[Kiplinger] Layaway Is Back

I know it seems a little early to start thinking about holiday shopping, but several retailers are offering layaway programs to help customers buy items they want without racking up debt. In fact, Walmart announced September 8 that it will start offering layaway October 17 for toys and electronics "to help families deliver a big Christmas." It's been five years since Walmart last offered layaway, says consumer expert Andrea Woroch.

This installment-payment method was popular before the widespread use of credit cards but made a resurgence in 2008 during the recession. However, marketing experts didn't expect layaway to remain a long-term trend because it's an expensive program for stores to administer. It allows customers to select items they want and pay for them over a period of time. Once final payments are made, items may be picked up.

The difference between using a layaway program and a credit card (which can let you stretch payments out over a period of time) is that interest doesn't accrue on layaway items. However, you must pay a nominal service fee and a deposit at the time of purchase. Plus, stores usually charge a cancellation fee if you decide you don't want the item.

Here's a roundup of retailers offering layaway this year:

Walmart
Layaway period: October 17 to December 16
Down payment: 10%
Pay schedule: Pay in full by December 16
Fees: $5 service fee; $10 cancellation fee
Note: Layaway is available in stores only for toys and electronics. Each item must be $15 or more, and the total purchase must be $50 or more. Layaway is not offered Black Friday, November 25.

Kmart
Layaway period: 8 weeks; 12 weeks for purchases of $300 or more
Down payment: $20 or 10% (whichever is greater)
Pay schedule: Biweekly
Fees: $5 service fee ($10 for the 12-week plan); $15 cancellation fee
Note: You can make payments online or in stores. There is a 7-day grace per! iod for payment. Layaway is not available in all stores. Online purchases available for layaway are identified as such.

Sears
Layaway period: 8 weeks; 12 weeks for in-store purchases of $400 or more
Down payment: $20 or 20% (whichever is greater)
Pay schedule: Biweekly
Fees: $5 service fee ($10 for the 12-week plan); $15 cancellation fee
Note: You can make payments online or in stores. There is a 7-day grace period for payment. Layaway is not available in all stores. Online purchases available for layaway are identified as such.

Toys "R" Us/Babies "R" Us
Layaway period: 3 months
Down payment: 20%
Pay schedule: 50% paid within 45 days; paid in full in 3 months
Fees: $10 service fee; $5 cancellation fee
Note: Layaway is offered in stores only and for select items. See a list of items available for layaway.

T.J. Maxx/Marshalls
Layaway period: 30 days
Down payment: 10%
Pay schedule: Layaways must be picked up and paid in full within 30 days
Fees: $5 cancellation fee
Note: Jewelry and clearance items are not eligible for layaway. Other restrictions may apply -- customers should call their local store for details.

Burlington Coat Factory
Layaway period: 60 days (90 days for Baby Depot items)
Down payment: 20%
Pay schedule: 20% additional payment due in 14 days; paid in full in 60 (or 90) days
Fees: $5 service fee; $10 cancellation fee

Web sites such as eLayaway.com and Lay-Away.com also offer layaway programs for a variety of merchants. Another way to avoid racking up credit card debt to make holiday purchases is to make a list of items you want to buy, set a budget and start saving soon. Look for my Kip Tip in the coming weeks on how to save $1,000 by the holidays.

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