Layaway season 2020 is here. Walmart kicks off their layaway season, running from  August 28th - December 14th. I saw the reminder come up on a Facebook ad. It got me thinking, hmmm is there still a demand for layaways? After all, I have never done a layaway, furthermore, I didn't even really know that much about them. I know around the holidays I always hear of a few stories of people coming into a store and paying off everyones layaways and causing a stir but, what exactly is the deal with layaways?

According to Wikipedia, layaway transactions date back to the 1930's during the period of The Great Depression, it was a time when many people simply didn't have enough cash to make full payments for their merchandise. Retailers understood this dilemma and often would allow customers to make payments, a little bit at a time, and allow people to take home the goods they had bought when they were paid in full. A kind of in-house financing that didn't involve a bank and could be handled all in the store itself. Interestingly, layaway transactions were popular well into the 1990s, when they declined significantly as credit cards came into wider use.

Credit cards allowed customers to take home the things that they bought on the same day, no more waiting, while still delaying the need to pay for the purchased merchandise.  Most stores discontinued their layaway plans due to decreased demand, as most customers preferred using credit cards.

Fast forward to the 2008 recession, credit became very tight, even scarce for many. Stores such as Walmart resumed their layaway services in 2011 due to the need of customers’ financial difficulty in securing credit. Major retailers experienced dwindling revenues and saw layaways as a means to increase revenue while also helping its core customer base.

But what are the benefits? When you look a little more closely, layaways stand out among other financing options for a few good reasons. First and foremost, usually zero interest. So this makes layaway a cheaper option, as compared to credit card purchases that incur interest of 26% or even more. Most layaway services only charge a minimal, flat-rate service fee to cover storage costs. The other big reason layaways still have a place, is that almost everyone is accepted and able to take out a layaway plan. You don't have to pass a credit check, you only usually require proof of identification and a deposit, then agree to make regular payments.

So depending on your shopping style, layaways may be the perfect plan for you, and who knows maybe someone will come by and pay off yours for you!

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