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The Good, Bad and the Ugly of Stores with Layaway

By (view all posts by psutton)
at 8:57AM Tuesday October 25, 2011
under Shop Smarter

Layaway reminds me of when I was a kid in the 70s.  Everyone seemed to be using layaway back then and our economy was in the dumps. Sounds like the situation our country is in right now. Layaway is very appealing when credit is hard to come by and the idea of more debt is depressing. I went on a little search to see the pluses and minus of layaway. 
Using layaway is ideal for someone who doesn't have a credit card. You get to make payments for 8 weeks.  That would be about the same as taking two months to pay your credit card for holiday purchases, and the fee of $5 to $10 for layaway is similar to the interest amount on your credit card. It's also often harder to save the same amount of money in those two months than to pay a little each week or two at the store.  Knowing that you'll lose the fee and you'll be charged an additional cancellation fee is another big motivator to pay off your layaway. 

So why would someone with a credit card want to use layaway?  No debt! January's credit card statement can be painful to look at.  The panic of how do I find the right gift for Aunt Suzy in December gets turned into the panic of how am I going to pay for that gift for Aunt Suzy in January--and sometimes February, March and April.  Heck, some people are still paying off their credit card charges from last Christmas.  Stores will also take credit cards as a form of payment, but don't get trapped with double fees from the layaway plan and the interest on the credit card.

Here is one of my favorite reasons to use layaway: free storage!  I have lived in small places in the past, and those bags and bags of gifts were not well hidden.  Once I had children, finding good hiding places was even harder.  Kmart has an 8 week layaway contract, so if it's scheduled right you can pick up your gifts just before you are ready to wrap.  This wouldn't work as well with Walmart, because you have to pick up by Dec. 16.  You also won't have as long to pay it off at Walmart if you are just starting.

Shopping early and avoiding the last minute Christmas crowds is reason enough for some to use layaway. Think back to Christmas past.  I remember angry moments in the parking lot after someone stole my parking spot after waiting for it, never ending lines at checkout and always being sure I picked the wrong line (I get that feeling all the time Christmas or not).  How about digging through what seems like hundreds of Zuzu pets to find the pink one that your child pointed out to you a few weeks ago only to find that it's sold out.  I don't want to make the holidays sound horrible, but shopping early really does have its pluses!

Here's the lowdown on what's not so great about layaway:  You have to pay a fee just to participate.  That's $5 to $10 you could spend on something else which goes to the store and never gets put toward your purchase.  You may miss the best deals.  Door buster prices won't apply once your items are on layaway.  If  you are not able to make your payments in the 8 weeks (with a 7 day leeway at most stores) you'll have a cancellation fee of about $15 on top of the $5 to $10 you already gave the store. Many stores have a minimum purchase amount,  At Walmart each item has to be at least $15--so stocking stuffers will have to be bought separately--and your total purchase must be at least $50.

Layaway can be a great tool to get through the holidays smoothly. You'll enter the New Year with a lighter load.

Happy Shopping!