Return of Layaway

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Layaway PLan SignWhen I was much younger, I remember going with my parents to department stores like Sear’s and JCPenney (a tradition I would continue with my wife, about a dozen years later) and the one department I never understood was the “layaway department.” When I asked my parents, they didn’t know what it was either because at the time, they paid cash for everything (didn’t have cash? save until you do!). I didn’t learn until many years later that layaway was where you could have the store hold something while you made regular payments, then you could keep it when you fully paid it off. Layaway was tossed into the gutter when credit cards became the norm, but now they’re making a come back.

I think layaway is fantastic. My parents strategy of saving up money before buying something, while prudent, was risky because the item could go out of stock while they were saving. With layaway, you could put a deposit, save money through regular payments, and then be assured the product was yours when you saved up enough money. There are service fees and cancellation fees involved with layaway, so it’s not a free service, but it beats paying 20% interest on a credit card. With the credit crisis and people being saddled with so much credit card debt, I think the return of layaway should be a welcomed thing.

How Does Layaway Work?

Layaway works different at each store but basically you select your items, bring them to the register, and request that they be put on layaway. You often have to put down a deposit (some dollar amount or a percentage of the total) and pay a non-refundable service fee. Layaway isn’t indefinite and isn’t available for all products at a store. They often exclude certain hot items (electronics) or things that are not easily layaway-able (like food, plants). Finally, there is often a time limit on how long you can put things on layaway.

It sounds like a lot of rules but it isn’t, check out Sears’ Layaway policy (it’s only 2 pages):

  • Available products: Sears Full Line, SEars Hardware, Sears Grands, Sears Essential Stores. Must be in-store merchandise.
  • Down payment: $15 or 20%, whichever is greater.
  • Non-refundable service fee: $5, $1 in Maryland ($5 if products greater than $500).
  • Cancellation fee: $10.
  • Deadline: Stores cancel and return all layaways on December 26th.

See? Not too tricky but it’s also not free, I suppose you have to pay for the right to store the item so it’s not entirely unfair.

Have you bought anything on layaway?

(Photo: notramstolimestreet)

{ 7 comments, please add your thoughts now! }

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7 Responses to “Return of Layaway”

  1. Dave says:

    I remember my mom used to do it when I was little. It has always seemed like a silly practice to me – why lay it away, why not just save your money and buy something when you can afford it. I also remember my mom used to do it at smaller “mom and pop” type stores, rather than big department stores like Sears. Perhaps they didn’t take credit cards??

  2. Aman says:

    Layaway can be a great alternative when doing Christmas shopping in advance for a person that is going to be carrying a balance on a credit card normally.

    You do your shopping early, put the items on layaway and slowly pay it off until Christmas comes, that way either the full balance of the item is paid off, OR you have less to charge onto your credit card and there for a smaller interest.

    The only drawback with layaway is that items might be cheaper after you get them OR in the case of electronics, some items like a laptop may just be replaced with a newer model

  3. My Journey says:

    With banks like ING, why does layaway exist? Is it the psychological reliance on a bill every month vs. just putting that same $X into an ING high yield savings account?

  4. My Journey says:

    With banks like ING, why does layaway exist? Is it the psychological reliance on a bill every month vs. just putting that same $X into an ING high yield savings account?

  5. HisMoney says:

    Layaway is a good way for people to ‘save’ without having to use as much willpower. It ends up being a bill to pay instead of money just sitting somewhere asking to be spent. Plus the fees usually are minimal in the grand scheme of things.

  6. financialqueen says:

    I once bought a leather jacket on layaway in high school. I paid my mom $25 each paycheck from my after school job, and she wrote a check for the jacket. After a few months, it was mine. It was a great lesson in delayed gratification, and I remember it well.

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