Layaway Making a Comeback: Here’s How To Play the Game

NEW YORK (MainStreet) — Attention U.S. shoppers.

Layaway is making a comeback, as the skittish economy forces credit cards to the sidelines in favor of cash consumers use to pay for goods on a gradual, payment-by-payment basis.

Take Atlanta-based furniture retailer Classroom Essentials Online, which offers 90-day layaway option for large purchases. Or Sears, BestBuy (Stock Quote: BBY) and Walmart (Stock Quote: WMT), which have rolled out layaway programs of their own.

Why layaway? For cash-crunched consumers, layaway allows them to . . .

  • Avoid finance charges often levied when using a credit card or a line of credit.
  • Better manage cash flow by scheduling regular, in-advance payments, with no interest rate payments and no credit card bill after the purchase is made.
  • Lock in current pricing (even sale prices) with an upfront payment (usually up to 50% of the total purchase amount).

Layaway can also curb a consumer’s appetite for frivolous purchases. Few shoppers will go to the trouble of making 10 payments for an item they’re not passionate about or absolutely need in their lives.

By and large, anyone fighting a tough economy can see the value of layaway, and many consumers are doing just that.

"There is a segment of consumers who have a hard time paying their bills,” says Ludwig Bstieler, associate professor of marketing at the University of New Hampshire's Whittemore School of Business and Economics. “In times like these, that group grows larger, and layaway offers them a way to purchase something without going beyond their means.”

For consumers looking at layaway plans as an option, the key, as in any savvy retail endeavor, is all about preparation, creativity and diligence. The tips listed below have all those elements, and can help you get to the finish line with your wallet and your psyche all in one piece: