Layaway 101 for today's shoppers

Layaway 101 for today's shoppers

Shopper Katie Gerber, of Beverly Hills, Fla., tries on a jacket at a clothing and accessories shop, in Cambridge, Mass., Tuesday, Feb. 5, 2008.

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Story Published: Dec 9, 2008 at 7:50 PM PDT

Story Updated: Dec 9, 2008 at 8:06 PM PDT

By Connie Thompson

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Thanks to the return of layaway plans, you can buy what you need without going into debt even if you don't have the cash.

It's not too late to buy on layaway, even this close to Christmas. Just make sure you understand the rules because for many consumers, layaway is a brand-new concept. Here's what you need to know.

More than half a dozen major discount retailers offer layaway plans this holiday season.

You can layaway items at Baby Depot, Burlington Coat Factory, Dress Barn, Kmart, Marshalls, Sears and TJ Maxx.

The early verdict at one Sears store is that bringing back layaway was a smart move. Consumers like it. A typical layaway purchase is said to average $200.
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"It's been good. I think it's really helped," said Deanna Bai, a manager at the Sears in Seattle's SoDo District.

Layaway is being seen as a revival of buying only what you can afford.

Instead of buying no and paying later on plastic with interest, the store holds the item for you and you make a cash deposit. You continue to make payments until the balance is paid off, and then you take the merchandise.

And even this close to Christmas, you can still take advantage of the layaway option.

"The only thing you can't put on layaway is home electronics and appliances," Bai said.

All stores require a down payment, and they all charge a penalty if you change your mind later. Minimum deposits rages from $15 to as much as 25 percent of the total.

Most stores have a $5, non-refundable service fee, as well as a cancellation fee of $5 to $10.

As for refunds, some stores will give cash back. Others will only give you an in-store credit.

Here's something else you should find out: what happens if an item you put on layaway goes down in price before you pay the balance?

Sears, for example, has a 14 day price adjustment so they'll reduce your balance if the price drops within two weeks of your layaway date. Be sure to ask.

You should also know that there are no federal laws governing layaway transactions.

But the Federal Trade Commission says under existing consumer law, retailers must fully disclose all terms of their layaway plans.

For some stores, the layaway option is limited to the Christmas season. Others, including Kmart and TJ Maxx, offer layaway year-round.

More information:

FTC: Offering Layaways

Holiday Shopping, Circa 2008: Tips from the Federal Trade Commission

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