The Real Cost of Layaway

                                                                    

The holiday season is approaching and companies are working frivolously to think of ways to lure customers into stores.  An old sales method that was retired and has been restored is layaway.  This holiday season layaway is offered at several stores such as BestBuy, Sears, Hallmark, Marshall’s and TJMaxx.  Kmart and Toys ‘R’ Us will reduce their layaway fees during the holiday shopping season this year.  Wal-Mart is reducing its fee from $15 to $5 from September 16 to December 14. 

Layaway allows customers to select items they want to buy and pay for them over a period of time. Once the final payment is received, items may be picked up. However, layaway requires a service fee plus additional fees associated with making a layaway purchase such as a cancellation fee.

Some stores charge a 5% service fee for layaway purchases such as BestBuy. While other stores such as Burlington Coat Factory, T.J. Maxx and Marshalls charge a nonrefundable fee of $5.  Some stores markup items that are placed on layaway so you end of paying more for the item than you should.  Those same items will be marked down the day after Christmas. 

If you change your mind and decide you don’t want the item it will cost you.  Cancellation fees can range from $5 to $15 if you decide not to purchase the item(s) plus a nonrefundable fee or service fee which end up costing you a total of $20. Here 13 disadvantages of layaway.

1. Enrollment fee or service fee can range from $5 to 5% of the total purchase price.
2. Downpayments can range from 5 to 10% the total cost of the items.
3. Requires minimum purchase.
4. May have to pay the full cost of items instead of the sale price.
5. If an item goes on sale, you may not eligible to get the items at the new sales price.
6. If you miss a payment, your purchase may be canceled and you may lose any money paid or may be able to get store credit or a gift card.
7. Payments only accepted in person at the store.
8. Only available on certain items.
9. You have a certain amount of time to pay for the purchase usually 2 to 3 months.
10. Spend more in gas costs and mileage going to the store to make payments.
11. You may miss out on other sales such as Black Friday.
12. If the store goes out of business or files bankruptcy you lose your purchase and your money.
13. Online sites may require additional fees.

Layaway is not a reason to spend more money than you should.  Layaway requires you to be responsible shopper.  Don’t go overboard this holiday season because of layaway.  Some shoppers may feel the pressure of the holidays and may see layaway as a good option due to commercials and ease of the programs but don’t ponder the hidden costs. 

Don’t put items on layaway that you can’t afford or are not sure if you will have the money to buy it.  Shop at discount stores such as Ross, Target, Walgreens or Wal-Mart or shop online to find cheaper prices instead of buying items on layaway.  Layaway is a form of debt so remember treat layaway as you would your credit card payment.