Monday, Nov. 09, 2009

Layaway plans: Stores go old school to help shoppers stay on budget

Remember when mom would put your holiday gifts on layaway? That way she could spread out payments while also making sure she got the items she wanted before they sold out.

Well, mom was ahead of her time - again. Stores - brick and mortar and online - are increasingly offering helpful layaway plans as a way to keep shoppers coming in, even if it's on their own payment terms.

What is layaway anyway? You pick an item, or a list of items, at a store with a layaway plan, leave a down payment (such as 10 percent of the total cost) and then make steady payments for several weeks or up to a year until your purchase is paid off.

Check out: Sears, K-Mart and Burlington Coat factory. Online, visit ELayaway.com, Lay-Away.com and LayAway-Travel.com

The upside: You can spread payments over time. More importantly, your layaway items stay in stock until you're paid off, ensuring you get exactly what you wanted. It's also a great strategy for making sure you get the hot items that may sell out shortly before the holidays, like the newest Tickle Me Elmo or Hannah Montana doll.

Here are some things ShopSmart Magazine recommends watching out for:

Hidden fees: They can range from $5 to $150. Most layaway plans also charge a cancellation fee and some charge service fees of $5 or a small percentage of the merchandise total. Make sure you know about all fees before you sign-up.

Price adjustments: Check whether the store honors price adjustments should one or more of your items go on sale during the layaway period. Often, the adjustment period is limited to a couple of weeks or less.

Choose your store carefully: Like gift cards, layaway payments could become useless if a store goes out of business.

Here is one more tip: Check local mom-and-pop stores, such as clothing, jewelry, consignment and second-hand. These stores may offer their own layaway plans with less fees.