Layway Becoming Popular Again for Holiday Purchases

Since it doesn’t look like the economy’s going to rebound in a big way any time soon, stores are bringing back an old standby: the layaway plan. I remember Kmart used to have a layaway department when I was a kid, and many people took advantage of the program.

How do you use layaway? It varies from retailer to retailer, but the store “holds” your intended purchases for an initial deposit (usually 20% of the price) for a set amount of time while you make weekly payments toward the total, until it’s paid off. Then, you finally get to bring it home. It’s generally used for large purchases of grouped items, or perhaps one big item. Layaway programs can last 30, 60 or 90 days.

Some places only offer it during the holiday season — ostensibly to get you to buy more presents — while others have it year-round. Retailers who offer layaway options include Kmart, Sears and Walmart. There’s usually a fee for the privilege of using layaway; the usual seems to be $5 or $10, with higher fees for more expensive items.

Is it just me, or does it seem like just another way to add to your debt? Without these programs, perhaps people would follow a budget for buying Christmas gifts. This is just another line of credit, and can be just as bad — or worse — than using a credit card to make the purchase.

I’ve seen it touted as a way to “hide” presents, but layaway always seemed a little sketchy to me. If you can’t pay for it and bring it home that day, maybe you shouldn’t be making the purchase!

5 comments to Layway Becoming Popular Again for Holiday Purchases

  • Hah! really? I totally forgot about layaway… I def. think it adds to more debt – I mean, it’s the same thing as spending MORE money that you have. That’s the only “trick” to living a healthy financial life – spend less than you make. Just a bit harder to put to use in the “real world” haha… though w/ layaway you can just have them store it and pay in chunks, yes? Do they have interest and all that? If not, I guess it’s not *as* bad. cuz you could do the same in your savings account and then go to the store and pick it up once you have all the $. But if it’s something special you don’t want it to be gone by then, right? I’m pretty sure it really doesn’t work so nicely like that though 😉

  • I’ve never used layaway, as I see it as just a debt. Plus, the things I usually want to put on layaway aren’t worth very much anyway – I can just pay it up front without having to remember to pay it.

    But I do think they’re a great idea for some people that need it, especially around the holidays!

  • Darla

    Layaway won’t leave consumers with the credit card hangover that comes after the first of the year when the bills roll in. You plan, pick and pay BEFORE you play. No different than making a list and sticking to it. Upside being is that you don’t have to deplete your bank account of savings all in one shot and should you have buyers remorse – you can cancel the agreement for a nominal fee.

    That being said – I came across a phenomenal sale on a TV that I hadn’t planned for. So, I placed it in layaway, paid for it in installments and brought it home. Upon seeing it for the first time, my son’s friend said “Dang, Darla.. you’re ballin’!” I have to agree.. I really am ballin’ – as I sit back and enjoy my PAID IN FULL purchase that didn’t put my finances in a strain.

  • I do think layaway makes it tempting to purchase more, but I think it is a little better than using a credit card in that you only get the items after you have paid for them, and you know upfront how much you will have to pay, which is good for people who haven’t become disciplined enough to pay their credit card bills in full each month and could face months of interest charges.

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