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Layway: Gone Away
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Years ago many retail stores had layaway programs.  These programs allowed you to pay over time for an itme or group of items without interest and the store would hold theitem(Drunk until paid for.

Most retailers have abandoned this practice. The determined the it is not cost effective to carry the burden of storage for items.  Rather they have adopted revolving credit card at high interest rates.Many retailers are now paying a staff member to try to get you to sign up for their store credit - usually under-written by a larger bank.  Some even try to get you at checkout.  The credit interest rates are usually very high - 15=>30% annually.

I am sure that to the executives in marketing this appeared to be an excellent way of increasing revenue and profits for items they were already selling.  It reduced storage requirements.  It gave the consumer the satisfaction of having the item today, rather than have to wait months for it.

This strategy appears to have worked over all, while the economy was thriving.  However, the economy is no longer thriving.  It is struggling. Some believe, despite government statements to the contrary, that we are actually in a pretty deep and long running depression.

Many consumers today are now more fiscally conservative than in the past.  They are concerned about spending money they do not yet have for items they can often live without.  The 40% off sale price on a TV is negligable when paying 20-30% on it for three to ten years.

These same consumers though may increase their buying through re-introduction of the layaway program.  They can buy what they want, they have to wait a little while to use it, but they can often take advantage of sale pricing.  If something happens where they are can no longer afford the item, it goes back to inventory and the retailer retains a portion of the money paid as a restocking fee.  The consumer gets most ofthe money paid in back.

In this way, the retailer is going to increase profits on some items because a certain percentage of consumers will not complete their purchase.  They also move more stock as the consumer does not have qualify for credit. The consumer also does not create additional financial liability for themselves over the long term.  If they cannot complete the transaction, there is a small penalty to them and they move on.

I am one of those consumers.  I used to go to retailers that had layaway programs and purchase bigger ticket items on layaway.  I would pay a significant down payment on the item and then pay it off over the next six months.  Of course I did not get the immediate satisfaction of using that item today, but I also did not over stress my budget nor accumulate long term debt.  If I had to purchase the same item on revolving credit, I would not have made the purchase.

Historically, I have avoided credit.  The idea of becoming financially obligated over a period of time for something that is going to lose value over that same period and with no surety that the income will be there is very unappealing.  Plus there are all the unknowns - will a vehicle need repair, will some one get sick or hurt, will the house need repair, will clothing need relacement?  And more...   Credit creates a vicious cycle of increased dependance and increased risk over time.  We are now in a depression as a result of many things - including the use of high interest credit. 

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