While many people frown at the idea of stores decorated for Christmas in September, smart consumers will be getting an early start to their shopping season with a layaway plan. The layaway concept dates to the Great Depression prior to World War II, when merchants gave people a chance to buy items they otherwise could not afford. It also ensured those hard-to-find items would actually be available when the customer was able to pay in full. The popularity of layaway waned as consumers turned to credit cards, but it has made a comeback with Americans trying to reduce credit card debt.
Sears and K-Mart offer year round layaway, while the world’s largest retailer, Walmart, will initiate their holiday program on September 16. Walmart has upped the ante on consumer spending for the holidays by offering the layaway option a month earlier than the traditional shopping season. In addition to toys and electronics, Walmart will allow customers to put home appliances and sporting goods on layaway this year.
“Last year, millions of Americans relied on layaway at Walmart to provide a great Christmas for their families,” said Duncan Mac Naughton, chief merchandising and marketing officer, Walmart U.S., in a written statement. Putting items on layaway will require a 10% down payment or $10, whichever is greater and a service fee of $5 that will be refunded in the form of a store gift card when the merchandise is paid in full.
Toys ‘R’ Us Inc. said it was eliminating the upfront service fee for layaway orders created in-store from Sept. 4 through Oct. 31. After Oct. 31, a $5 service fee will apply.
The Advantages of Layaway
Layaway allows you to buy the things you need without spending money you don’t have by spreading out the payments without adding more charges to a credit card. The interest you’d pay over the course of 8 weeks if you paid with plastic is generally comparable (or more) than the cost of paying cash payments on layaway. And for hard to find or popular items, you’ll have the best selection of merchandise by shopping early.
Each merchant has their own specific policies; while each state may also have legal limitations for layaway programs. And as attractive as layaway may be for people on a fixed budget, before buying on layaway there are some rules to consider.
- Consider the price of the merchandise you’re considering putting into layaway; if another retailer offers the same item at a deep discount price, layaway will cost more. You sacrifice the flexibility for the convenience of a payment plan, but that may be a deal you’re willing to make.
- Miss a payment and the layaway will be canceled. You’ll get your money back but will typically forfeit the service charge and any applicable cancellation fee.
Read the terms to fully understand the minimum required payment, how long you have to pay, when payments are due and service fees.Other major retailers offering layaway this year include Best Buy, Hallmark, Burlington Coat Factory, Marshall’s, TJ Maxx and Sears. Many also provide the service for online purchases, as well. Keep in mind that the store has your money and merchandise until you make the final payment.
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