The Best Holiday Layaway Plans

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Lots of things get reused for the holiday season. Some people regift and some give the same presents year after year. But this year there’s one thing getting a second chance that’s definitely more exciting than opening another pair of slippers: Layaway.

While the concept of paying by installment has never been fashionable—even discount stores like Wal-Mart (STOCK QUOTE: WMT) and Target (STOCK QUOTE: TGT) dropped the practice in 2006—a recession-fueled fear of spending has made layaway a popular choice for purchases this season.

“There are really only three major stores who have layaway, Kmart (STOCK QUOTE: SHLD), TJ Maxx (STOCK QUOTE: TJX) and Burlington Coat Factory,” says Ellen Davis, Vice-President of the National Retail Federation. “Those retailers have been saying that stores have been busier than normal. It goes to figure that in an economy like this, layaway is a very good option.” Indeed, Burlington Coat Factory has reported a 2.5% spike in layaway sales. But this hasn’t convinced other stores to reinstate their programs, says Davis.

“Layaway, like other programs, is a service that retailers evaluate on a case-by-case basis,” says Davis. “It doesn’t make sense for every retailer, and over the last 10 years most have gotten rid of it. Layaway costs the store quite a bit of money and it requires dedicated space and at least one staff person, so what many retailers determined over the last 10 or 15 years was that their best customers didn’t use layaway and were indifferent to having it. For many retailers, layaway was not relevant.

And while layaway isn’t the best option for every store, it also might not be right for every consumer.

“Layaway can be tricky, you have to follow the rules set down by the store,” says Suzanne O’Connor, proprietor of the Web site BargainsLA.com. “You risk losing your deposit, product and monies paid of you don't adhere to their rules. If you're disciplined, layaway can be a terrific tool.”

She continues, “Mostly people need to be disciplined and realistic in their purchasing habits. Most items that we don't have the money for are usually unnecessary. You don't have to buy that SubZero [refrigerator]. A lower priced Maytag or Whirlpool (STOCK QUOTE: WHR) would probably do the job just as well.”

While O’Connor recommends trying alternative methods this season—including shopping sales and secondhand stores—Davis says that, if used wisely, layaway can make shopping easier and more manageable.

“What we're expecting is that products will be on sale on season,” says Davis. “If you make all of your purchases at one time, you won’t get the best deal.”

Indeed, shoppers who take the entire season to scour shelves for deals will probably make out better than anyone else, but who has the kind of time? Layaway allows shoppers to decide what they want to spend and on what items, leaving them better prepared despite missing out on any last-minute deals.


“They would rather pay more as a whole than to go out every weekend to find out what’s on sale,” says Davis. “People using layaway are able to know right off the bat how much they’re spending and can budget for it accordingly before the holidays.”

And going into January without any gift-giving debt just might be the greatest present you could give yourself this season.

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