Pros and Cons of Shopping on Layaway

Barbara Harrington

It's an option that lets you do all of your Christmas shopping, without having to pay for it all at once. Layaway allows shoppers to make several small payments for an item, instead of in one big amount.

And it's making a comeback. Layaway was first introduced during the great depression, but now several major retailers like Walmart are offering it again.

There are a few things you should know before deciding if layaway is the best way for you to get presents under the tree.

It's the only way Charlotte Hale says she can spoil her seven grandchildren this Christmas.

Charlotte Hale, resident of Mishawaka, Indiana, explains why she uses the layaway services, “I got preteen granddaughters that are all girly girly now so for them it's clothes. And for the little ones' toys.”

And all of those presents cost a pretty penny.

But Hale isn't paying the big bill right now, she's using the store's layaway plan to make several small payments over the next eight weeks.

Hale explains why people should do it, “If you're not high income to begin with, you need every break you can get and this is convenient you can come over and pay whatever you can pay on it and be done. They start early, it helps them budget their money. There’s things they see now that maybe won't be available later that they can put away."

And more and more people are doing so, for very little additional cost.

Jeff Crabtree, K-Mart Store Manager, describes the type of deals they offer, “We have an eight-week plan and we also have a twelve-week plan. There's a small service fee and then there's a small percentage down of what your purchase is.”

It's an option that brings shoppers a whole lot of Christmas joy -- being able to put presents under the tree without having to shell out a whole lot of cash at once. But it's an option that may not be for everyone.

Dreama Jensen is the Area Director of the Better Business Bureau of Northern Indiana. She says some people are better off using credit cards to pay for items they can't afford up front instead of layaway.

"Some of them will have a service fee, they also if you don't take the merchandise there's a cancellation fee, there's a restocking fee. so you could end up paying more than you would pay if you used a credit card," says Jensen.

So what option's best for you?

Jensen says it's easy to figure out with a little math.

“The questions you need to ask is number one, how much is it going to cost me to put this in layaway. What are my payments going to be and if I don't take the merchandise, will my money be refunded? Will there be a restocking charge," she explains.

Once you do that, make sure you always sign a contract when starting a layaway plan. Then you can pack your cart with presents, without breaking the bank.

Jensen says to be careful if you're using layaway online. Some people set up websites during the holidays that only offer layaway, and then they go out of business right before Christmas. Shoppers never get back their money, or their merchandise, back if that happens.

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