Such is the case this year when Walmart announced their plan to do layaway after many years of not having such a plan. K-Mart, on the other hand, has always had layaway and they are continuing it—year ’round. Sears also has a layaway plan but jewelry and clearance items do not qualify for layaway. Other stores with layaway plans are: TJ Maxx, Marshalls, and Burlington Coat Factory. There are others so if you can’t pay cash for an item, ask a clerk if his store offers layaway.
Layaway works this way. You go to the store. You pick out something you want to buy—a toy, an electronic gadget, or clothing. You pay a small sum down and the store puts away your purchase in a back room. You make small payments weekly or as often as you can. Before you know it, the total sum has been paid, and you can go to the store and claim your purchase. Most layaway programs run on a two-to-three month payment schedule.
Now, a warning. Chuck Schumer, a New York senator, warns that the new layaway programs could cost consumers the same rate of earnings for the stores as sky-high interest rates on credit cards. He is calling on stores to prominently display interest rate equivalents that stores often call “fees” instead of calling them “interest rates.” Schumer says that some layaway fees can equal an 81 percent credit card APR for a $100 purchase. Read the fine print before signing any document relating to your money.
Now that you know the ups and downs of layaway programs, consider using them with your eyes wide open. They may still be the best way to purchase gifts and avoid huge debt following Christmas. If you have poor a poor credit rating, layaway is a great way to build a better credit history. Keeping payments up to date and paying off a layaway will establish a positive credit history.
I was surprised to learn that some airlines offer layaway where you can pay on a trip or a vacation a little at a time until you have paid the entire cost. Their plans work for longer than two or three months, allowing more time to pay for an expensive vacation or trip. Knowing how airlines like to use fees to make money, be especially careful to read the fine print on these offers.
There are even online layaway plans, but I didn’t like what I saw in my research. Some of them withdraw the set amount of payment from your bank account each month. Maybe I like having more control over my money than that, but the idea felt uncomfortable to me.
Whatever you do for your seasonal shopping, just be sure not to overspend. It simply isn’t worth the stress and sometime quarrels that result from the bills that arrive which cannot be paid. Think seriously about using layaway for your purchases.