Now is good time to begin your Christmas shopping, since it can help you spread out your budget. If you are concerned about spending a lot on gifts this year, one of your gift giving strategies can be to use layaway.
Since the recession, layaway has been making a comeback. Before the financial crisis, many stores had stopped offering layaway; with credit cards there was no need for layaway. However, more stores are offering this alternative, since consumers have been more reluctant to use credit in recent years.
Advantages of Layaway
The biggest advantage of layaway is that you have the chance to pay for your purchases a little bit at a time. It helps your budget, since you can stretch out the payments. As a result, it’s possible to make purchases more affordable — often without paying interest.
Layaway provides a way for you to reserve gifts for your children as well, without waiting. Parents concerned about whether or not their child’s present will be sold out can put it on layaway and reserve it for later. (Of course, if everyone decides to reserve the same popular toys, you might not be able to get what you want.)
You have more time to pay off your purchases, and you don’t have to go into debt. For the most part, as long as you make your payments on time, you don’t have to worry about losing your purchases, and you can save money in interest.
Concerns about Layaway
Even though layaway can work well for many, there are concerns about the process. Every store has its own rules and requirements for layaway, and it’s important that you understand the situation before you sign a layaway agreement. Some of the things to consider include:
- Time requirement: Many layaway programs won’t just let you keep making payments for a long period of time. A significant number of them have a time limit, usually no longer than eight weeks, although some programs are as short as four weeks, and some give you as long 12 weeks.
- Fees: In some cases, layaway programs charge fees. There might be a small program fee charged at the beginning (but usually less than you would pay in interest if you used a credit card).
- Other charges: Make sure you understand the other charges that you might incur as part of the layaway program. If you cancel, you might need to pay a restocking fee, which can be as high as 20% of the purchase price.
- Missed payments: Watch out for missed payments. Read the agreement to find out what happens. In some cases, if you miss a payment, your purchase will be re-stocked, and the fee might be deducted from any refund you are due.
Make sure you find out about the program before you decide to use layaway. This way, you will know what you are getting into. Weigh the pros and cons of the layaway program in question. Make a plan to pay off your purchase within the required time period so that you don’t run into problems.