Layaway Making a Comeback for the Holidays

Last Updated Oct 8, 2010 10:22 AM EDT

Back in the '80s my mom used to put some of our holiday gifts on layaway. Keeping the items at the store until she'd paid them off in full meant avoiding the use of a credit card (and the accompanying debt and interest) and securing a great place to hide presents from the kids. While fewer stores offer layaway these days, the practice has made a small comeback in recent years given the down economy.

Among the chain stores that are offering layaway plans this season are Toys R Us, TJ Maxx and Marshall's. And Sears and Kmart are extending their layaway program this year by four weeks, and including home appliances in the program for the first time. They've actually declared this week to be National Layaway Week to encourage shoppers to get a head start on holiday shopping.

Upscale Stores Offer 'Stealth Layaway'?
It's not just the big-box family retailers offering layaway. A friend of mine recently put an $800 winter coat on layaway at a small upscale boutique in Manhattan. There was no sign or announcement that the shop had a layaway plan, but my friend - desperate to finance this expensive piece of clothing without falling into debt - asked the salesperson if this was something they'd entertain. The store obliged and my friend put down $100 as a security deposit. She figures she'll have all the money in a month, when it'll really be time for a winter coat.

Diamond retailers, jewelry stores and art dealers are also reportedly striking layaway deals with customers. And according to, pawnshops are getting in on the action by offering layaway to cash-strapped consumers.

Layaway Tips: Be Smart

The FTC recommends you always get the layaway agreement in writing. Understand the refund policy, how much time you have to pay for the merchandise and payment due dates. Especially if you're working with a small independent retailer, do a background check on the business to make sure they're in good standing with consumers. You can see if consumers have filed any complaints against the retailer at your local consumer protection agency and Better Business Bureau.

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    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 and on Twitter at @farnoosh.