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Think 1982, legwarmers, permed hair and Blue Light Specials. In the right frame of mind? Good. Now prepare to take this in: Layaway is making a comeback. For real.
Kmart is doing it. Sears is doing it. So are TJ Maxx, Marshalls, Best Buy, Burlington Coat Factory, Men's Wearhouse, Toys "R" Us, a slew of jewelers and dozens of retailers who are accepting layaway payments through this eLayaway site. Stores that began reviving long-dormant layaway programs over the past couple of years are keeping them going, even expanding them.
But why?
It's the economy. The Great Recession may have officially ended a year and a half ago, but consumers are continuing to exercise caution in their spending habits. Growing numbers of people from every imaginable income level are shunning credit-card debt and embracing frugality. And what's a sure-fire way to shop with discipline and make big-ticket purchases without taking on any lingering, crippling debt? Put stuff on layaway.
With layaway, you don't get to take anything home until you're done paying for it. Stores' nominal layaway fees -- often in the $5 range -- appeal to many shoppers more than the potential interest charges and other costs associated with credit-card debt. Basically, you can just plan to pay for your holiday gifts or other purchases over a period of 30 days to 13 months, depending on the retailer. Once you're all paid up, you get your goods.
That said, caution is still needed -- proving that even the most well-intentioned, thrifty and careful consumers can get tripped up and hurt. The Better Business Bureau says it's received hundreds of complaints in the past year from people who lost money when they attempted to put purchases on layaway. To prevent financial heartburn right before the holidays, consider these tips from the BBB and the National Endowment for Financial Education:
--Know what you're getting into. Retailers' layaway policies vary quite a bit. Some require hefty down payments; some don't. Some give you lots of time to pay off your purchase; some don't. (For instance, Sears recently began allowing shoppers to spread their payments out over 12 weeks instead of the usual eight weeks. Good to know!)
--Understand when the deal will disintegrate. The BBB says many consumers complained about diligently making payments on an item for weeks or months, then learning that the item had been sold to another customer. Find out exactly when final payment must be made so you don't get burned.
--Do business with reputable retailers. Other BBB complaints centered on stores that went out of business before customers received their merchandise. To avoid that, enter into layaway agreements with well-known businesses, and remember that making those gradual layaway payments on a credit card could afford you at least some protections. (Unlike cash payments, you can dispute charges if your products never get delivered.)
--Budget, budget, budget. If you're opting to use layaway because money (or credit) is tight, make sure you'll really be able to handle the layaway payments. Consider this scenario from the National Endowment for Financial Education: "If you buy $300 worth of presents for your children, make sure you can commit to paying off $50 each week."
--Find out what fees will apply if you change your mind. Clarify the retailer's layaway cancellation and refund policies. Many consumers who complained to the BBB were shocked when they tried to cancel layaway orders and got hit with restocking fees of 10 percent or more. Others were disappointed to learn that refunds only involved store credit, not cash. So remember: Ask first.
Leave a Comment:
Lay-away is very good for working people, it allows for them to form a holiday plan to work with and a way to make it happen.
Nothing worse than taking the time to go to a retail outlet w/money in hand and not able to purchase an item of interest because they are all in a layaway bin somewhere. With the times that we are going thru the retailer should not have to bear the burden of financing your purchases. If you don't have the money don't buy it, leave iton the shelf for the person who does have the money
Groovy, what decade are we in? Some moron stuck in the seventies must have written that Headline.
That was the point, dummy.
It used to be EVERY reputable store had some type of layaway plan back in the 60's and early 70's. Then most stores started offering charge cards and store accounts. It's been downhill ever since.
I'm glad to see layaway make a come-back. It'll be helpful even if you aren't planning to splurge. This way, at least everything has been paid off by the time you put it under the tree. No having to use your tax return to pay off the gifts.
I am very glad to see layaway making a comeback! This way if you see an item that you want to get someone you can go ahead and get it before it is gone!
me I do even better its called a christmas club ..10 dollors a week and never really miss it.. I started with $5.00 a week for 50 weeks... :)
WeldDem,
Apparently you are so thick-headed you didn't get the irony. Can you dig it?
