Layaway is Back! (Well, in some stores, anyway.)
Back in 2006, the mega-retailer Wal-Mart abolished their layaway program, prompting many to claim the death knell had rung for that type of buy-on-time purchase. Two years later, layaway is looking pretty good, especially to K-Mart which has a new ad campaign promoting their program. Don’t look to Wal-Mart to jump back on this bandwagon; they won’t.
Why would retailers kill layaway? Because they figured out that it was far more lucrative to con you into a store credit card than to hold the merchandise for months while you paid on it. They could charge you monthly interest and late payment fees and overlimit fees and make more money over time on your purchases. And—bonus for them—credit card buyers tend to spend more.
Why would you want to use layaway? Well, some folks can’t get credit cards and can still use layaway to pay over time. Some folks have been burned by credit cards and know what the marketing tricks are so they refuse to use them ever again. Basically, anyone who doesn’t want to add fees and interest to their purchases and/or prefers to (or needs to) pay cash but doesn’t have the total amount on hand can benefit from store layaways, if they can wait to get the merchandise. So would someone who needs to make a gift purchase but needs to keep the item hidden from an overly observant—or curious—spouse or child. (No package to hide and no telling line on the credit card statement.)
In-store layaway is not always easy to find, but some retailers like K-Mart and Burlington Coat Factory still offer it. You can also check with your local Marshalls or T.J.Maxx to see if it is one of the select few that allow it. For online shopping, you can also check out eLayaway and Lay-away.com. (I’ve not tried these sites, so if you have, please let me know about your experience.)
I’ll admit that I’ve not used layaway in some years. Mainly it’s because I have been budgeting for my purchases and don’t need to buy over time. I wait until I have set aside the necessary funds and then I go shopping. If I don’t have money, I don’t shop. It’s a pretty basic equation, but I’m realistic enough to know that when you’re just starting out on getting your financial house in order, layaway may be your lifeline when it comes to large purchases. Sometimes, the money isn’t yet there, but you know it will be. When those times come, layaway is a better option that a credit card.
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