Layaway—the way to purchase big ticket items in weekly or monthly installments before taking possession of the merchandise—is making a quick comeback at U.S. retailers in advance of the 2008 holiday season.
As creditors reign in credit limits and consumers become less inclined to go into more debt, layaway may be an ideal solution for retailers and shoppers alike.
How Layaway Works
When you buy something on lay away, you pick it out at the store and “lay it away” until you have paid for it. Say you want to buy a new TV before Christmas that costs $800, but you only have $200 to spend this week.
You pick out the TV you want, put down a $200 deposit, and the store sets it aside for you. Then, either you send regular payments each week or month until you have paid for the TV, and you go pick it up.
Layaway is the same as saving up for the item you want—only with the guarantee that an item on store shelves now will still be there for you come Christmas. It’s a bit of instant gratification now (because you can shop now), without the debt hangover and associated interest payments.
Where to Layaway
What Layaway Costs
Typically, layaway is much more affordable than using credit to purchase a big ticket item—especially if you plan to pay for your purchase over many months.
KMart charges a flat $5 layaway fee, and there is a $10 fee if you cancel ($15 or 10% of the item price is collected as a down payment; if you pay for the item the $10 cancellation fee is applied to the purchase price.) eLayaway charges a 1.9% transaction fee, or $1.90 per $100 purchased, and has a $25 cancellation fee.
Have you used layaway? Would you use it if it became widely offered again?