Stores Once Again Pushing Layaway Plans - KALB-TV News Channel 5 & CBS 2

Stores Once Again Pushing Layaway Plans

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(LowCards.com) - Retailers are again promoting layaway plans in order to bring in holiday shoppers and encourage additional spending. Merchants are cutting service fees, adding more popular items, extending the layaway period, and even shipping the layaway items to your home.

Layaway allows a shopper to reserve an item and make interest-free payments toward the purchase of that item. The consumer receives the product when it is paid off.

Layaway programs began during the Great Depression, but were all but eliminated with the advent of credit cards. But they made a comeback a few years ago after the economic downturn. Kmart resurrected layaway in 2008 and other retailers followed.

"Layaway can be an option to survive Christmas shopping without going into credit card debt and paying high interest payments," says Bill Hardekopf of LowCards.com. "But consumers have to guard against impulse buys even on layaway purchases. You need to determine if you can make all the payments before the deadline. Don't use layaway if you can pay in cash."


Layaway Fees
Layaway is not free, but retailer competition is forcing service fees to be decreased or even eliminated. Toys R Us waived its $5 service fee on layaway orders made by Oct. 31. Walmart lowered its service fee from $15 to $5, but you can get this back as a gift card after your final payment. Sears is dropping the service fee--$5 for an eight-week contract and $10 for a 12-week contract--for orders placed through Oct. 29 and from Nov. 2 to Dec. 3. Kmart's fee is similar to Sears' and it is being waived through Nov. 15.


Concerns about Layaway Plans
Layaway plans aren't specifically regulated by federal law, so consumers need to get the layaway terms of the store in writing before purchasing an item. Know all of the details and conditions of the plan. Know when you have to pay off the item and the dates that each payment is due. Ask what happens if you are late or miss a payment, or if you no longer want the item after making a few payments. Know what occurs if the item goes on sale after you've started the layaway plan. Be familiar with the refund and exchange policies for an item on that specific layaway plan.


Examples of Layaway Terms
* Toys R Us requires a deposit of at least 20 percent of the total price of your order plus all applicable taxes. 50 percent of the total price of your order must be paid within 45 days and the total price of your order must be paid within ninety days or by the "Holiday Cutoff", whichever is sooner. Your contract will be automatically cancelled and ordered merchandise will be returned to stock if you have not made payment of 50 percent of the total price of your order within 45 days or your balance is not paid in full within ninety days.

* Sears layaway is available on purchases made Sept. 29 through Oct. 29 or Nov. 2 through Dec. 3. It requires a down payment and biweekly payments. Four payments of balance due are required after down payment for an eight-week contract and six payments of balance due are required for a twelve-week contract. All fees are nonrefundable.

* Walmart requires a $10 or 10 percent down payment. The minimum total purchase must be over $50 and individual items must be $15 or more. Layaway is available through Dec. 14 and final payment and pick up must be made by that date. If your account is cancelled, the items will be returned to inventory and a $15 fee will not be refunded.

* Best Buy layaway is available year-round with a 25 percent initial down payment plus a 5 percent non-refundable layaway fee. The items must total $250 or more. Consumers must make a payment every two weeks until your balance is paid in full.

* Target does not offer Layaway.

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