A few years back I remember hearing some colleagues making fun of someone they knew who purchased things using layaway, which allows you to have items held until you complete payments on them. They hooted and hollered about how it was so tacky and beneath them to even think of using layaway to purchase anything. I was pretty mystified by the whole thing and mentioned that when I was a kid layaway was standard practice by almost every family I knew – especially when it came to back-to-school shopping and Christmas gifts. They acknowledged that it was common practice years ago, but all of these people said they wouldn’t be caught dead using layaway.
My, how times have changed. Apparently layaway is regaining popularity as the economy’s woes deepen. While many retailers did away with layaway years ago, places like Kmart and Burlington Coat Factory still offer this payment plan. Kmart is even highlighting its layaway plan in its holiday advertising.
Credit card companies are starting to feel the squeeze. Some of the country’s largest credit card issuers are suffering from large quarterly losses and are watching their credit card delinquency rates rise to historic levels.
“Credit-card companies will “pull back on growth and aggressively manage credit lines to manage through this cycle,” said Meghan Crowe, an analyst at Fitch Ratings. “Charge-offs will increase. Margins will be squeezed because of higher funding costs, higher provisions and as consumer spending slows down.” The credit ratings company expects an increase in charge-off rates among borrowers with strong credit to hit at least 7% by the end of the year from 6.4% in May.”
Essentially, credit card companies will need to restrict credit limits for some of their customers to help curb future loses. They expect more accounts to go delinquent and expect less revenue from a reduction in consumer spending.
Chris Rocks is the Regional Director of the National Credit Federation (NCF). NCF is a nationwide membership-based organization that assists consumers recovering from a financial difficulty and those who need a significant increase in their credit score.
Chris began his financial services career as a Financial Advisor helping young families with risk management and asset accumulation strategies. It was during that time that Chris realized that many of these young families also needed someone to guide their choices with regards to debt management.
He made the transition into the mortgage industry where he first worked as a loan originator and later the Vice President of a small mortgage company. As Chris came across clients who had suffered through financial challenges and saw the difficulty they had in re-entering our credit driven economy, he discovered there was a real opportunity to leverage his unique background and help others.
He can be contacted by visiting his personal site, GoodCreditLiving.com.
Francine L. Huff is the Publisher and Editorial Director of Super Savvy Publishing, LLC, which provides editorial and publishing services. She is a gifted author, freelance journalist, and motivational speaker who has entertained and motivated a variety of audiences through workshops, panels and keynote addresses. Francine is the author of The 25-Day Money Makeover for Women, which has inspired and motivated many readers to rein in poor financial habits, become good stewards over their money and work toward a debt-free life. She has appeared on a variety of TV and radio shows. Francine previously worked for the Wall Street Journal, where she was the spot news bureau chief, a news editor and a copy editor. She has interviewed a variety of financial professionals about financial issues and strives to present information about managing money in an easy-to-understand format that is accessible to people of all backgrounds and income levels.
Karen Lawson is a freelance writer with more than 15 years of experience working in mortgage banking and loan servicing. She holds BA and MA degrees in English from the University of Nevada, Reno. She enjoys writing informative articles about debt management and personal finance.