Going Shopping? Avoid The Layaway Plan

The shopping season is nigh and the layaway plan is making a comeback. But here’s why you should avoid signing such a contract.

Photo by SanJose.com.

The season of excess is nearly here! For many of us, the holidays mean too much of everything. Too much stress, too much anxiety, too many parties, too many people in the mall, too much food and drink… It seems that the only things in short supply this time of year are time, patience, money, and, at least in my world, pants that still fit past Thanksgiving 😉 .

It used to be that the holiday shopping season didn’t really fire off until Black Friday. However, with analysts predicting only a 2% increase in holiday sales this year over 2007, retailers are sweating and scheming now. While parked in front of the television this evening, I saw at least a couple of ads for holiday sales at popular department stores, and another ad for the newly reinstated layaway program at Kmart.

The Problems With Layaway

1. Fees and more fees.
Layaway. Not a good idea. Why? I understand that nearly everyone is feeling the strain of our weakened economy and that many people want to avoid using their credit cards or maybe don’t have the credit to use. I never really understood the point of paying for holiday gifts until summer vacation, anyway. What I understand even less, however, is paying a fee to have someone hang onto merchandise for you and collect your bi-weekly payments. Layaway might be worthwhile for some people if it were free, but it’s not. There’s a service fee for initiating a contract. Then, if for some reason you need to or want to cancel the layaway contract, you get to pay another fee.

2. Lost discounts.
Another problem with layaway, as I see it, is that you miss out if a sale comes along. According to the details for the layaway program at Kmart, you can only get one price adjustment for an advertised item on layaway, and it must be requested within seven days of initiating the contract. So, if on the 10th day of Christmas you find that your partridge in a pear tree has been marked down by 40%, you’re stuck with your partridge at original price (plus the contract service fee). Sound fair?

3. Blackout dates and confusing terms.
Oh, wait! One more problem: There are blackout dates. Holiday items (Christmas trees, ornaments, gift boxes and the like) placed on layaway must be paid in full and picked up by December 5 to avoid cancellation of the contract and the associated cancellation fee. Electronics over $200 cannot be put on layaway after November 16. No new layaway contracts will be written between December 12 and January 2. After weeding through all of the ins and outs of the layaway program, you’ll be headed for the pain reliever aisle of the store, guaranteed.

Better Alternatives to Layaway

Rather than using a layaway program, wouldn’t it be more prudent to just set the money aside yourself and purchase that stand mixer for mom when you’ve got the cash in hand? It’s unnecessary to be paying fees to a store for the privilege of having them hold on to your merchandise while you pay for it in installments.

Although usually cheaper than using credit, layaway still requires that you pay something extra. You’re paying more in advance of your purchase, rather than later, as in the case when you rack up credit card interest. Either way, you’re spending more money than you need to, and creating much more hassle for yourself in the long run. Besides, by delaying that purchase until you have the funds, you may well get a far better price. As the shopping season plods on, I believe that there’s a good chance that retailers will slash prices even more than in recent years in an attempt to spark a buying frenzy in consumers.

So how about this: use the money you save by skipping layaway to buy yourself a little something special, like a Weight Watchers membership to start after Christmas cookie season has ended. 😉