What’s Old is New (Editorial)

Only readers of a certain age are likely to remember layaway, the pay-now-buy-later plan that allowed shoppers to put a down payment on a consumer good (often Christmas gifts), then make regular payments to the merchant until the item was paid in full.

The merchant kept the consumable until the consumer had paid it off. If the consumer failed to pay it off within a set period, the merchant kept the item and sometimes the down payment as well.

Layaway plans gave consumers incentive to pay off their purchases or they’d risk losing a portion of what they’d already paid.

Merchants were protected because they retained possession of the consumable until it had been paid for.

Nobody ended up in debt.

The increasingly widespread use of the credit card doomed layaway plans.

Until now.

The Wall Street Journal and others say that the humble layaway plan is regaining popularity with a cash-strapped, debt-hobbled public.

The advantage of the layaway plan is simple: no interest payments.

Although most merchants require, in addition to the down payment, a small fee to cover holding and handling costs, once a consumer has written that final check (or, more likely these days, swiped the debit card for the last time), he owns free and clear the bicycle (or, rather, the PlayStation) for little Johnny or Janie (or, rather, little Joshua or Kaylee).

Some say the layaway plan was a product of the Great Depression. We can only hope its resurgence now is a sign less of a return to those hard times than a return to consumer sanity.