Lay-A-Way was better than Credit Cards

Do you remember the Layaway option that was offered at stores like Kmart? I do. It was a great option for people who did not have credit cards or did not want credit cards. Today, Kmart is long gone and instead of layaway all we have is prepaid cards and savings accounts. It's the same concept, but I think the economy lost something in the replacement.

The cool thing about layaway was a buyer had his eye on the prize. I want that $70 coat. I gotta have it. I don't have a credit card. I only have $10 in my bank account. How am I going to get that coat? Oh, Layaway! Wow. Cool. In three payments, I'll have that coat. Awesome.

It's suppose to be the same with a prepaid card or a savings account. I can do the same thing. I want that coat. They don't have a credit card or layaway at the store. I can simply put three payments into my savings account or prepaid card. No difference, right? But there is a difference. Once I choose to put money in my savings account, my eye is not on the prize anymore. Out of sight, out of mind. By the time I'm supposed to make the second payment, I'll have already forgotten that I wanted that $70 coat. That's not the way it is with layaway.

With layaway, (especially when it was at Kmart) the customer had to go to the store to make the payment. The prize was in sight and mind, reminding me why I was going through the trouble. There was a light at the end of the tunnel. A savings account or prepaid card can't do that because by the time you make the third payment, the coat could be gone. That wasn't the case with layaway. The coat was saved/stored to ensure that at the last payment you would get your "prize". It was a better "way" to get something that a buyer really really wanted. Not only did it require discipline and focus, but it showed the buyer the "value" of the coat. The price is not the value. One man's trash is another man's treasure. The value is achieved by how much time, trouble, and money it's worth to you. You won't cherish any old coat that you get for free, but if you had to work three months just to get something, that has a lot of value and worth to you. The business wins, because they got the exact price that was on the tag. No discount, no clearance, and no theft. The buyer wins because he got exactly what he wanted, even if it took longer to get.

Layaway was beneficial to the business, much better than credit cards. Both layaway and credit cards receive interest and fees for the process. The difference is that layaway gets the full price of the merchandise being sold, whereas credit cards often end up unpaid and sold to collections departments. Sad, but true, that most credit card shoppers go crazy (like they won the lottery) and buy a bunch of stuff that they don't need or really love, and then when the thrill is gone, so is their commitment to the credit card. Credit cards hurt both the customer and the business. Layaway was good to both.

Also think about this situation. A credit card holder gets 20% off of their purchases. They go to the clearance rack where a $100 item is already marked down 75% (so it's down to $25) and now at the register the price will be about $20. The store has already lost $80 on that item. If the customer doesn't pay the credit card the $20, the credit card has lost the $20. To me, that's bad business, and the sad part is, the buyer probably doesn't love that discounted item as much as the buyer would love that full price coat.

I haven't seen the layaway option since Kmart was around. It probably made too much sense economically. In this world where everyone is entitled and everyone thinks that everything should be "free", the economy and any good idea for it has suffered like roadkill.