My brother worked at a Wal-Mart when they first dropped their layaway policy. In his store the change was necessary. People were trying to put things on layaway indefinitely and without having to pay any money except when they felt like it. "Just because I stopped paying? That's so greedy!" was a common complaint there. The people working layaway wondered if any of the customers realized that not only do other customers use it as well, but that the store doesn't have infinite space to store their items.
It seems that maybe that Wal-mart didn't explain the system very well to their customers....
I think layaway is a great thing for people on a budget. As long as the store doesn't lose your things! I had that experience with a certain retailer I won't name (based in Arkansas?). My things were eventually found but not before much stressing on my part.
If one doesn't have the cash to buy something outright (or certain that they can pay off their credit card monthly) layaway is an excellent way of demonstrating financial disclipline and should be respected. There was once a time when people would not buy something unless they actually had the money to pay for it - they wouldn't dare be tempted by credit. Those items that are paid-in-full rather that charged should mean more to those buying the items as well as the recipient if it is a gift being purchased. Nothing wrong with paying as you go.
Actually, a client of mine is doing a lay-away plan for her business, and I designed a flier over a month ago with a retro theme. I think we were ahead of the curve on this one...not stuck in the 70s.
Why not just stick the money in a savings account each week and then go make your purchases in cash? This would save even the nominal layaway fees and possibly earn a little interest.
If you are disciplined enough to make layaway payments, why can't you be disciplined enough to save first, then shop?
Because in 8 or 10 weeks, by the time you have saved for the item, it could be gone! And if it is a good price (a sale item), you may not have been able to plan for that, but layaway allows you to take advantage of the sale price.
I'm even buying a Grasshopper mower on layaway. I don't need it til spring, and they're giving me a huge discount to commit now.
I worked in layaway at a certain dept. store and found it very useful for the consumers. I am glad to see it making a comeback. As for the dept. store misplacing the items, it was an issue before a co-worker and I took over the dept. But after we took over we were able to track and organize things in such a manner that it was no longer an issue. If you have responsible and decent employees it isn't hard to keep things well organized. The consumer does need to keep in mind though that there is usually a very limited amount of space to keep items so some stores bring in containers to store items and it takes a while to retrieve these items.
Shopping around the holidays can be tricky in that the item you are saving for just may not be there when you get around to purchasing it, and some items may be on sale and it locks in the price. Also, many items, if still in layaway when they go on sale, are maked down so you don't lose out by having the item in layaway!
"Why not just stick the money in a savings account each week and then go make your purchases in cash? This would save even the nominal layaway fees and possibly earn a little interest.
If you are disciplined enough to make layaway payments, why can't you be disciplined enough to save first, then shop?"
Shopping around the holidays can be tricky in that the item you are saving for just may not be there when you get around to purchasing it, and some items may be on sale and it locks in the price. Also, many items, if still in layaway when they go on sale, are maked down so you don't lose out by having the item in layaway
Layaway really helps families like us that have 5 kids...I definately think Walmart needs to put their layaway back into effect and just be more strict on payments and pickup...Kmart has layaway and a pretty strict policy...maybe too strict because they dont call or anything before putting it back on shelf...their payment system is a little odd...and you must check your next payment date and minimum payment amount required and pay every two weeks...but...Kmart especially the small ones do not have as much of a choice of items as Walmart and their prices are a bit higher.
Gotta tell ya, love Kmart. In central PA, our Kmart is very often cheaper than Walmart! Friendlier people, too!
It's great that retailers are offering layaway as an option to their customers. I worked in a southern based retail store chain that begins with a B in the late 80's and early 90's. Many of our customers used layaway not only for the holidays but for back to school and birthdays. Many young people learned financial responsibility by using layaway. My wife and I are using it this year for our Christmas gifts because I am a teacher whose pay has been cut 10% this year and we want to be able to purchase gifts for our daughter and family and not pay for them for an entire year. Many people think only low income families use layaway, but we had many affluent members of our community use it in my store because it was much cheaper than paying interest on a store credit card for 90 days. I am ready for more stores to begin offering layaway.
Here's a great website that lists stores offering layaway, along with their terms:
http://www.LayawayPlans.net