Last week, I chatted about Christmas Clubs and how we regularly stashed money away every week so we had a bundle to spend on presents in bygone days. But, there was also, and still is, another method available to purchase items. Do any of you remember, or still use, layaway plans?

What is a layaway plan? It’s simply an agreement between a vendor and customer by which the vendor will reserve an item for the customer while the customer makes regular payments until the full purchase price is reached and then give the customer the item. There is sometimes a fee associated with this type of agreement, as the seller must store the item until it is completely paid for. If an item is not completely paid for, the item is returned to stock. However, the money which has been paid in may or may not be returned to the customer, based on the terms of the agreement. There may also be a fee associated with an incomplete transaction. The basic advantage of these agreements is no interest is charged to the purchaser. One other advantage to the consumer is the price is fixed and does not increase over the payment period. The one downside is if the provider goes out of business, all the purchaser’s funds paid in may be lost.

These plans became common during the Great Depression of the 1930’s. Jobs and income were both in short supply. There was merchandise for sale, but it was sitting on the shelf. Limited income was translated to limited buying power. Essential items could be paid for with these installments and eventually delivered. I remember I did this once, at Big Scot’s over on Route 17K where the Vintage Emporium is now, for something I desperately desired which was on a great sale. My parents decided they were not a financial institution and did not give loans. So, I paid it off weekly with my allowance and odd jobs over the next few months. I don’t remember what it was, perhaps a bicycle or stereo, but I learned the value of a dollar.

By the 1980’s, these plans had followed the path of the dinosaurs and practically become extinct with the convenience of credit cards. With credit cards there was instant gratification though you were subject to interest payments if your credit card was not fully paid off the end of the month. One of the last major concerns to discontinue this practice was Wal-Mart in 2006.

But, like in the Jurassic Park scenario, the extinct sometimes return and in 2011, Wal-Mart reinstituted these plans in response to more restraints on consumer credit and the economy. What is interesting is KMart has continuously offered this type of plan for almost half a century. Many other major retailers also offer these plans.

These plans were developed and groomed to provide individuals with limited disposable income the ability to purchase items at sometimes a great sale price and pay it off without interest over time. As always with our culture, if a demand is recognized, someone will step up and fill it. Having this option to take advantage of great pricing is definitely a benefit if used wisely.