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Layaway is an option for buying holiday gifts

November 3, 2008

Layaway. It’s a term you don’t often hear these days. Some younger people may not even know what it means to “layaway” an item.

For anyone not familiar with the concept, a layaway is when you ask a store to hold a purchase item for you and you make payments until you’ve paid for the item in full. Then the store gives you the item. It’s a bit like buying on credit except you don’t actually have the goods in hand until you’ve paid for them.

I can remember my mom using layaway at Hills when I was a kid, mostly at Christmas. (Hills, which no longer exists today, was our favorite place to scope out Christmas toys. Their commercial slogan was, “Hills is where the toys are!”)

Like Hills, the concept of layaway had largely faded into oblivion sometime in the 1990s. But, it appears layaway is making its way back into retail stores.

Wal-Mart ended its layaway program a couple of years ago. Company officials said too few people were using the service to justify its expense.

But, that was before the emerging credit meltdown. After I saw this blog on the Wall Street Journal’s web site, I began to rethink the idea of layaway.

In general, I don’t advocate purchasing something unless you can afford to pay for it right away. That being said, if you are determined to purchase something, layaway could be a better option than using your credit card, or it’s an alternative if you don’t have a credit card.

There are generally some small fees associated with layaway, and you may be required to put down a deposit. After that you are expected to make regular payments (it could be weekly, bi-weekly or monthly) until you’ve paid in full. If you miss a payment and lose your layaway items, you will lose your upfront fees, but you should be able to get back any other money you’ve put toward the purchase.

Keep in mind that the individual stores make the rules when it comes to layaway. Make sure you understand all of the rules, fees and repayment terms before you sign up for the plan.

Here is the biggest benefit I see with layaway, you won’t be left with debt hanging over your head. The holidays are a time when many people end up charging what they can’t afford and paying for it well into the New Year.

You can do some web surfing or call stores to find out which retailers near you still offer layaway.

If you have any advice about using layaway or have a comment about layaway, please share.

Written by admin · Filed Under Misc. 

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