With money and credit tight, and the prospects of a dismal holiday shopping season looming ahead, more retailers are embracing something that many had once thought was about as hip as a rotary phone: layaway. Sears recently announced it was bringing back layaway after noting that it has worked quite well for Kmart.
Layway is something that has been around since the Great Depression. Customers pick out an item they want to purchase from the store, pay a small down payment fee to have the retailer store the item in their stockroom, or "lay it away" for them, and the customer then makes weekly payments on the item until it is paid off. Once the item is completely paid for, the customer picks up the item from the store. Retailers like layaway because it is a means of racking up sales from consumers who may not otherwise be able to make the purchase, due either to a shorfall in funds or a lack of credit.
For customers, there are some advantages to using layaway versus a credit card: no interest, no late fees, no penalties for missed payments and no dings on a credit report. The downside to layaway: possible "over-shopping", and if the item isn't paid off in the agreed-upon time the store may put the item back on sale, and you could lose any money paid on the item up to that point. Most retailers will return money on items not completely paid for, minus a "re-stocking fee". Be sure to ask about a retailer's layaway policy before paying the down payment or filling out a layaway form.
Layaway isn't something confined to brick-and-mortar retailers, either. Some online retailers also offer layaway, and sites such as eLayaway.com allow consumers to shop at many different retailers and make small payments toward their purchases.
