If layaway wasn’t around when I was a kid, Christmases would have been bleak.  My mother was the Queen of Layaway. With four kids, it wasn’t always practical for her to splurge at one time for all of us. Typically, her Christmas layaway shopping started in September, and by Christmas we were a bunch of smiling kids with Barbie dolls, WWF toys,  my chemistry set and typewriter.

Layaway vanished in the 1980s, largely because of the onslaught of consumer credit cards that allowed people to pay now and bring it home now.  “Layaway was popular 30 years ago, before the credit card companies sent out cards to everyone. If you lived in a homeless shelter, you got like seven cards,” says retail consultant Howard Davidowitz, chairman of Davidowitz & Associates. “Once everybody got a card, there was no reason for layaway.”

With many stores finding it hard to entice consumers, a lot have turned to offering layaway as a way to draw in buyers. Last year Walmart announced the return of layaway in time for 2011 holiday shopping season. The world’s biggest retailer joins Sears, Toys R Us, TJ Maxx, and Best Buy in a growing list of stores now offering layaway.

But is layaway a good idea? Not so  says Cornell professor Louis Hyman in a New York Times op-ed. Hyman says the typical shopper would wind up paying less interest by using a credit card, than with layaway. Hyman gives the example of a mom who buys $100 worth of toys on layaway at Wal-Mart. A $10 down payment is required, as is a $5 service fee. “Over the next two months she pays off the rest. In effect, she is paying $5 in interest for a $90 loan for two months: the equivalent of a credit card with a 44 percent annual percentage rate, a level most of us would consider predatory.” Of course that is if you A) Have a credit card B) pay off the balance in full. If you don’t end up paying off the balance, the interest mounts. Layaway can definitely be considered a double edge sword.


If you’re considering layaway this holiday season, the Better Business Bureau offers a few tips:

• How much time do I have to pay off the item?

• When are the payments due?

• How much do I have to put down?

• Are there any storage or service plan fees?

• What happens if I miss a payment? Are there penalties? Does the item return to inventory?

• Can I get a refund or store credit if I no longer want the item after making a few payments?

• What happens if the item goes on sale after I’ve put it on layaway?

Have you ever used layaway? Do you consider it an option?

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