Before You Agree to a Layaway Plan, Read the Fine Print and Ask Questions

  
     
November 08, 2011

Layaway can be a great program for consumers if they are well-versed in both the benefits and detractors of the plan. Don’t let the big stores pull the wool over your eyes. Follow these tips to give great gifts this holiday season while you stay in the black

With the holiday’s fast approaching, we all have our eyes on the perfect gifts to give and be the recipient of this season. Those perfect gifts, though, don’t always come cheap, and while it’s never the goal to overspend during the holidays, it happens to the best of us.

The alternative many experts say consumers will take advantage of this fall? None other than layaway. Though its popularity may have diminished over the last few years, it seems to be seeing a resurgence among many popular holiday-shopping stores including Walmart, Toys R’ Us, Kmart, Hallmark and Sears.

Layaway, for those who have forgotten or simply don’t know, is a program offered by retail stores that allows consumers to put money down on a product months in advance and pay it off in smaller increments. Once payment of that item is complete, the consumer is free to pick it up from the store. Layaway has a rich history with the holiday season, as it is almost solely used in the last few months of the year.

Layaway can be a great program for consumers if they are well-versed in both the benefits and detractors of the plan. Don’t let the big stores pull the wool over your eyes. Follow these tips to give great gifts this holiday season while you stay in the black.

There may not be interest, but that doesn’t mean you aren’t paying extra. It’s true that you don’t pay interest on a product while you make your layaway payments, but there is a program fee of around $5-10, and if you fail to make your payments, there is usually a cancellation or restocking fee. Both of these are almost always non-refundable.

Start now! If you are serious about putting items on layaway this holiday season, it’s never too early to get your shopping started. Most layaway plans allow for 5-12 week payment options. The earlier you start, the smaller your payments will be, and thus easier to pay off.

Be a smart shopper, ASK QUESTIONS. Before you agree to a layaway plan, read the fine print and ask questions like “What happens if this item goes on sale?” “How much money to I have to put down?” “What happens if I miss a payment?” The more you know about your layaway program, the less you will have to worry about as you make your payments.

For more information about holiday scams and layaway plans, check out BBB.org