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Call Kurtis: What Shoppers Need to Know About Layaway

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?

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