The great consumer credit story of the past 30 years has been the general substitution of credit cards as a source of consumer credit for old-fashioned forms of credit, such as installment borrowing, personal finance companies, and layaway. Two years ago Wal-Mart, which had been one of the last major retailers to offer layaway, discontinued that service.

It that vein, it is interesting to note that both Kmart and Sears have announced that this Christmas they'll be reviving layaway. The reason seems clear--because of the credit crunch, consumers are having trouble using their credit cards. Credit lines are being reduced and credit issuance is tightening up. As this preferred line of credit dries up, consumers are rolling back the clock to some of the older forms of credit, such as layaway. The end result is that a lot of consumers will "borrow" just as much as they have in the past, but it will just take a different form.

I've remarked before that just once I'd like to see a January press release that says "Credit card debt reaches all-time high; layaway and retail installment credit reach all-time low." But, of course, financial reporters don't seem to recognize this substitution effect. Perhaps this year the revival of layaway will help them to see that.

BTW, I've never been able to find any really good data or sources on layaway. My impression is that at its height, it was a highly significant part of the consumer credit economy. But I've never seen any measurements. It may be that it was lumped in with other installment debt. But if anyone knows of any good sources that discuss the development and peak size of layaway, I'd be interested in references.