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What Are Layaway Plans?

Holiday Savings Tip: Pay With Layaway Plans Instead of Credit Cards

Do you feel sick when you look at your credit card bills after the holidays? What you probably need to start doing is paying for your holiday shopping with a layaway plan instead of charging your credit cards. It seems many retailers are bringing back layaway plans, a type of payment that was popular during the Great Depression.

These plans basically let customers pay in several installments while the retailer holds the items for them. You don't need to pay any interest on the installments and you'll only receive the item once you have paid in full. Here's what to expect when you opt for this type of payment:

  • There is a small initiation fee that ranges from $5 to $10.
  • There usually is a minimum amount you need to spend. For example, to be eligible for Wal-Mart's plan, you have to spend a minimum of $50 and each item has to cost above $15.
  • You have a certain amount of time to complete the payment. Eight weeks is typical, but some go for up to 12 weeks.
  • If you're unable to complete the payments by the due date, you'll have to pay a cancellation fee of around $10 to $15. You won't get the products, but you'll get your money back.

Here are some stores that are currently offering this type of payment:

  • Wal-Mart: Starts Oct. 17 ends Dec. 17.
  • Kmart: Available all year round online and in-store with your choice of eight-week or 12-week programs.
  • Sears: Available all year round online and in-store with your choice of eight-week or 12-week programs.
  • Toys R Us: Offered in-store only and for the holidays. Payment must be completed in 12 weeks.
  • Best Buy: Layaway is only available at select stores and items must total over $250.

The biggest benefit to a layaway plan is that you're not spending the money you don't have. Further, the fees are far less than your credit card balances and interest that will start adding up before you know it. Better yet, save up on your own for the gifts you want and buy them when you have the money. You can also skip the store-bought goods to create handmade gifts that will touch your loved ones and save you cash at the same time.

Image Source: Thinkstock
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