Here we are again – the holidays are rapidly approaching and many families are wondering just how they will afford it. If you purchased last years Christmas on credit cards, chances are… you are still paying for it. Learning to live within our means is not something that is easily grasped or integrated these days. However, with so many unemployed, we should quickly realize that you CANNOT guarantee your financial state in 6 monthes, 1 year or longer. If you can’t quickly save and afford to pay cash for something, the lesson seems obvious – you can’t afford it. Learning to pay cash and live on LESS than what we make should be a goal for all…yet, any trip to a shopping mall quickly lets us know that there are still one too many ‘swipers’ that don’t even look at price tags and consider budgets.
Layaway nearly vanished before the recession, as credit card use grew in prominence. Stores preferred that we swipe away, because it was much easier than handling all the paperwork. But with consumers leery of facing holiday debt – and threatening to spend less this year in stores – many retailers have brought back layaway plans as a means of luring us back.
Best Buy
Bring your item(s) to Customer Service at a participating Best Buy® store and make a 25% initial down payment, plus a 5% nonrefundable layaway fee. Item(s) must total $250 or more. Products may be placed on layaway for no longer than twelve (12) consecutive weeks (8 weeks on all computers), and require a 25% down payment, plus 5% layaway fee of the total product sales price at the time of layaway plan agreement.
Kmart
Service Fee is $5 for all new layaway contracts.
Cancellation Fee is $15 for all new layaway contracts.
Down Payment is $20 or 10% (whichever is greater) and is collected when merchandise is put on layaway.
4 Easy Payments of balance due are required after down payment for an 8-week layaway contract. Layaway contracts are 8 weeks. For purchases of $300 or more, a 12-week option is available in-store (and there is a $10 service fee) which must be paid in 6 payments.
Sears (very similar to Kmart)
Service Fee is $5 for all new layaway contracts.
Cancellation Fee is $15 for all new layaway contracts.
Down Payment is $20 or 20% (whichever is greater) and is collected when merchandise is put on layaway.
4 Easy Payments of balance due are required after down payment for an 8-week layaway contract. For purchases of $400 or more, a 12 week option is available (and there is a $10 service fee) which must be paid in 6 payments.
TJ Maxx, Marshalls & AJ Wright
TJ Maxx, Marshalls and AJ Wright are owned by TJX Cos. and offer layaway but not in all locations. At TJ Maxx, a 10 percent down payment is required, and some items are excluded (such as jewelry and clearance items). There is a nonrefundable service fee ($5.00) in most cases and the term is 30 days. At Marshalls, the layaway plan is also 10 percent down, $5 fee and 30 days.
ToysRus (BabiesRus)
A deposit of at least 20% of the total price of your order plus all applicable taxes, a $5 service fee and shipping charges are due when the merchandise is put into layaway. You may make additional payments at any time, but 50% of the total price of your order must be paid within 45 days and the total price of your order must be paid within three (3) months or ninety (90) days or by the “Holiday Cutoff” whichever is sooner.
Walmart
You will need to have a minimum purchase of $50 and each item will need to be priced at $15 or more. There will be a $5 layaway fee, you will need to pay 10% down and complete their payment schedule. You will be required to pick up your layaway no later than December 16, 2011; or pay a $10 cancellation fee. Walmart still offers layaway on their fine jewelry year round.
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While this all sounds well and good, there are problems related to such programs. Here are a few “Do’s” and “Don’ts” you should consider before making the leap!
The DO’s of Layaway Plans:
Do Dissect the Fine Print
You’ll have to sign a contract or layaway initiation form, which naturally contains a lot of vital information you could easily overlook. Don’t let a long line or impatient clerk rush you through checking each detail so you know what to expect.
Do Consider Whether it’s Worth the Origination Fee
There’s a fair amount of paperwork, processing and labor involved in layaway plans, so stores charge a start-up fee for each order. Consider if the amount of that charge is worthwhile compared to the overall total of your purchase.
Do Decide if You Really Need This Item
Should something happen and you decide not to go through with all payments, you’ll likely have to pay a fee of roughly 25 to 30 percent of the total price of the layaway plan. That’s a hefty fine for changing your mind, so make sure you really want the item before placing it on layaway. It’s not free money, it’s not a credit card purchase. If you wouldn’t pay cash immediately for the item, you shouldn’t place it on layaway just because you don’t have to pay for it now.
The DON’Ts of Layaway Plans
Don’t Ignore the Internet
Don’t let a sale combined with a layaway plan talk you into buying before researching your options. You’ll often find better deals online and it’s a lot easier to comparison shop with your mouse. With so many Daily Deal Sites, you can very easily save up to 90% over Retail prices. Use a Cash Back Site like EBATES to Search for Coupon Codes to use toward your coveted item, get CASH BACK on your online purchase through them, and then compare the final cost of the online purchase to what you’d ultimately pay by putting it on layaway.
Don’t Neglect Your Expiration Date
There’s a limit to how long Walmart will store your stuff. As with other stores, they want to move it before Christmas, so check to ensure you have enough time and cash to pay the entire debt off on time or you’ll forfeit everything you’ve already paid. Mark that date on your calendar and make sure you make all payments before it hits.
Don’t Forget About Automatic Withdrawals
Some merchants prefer to set-up automatic checking-account deductions, ostensibly to save you the hassle of coming in to make each payment. In actuality, it’s just another way to make sure they get their money. Should one of those payments bounce, however, you’ll be socked with a healthy overdraft fee from both the merchant and your bank. Once again, mark on your calendar the date each deduction will be made, so you can double check the balance in your account.
Don’t Layway When You Can Pay
It’s hard to part with cash during the holidays, when other expenses build up, but the fees you incur with a layaway plan aren’t always worth it if you can pay cash now and avoid the hassle.
Would you rather put holiday spending on your credit card or pay for it through a layaway program? Many Americans are opting for the latter, helping retrench these time-honored payment plans. You spend at least 50% more when you use a credit card and you’ll most likely still be paying for this years Christmas NEXT YEAR. The cycle of debt can be quite viscious and future incomes these days are not exactly quaranteed regardless of your industry – using a credit card is ASSUMING that you will have that future income…what will you do if you don’t ?
So, what are your thoughts? Will you be utilizing a layaway plan at your favorite store? Credit Cards? Cash ?
Post published by Melissa Roach, Co-Authored & Edited by our Founder, Wendy Little.
Melissa is a Full Time Mom & Blogger HERE (please check out her blog!)
Thanks to Andrea Woroch, who is a consumer and money-saving expert for Kinoli Inc. for help with the Layaway Do’s & Dont’s portion of this post!
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