paying, your item will be shipped to you.

What are the pros and cons of the layaway system?

advantage:

1. You can reserve an item that may go out of stock, such as popular holiday toys.

2. You can avoid high interest rates on credit cards.

3. You won’t have that Christmas hangover with big payouts after the holidays.

4. If you change your mind and don’t pay all the fees, we’ll give you your money back, minus the fees.

5. You can buy early, but pay later.

Disadvantages:

1. Even with the installment payment system, you may still not be able to pay for the item.

2. There is delayed gratification; this is more important for some than for others.

3. If you pay your installments by credit card, you may still have high interest payments.

4. Maybe you could have gotten the item cheaper with the post-holiday sales.

As in any transaction, Buyer Beware. If you decide to use layaway, ask yourself these questions:

1. With the current economy, can I really afford this item?

2. Can I get it cheaper elsewhere?

3. Can I wait and pay in full, therefore without incurring any charges?

4. Will I really get my money back if I don’t make all the payments? Check the fine print of everything you sign.

5. Are you paying credit card fees and defeating the purpose of the layaway system?

6. How much are the fees? Can I afford to lose them?

If used wisely, layaway can be an alternative to using your credit cards.