Layaway started creeping back in stores about three years ago, and now it’s back in full force. But is it the right way to pay for your holiday gifts?

It’s an old concept; pick out gifts now, make payments, then pick them up when they’re paid in full.

“Other stores are starting to do it now and I think it’s a wonderful thing for the people,” says shopper Joe Matthews.

Matthews remembers layaway from back in the 1960s when he worked at a department store.

“You see what you want, you can hold it for yourself,” says Matthews.

Stores such as Sears, K-Mart, Walmart and Toys “R” Us are reviving the decades-old concept and trying to help consumers beat back the recession.

You pay an up-front fee that is usually $5, along with a down payment. You make periodic payments and when the items are paid off, you get to take them home. But if you cancel, there may be another fee.

“You know that you’re buying what you need and not overextending yourself,” says a New Jersey shopper, putting bikes on layaway for his children.

But U.S. Sen. Charles Schumer is critical of the programs, calling on retailers to be more clear about their fees.

“These programs end up costing consumers far more than credit cards with the highest interest rates, and in many cases, actually exceed state interest rate caps,” says Schumer.

“I think the stores probably are very up front,” says financial specialist Rosanna Venturini of Clearpoint Credit Counseling Solutions.

Venturini thinks layaway might be right for some, “For folks who don’t have available credit, or they have credit and they don’t want to incur more debt, it’s a really good option.”

With three kids, Kathryn Mansfield says she plans to spend up to $500 this Christmas.

“It’s very expensive,” says Mansfield.

But rather than piling it onto her credit cards, or using layaway, she has another alternative.

“I just try and hit sales throughout the year,” she says.

Shoppers considering layaway should read the store’s entire policy. Layaway may only be offered for certain types of products. You should also ask what happens if the item goes on sale; do you pay that discount price, or are you stuck with the original price?

Comments (5)
  1. Harriet Snodgrass says:

    We didn’t have assinine stories like this in the 50s and 60s–people were assumed to be smart enough to know what they were doing. Now, with TV stations always looking for sensasionalism and paranoia, and politicians going for the Nanny-state too-dumb-for-their-own-good vote, like Shulmer, we get this garbage.

  2. D says:

    I’d like to know where this politician got his information. I’ve used lay-away, when it was available, for years and I have never seen a lay-away plan that charges interest. The $5 fee is well worth the convinence for me. I had one kid that would tear the house apart looking for presents. I would leave them on lay-away until the last possible day. I love lay-away, I think it’s a great deal.

  3. jjvv says:

    This is not new to KMart, they never stopped layaway, and they are pretty much up front about their fees. There is a cancellation fee which is kinda like a restocking fee, but you don’t pay it if you pay the entire layaway off. I was a single mother with four kids (now all grown) and I used it not only for them during any holidays, but for other things like household stuff as I wanted or needed throughout the year. Sears started layaway when they joined kmart. Walmart has too many restrictions. Burlington charges a fee, and if you return any item, you only get it on a gift card, which they are up front about that. However, as I been using it for years & I also have credit cards, they do not compare as far as rates go.

  4. Dr. Blodgett says:

    I’m a child of the 50’s, I’ve used lay away numerous times in many various stores, and I’ve never even heard of a store that charged interest on lay aways until now. What’s up with that? Which stores do that? I’m kinda wondering if the Senator knows what he’s talking about, or is just releasing hot air, which seems to occur all too often with those who think they are higher ups in Senate. Or any other ‘important’ government agency, for that matter.

  5. sassafras says:

    Back in the good old days we did not have credit cards everyone we knew used layaway as money was scarce for young families. Five dollars for the privilege is worth every penny. I do not think ya got credit if items you had in layaway went on sale (don’t remember)that is the chance ya take. Perhaps Senator Charles Schumer is in cahoots with the credit card companies, think of the money they will lose if everyone used the layaway plan the credit card companies get away “legally”with outrageous fees, he should be addressing that and not going after stores that have layaway plans.

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