Last Updated Oct 12, 2011 6:31 PM EDT
Beginning next week, the world's biggest retailer, Walmart will restore its layaway program, which it discontinued in 2006. And starting on Friday, Toys R Us will offer an expanded layaway program. In the past, the store has limited layaway offerings to big-ticket items -- like bikes and swing sets -- but now consumers can place all toys on layaway at a majority of its stores.
For budget-conscious consumers who wish to avoid "debt hangover" after the holidays, layaway can be a practical and lower-cost alternative to using credit cards.
But, of course, layaway is not free. Plans typically charge "service" fees for the plans -- ostensibly for removing items from shelves and holding them for you in a secure place -- and there are also cancellation fees, in case you change your mind.
Here are a few general layaway tips; read on for a list of the stores offering the plans.
- Document, Document! Keep a copy of your contract in a safe place. The contract should describe the item(s), the price and the date you placed the item on layaway. Request receipts showing that you're making timely installments, in case the store loses track.
- Ask About Price Adjustments. Be aware that if the item you've place on layaway goes on sale, you may not be entitled to a price adjustment. In some cases, you may be eligible for one price adjustment within the first week or two. Best to ask the store about its policy -- and get it in writing.
- Not Everything Is Eligible. In some cases, discounted or clearance merchandise cannot be placed on layaway.
- Know Your Store. If you're planning to set up a layaway plan with a smaller retailer that you're not very familiar with, learn more about its reputation before entering into an agreement by checking in with your local Better Business Bureau. Another reason to work with reputable retailers: If the store suddenly goes out of business, you may lose the money you've place toward an item on layaway. Learn about your potential risks in that scenario by speaking with a store manager. If they say it won't be an issue, get it in writing.
- You Can Always Ask. Even if you don't see any signs for layaway options in the store, inquire about it by asking a store manager. The store may not have an official policy, but the manager may be willing to create a flexible payment plan for you if you ask.
Products are limited to toys, electronics and fine jewelry. A 10% down payment is required, as well as a $5 non-refundable service fee and a $10 cancellation fee. Total purchases must total $150 or more and each item must cost at least $15. Walmart's layaway program expires December 16, so you'll need to be pay in full by then.
Sears & Kmart
Since they are under the same ownership, Sears and Kmart offer similar layaway programs. Shoppers can enter an 8-week layaway contract in stores or online. At Sears, purchases of $400 or more are eligible for 12-week in stores only; at Kmart the minimum purchase for a 12-week in-store plan is $300.
Both retailers require a $20 or 20% down payment (whichever is greater) for an 8-week contract, with a $5 service fee and a $15 cancellation fee; the 12-week contract has a $35 or 20% down payment, a $10 service fee and a $25 cancellation fee.
At Best Buy, the typical layaway term is 12 weeks (8 weeks for computer purchases), and customers must place a 25% down payment. There's also a 5% layaway fee at the time of the agreement. Item(s) must total $250 or more. Best Buy's layaway program is only available at select stores across the country. You can find your nearest participating store here.
Toys R Us
The toy giant first launched its layaway program in 2009 and this year is expanding it with more eligible items. Layaway customers must place a deposit of at least 20% of the total price of their order, as well as a $5 non-refundable service fee. Fifty percent of the total price of the order must be paid within 45 days and the total price must be paid within 90 days or by the "Holiday Cutoff," whichever is sooner. The cancellation fee is $10.
Layaway programs at these two off-price retailers run 30 days. Customers must put down a $10 deposit. There is also a $5 cancellation fee. At my local TJ Maxx, items on clearance and household items that may break will not be held on layaway, according to a sales rep. Not all TJ Maxx and Marshalls locations offer layaway, so check with your local store for details.
Burlington Coat Factory
The store has a 60-day layaway policy (90 days for its Baby Depot stores) and requires a 20% immediate deposit, followed by another 20% deposit 14 days later. The final payment is due on the pickup day. There is a $5 non-refundable service fee, as well as $10 cancellation fee.
Hallmark Gold Crown
There are about 3,000 Hallmark Gold Crown stores nationwide. Most are independently owned and operated, but of the 385 stores that are corporate-owned you can expect to find a year-round layaway program. The plan runs for 60 days an requires a 20% down payment on full-priced merchandise only. Seasonal merchandise must be picked up 10 days prior to the holidays. A company rep tells me that their layaway plan is popular with customers who buy the Hallmark Keepsake Ornaments, which come to market starting in July.
Want to put an iPad on layaway? eLayaway.com is a third-party website that can make that happen. Consumers can buy big-ticket items from a virtual "mall" -- which includes merchants such as Apple, Dell and Swarovski -- and put them on hold while they make installments via their checking accounts. There is a one-time transaction fee for retail purchases, ranging from 2 to 4 percent, and a cancellation fee of $25 or 10% (whichever is smaller). The entire fee schedule is here.
Farnoosh Torabi is a personal finance journalist and commentator. She is the author of the new book Psych Yourself Rich, Get the Mindset and Discipline You Need to Build Your Financial Life. Follow her at www.farnoosh.tv and on Twitter/farnoosh
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