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Spending Like It's 1969

Remember layaway? I think I put my prom dress on layaway. That was back in the Stone Age, when banks weren't handing out credit cards like toilet paper. I didn't have any credit, so layaway was the only way I could buy an item that I just had to have, but which I couldn't afford at the moment. I'd put down a deposit, the store would set aside the item ("lay it away"), then I could pick it up when I returned to pay off the balance. I never had to "qualify" for layaway, and there were no interest charges.

Layaway
Layaway

Layaway is back! "To see it coming back is kind of nice," says Liz Ramirez as she shops for baby clothes inside a Kmart in Burbank, California. "I used to be a layaway fan when my kids were small," she says. "Now I came in today because my older son is going to be a daddy, so we're kind of looking for stuff for the baby to lay it away."

Kmart actually brought back layaway three years ago, according to store manager Lloyd Davis, who's been with the company for 35 years. This year, it really took off. "People are paying with cash more, credit cards less."

Kmart's corporate sister, Sears, has also started up a layaway program after a long break. Both are owned by Sears Holding, and management predicts a record holiday for layaway. Kmart's layaway plan requires a minimum deposit of $15 or 10 percent of the purchase price, whichever is higher. The store sets your item aside in a secure area. "We have two rooms very full," Davis says. Customers have eight weeks to pay off the balance, and only then will they be allowed to take the items home. Davis says "less than five percent" of customers who put an item on layaway fail to come up with the balance in time.

What are people laying away? Everything—school supplies, apparel, home furnishings, and electronics. "They don't have to max out a charge card," Davis says. "They could use a charge card maybe for a vacation of something like that." That's assuming they have a charge card left.

There's also a 21st century twist to layaway at a website called ELayaway.com. The site processes transactions for a thousand retailers, and business has reportedly doubled.

But wait, there's more!

Remember Christmas Clubs? They're back, too!

"Christmas clubs were normally at a bank, where weekly you would go and make your payment," says Davis. "They would accumulate it and pay you interest at the end of that time." It was like a special savings account for Christmas. This month Kmart launched a new version of the concept. On display inside stores are debit-style cards you can activate and then add money to at the register. Kmart will then add three percent to the balance on the card on November 14th. "A lot of people that have used Christmas clubs in the past remember them and are using them," says Davis. "And talking to a lot of younger people, they're starting to use these to save weekly so they have the amount, with that extra three percent added, to do the extra shopping."

Imagine, setting money aside BEFORE you spend it.

  • Based in Los Angeles, Jane Wells is a CNBC business news reporter and also writes the Funny Business blog for CNBC.com.

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