Made popular during The Great Depression, layaway programs seem to be making a comeback. A layaway plan allows a consumer to reserve an item in a store, make interest-free payments until the item is paid off, and then take it home. The idea is that consumers can purchase products they need and pay for them gradually.
These programs previously lost their luster as consumers’ buy-now-pay-later mentalities emerged thanks in large part to credit cards. But, with the recent recession, access to consumer credit tightened, and retailers found themselves seeking new ways to get cash-strapped and credit-challenged customers into their stores.
In 2010, layaway grew significantly in popularity, and stores—from major chain retailers to locally owned Mom-and-Pop shops—have now begun offering this option. However, consumers are being cautioned by legislators and consumer advocacy groups alike to read the “fine print” and ask about all the layaway fees before they choose to participate.
New York Senator Charles Schumer indicated layaway may cost more than using credit cards. Similarly, Connecticut Senator Richard Blumenthal warned consumers of the real, hidden costs of once-popular retail layaway programs, suggesting better options exist. CBS News also covered this topic on air recently. Watch the video.
Among those options are employee purchase programs, deployed as voluntary benefits through employers and facilitated through payroll deductions, that offer eligible workers the ability to buy brand-new, current-line products from many recognized electronics, appliance and furniture manufacturers. It’s not a layaway plan. Merchandise is delivered right to employees’ doors just a few weeks after they place their order.
Employee purchase programs offer all-inclusive pricing that includes the actual product, value-added features such as extended warranties and accessories, shipping and handling fees, as well as any applicable taxes. Employees know the total cost up front. A 12-month payroll deduction schedule helps ensure that they won’t miss a payment, so they don’t risk late fees or loss of merchandise like they could with layaway.