Is Layaway Shopping Right for You?
Layaway is more popular than ever for keeping holiday spending in check. Nearly a third of us regret overspending during the holidays, and 11 percent of Americans admit they go into debt trying to buy all the presents and trappings. Reasons for using layaway include budget restraints, an aversion to debt, and a desire to keep credit card use under control.
Popular during the Great Depression, layaway programs were marginalized as credit cards gained in popularity. They’ve been revived since the recession of the 2007-2009 and some retailers, such as Kmart and Walmart, are waiving initial fees. Layaway can be a great way to save on holiday gifts, but policies vary and you need to read the fine print.
How does layaway work?
Layaway works the opposite of a credit card: you pay in installments up front, rather than after purchase. While there are usually deposits and service charges, they are small in contrast to the interest you pay on a credit card.
Can you use discounts and coupons for layaway?
You may be able to use coupons and online coupon codes off the total price of the merchandise. This is not always true, so always ask the individual store whether you can use coupons for layaway, and be ready to present them before you sign up.
Online layaway options
You can do it online at Kmart, Walmart, GameStop, Sears, Toys R Us/Babies R Us and others. eLayaway, a third-party service, works with about 50 different retailers. Payment is made at intervals, usually every one or two weeks until a designated date at most stores. It is important to check the pay-off dates, as they vary. Some retailers allow you to sign up for text reminders when it’s time to make a payment.
Minimum purchases and deposits
There is often a minimum purchase price to qualify, a minimum deposit, or both. At Walmart, it’s $10 for a total purchase bill of $50 or more. GameStop requires a $25 minimum deposit.
What to ask before you use layaway
- Find out whether the initial fee can be refunded at the end of the layaway.
- Be sure to ask about price adjustments. These vary not only between retailers but store by store.
- Some stores charge a cancellation or re-stocking fee if payments are not received on-time.
- Some products are not eligible for layaway. These usually include flammable products, tobacco, food and plants.
If you are budget-conscious or credit-shy, layaway might be the right choice for you this holiday season. During the rest of the year, it can also be a great way to teach kids to delay gratification and be responsible credit users. If you start now, it’s not too late to start a holiday layaway program and give your budget some breathing room in the New Year.
Click these links to learn more about each retailer’s layaway policies: