Layaways plans have been around a long time starting during the depression era. They lost favor during the 80′s when credit cards became king, but in the past few years have become more popular again as retailers are trying encourage spending during the holidays seasons.
Pros and Cons Regarding Layaway Plans
Pros: One of the major pros in regards to layaway plans is that the financial risk regarding money out of pocket if you get to the point in which you cannot complete your plan is much lower than if say you cannot pay your credit card bill. You do not have to worry about interest or penalties and for most plans you simply pay a fixed service and cancellation fee thus minimizing the risk of getting yourself into financial trouble if you cannot pay. You throw in the fact that many retailers are offering no service fee options, and the possibility of layaway angels (people who anonymously paid off random people’s lay away plans), and holiday shopping through the use of layaway plans may be a good option to minimize the financial damage for those who might have a holiday shopping weakness and especially for those who know they are disciplined enough to make their payments on time.
Cons: However, there are some negatives to using layaway plans. For every plan that I researched I found that you will be paying full price for the items you purchase using a layaway plan. Forget about Black Friday sales or holiday specials. These do not apply to you. Also a large percentage of people who use these plans find it easier to justify purchases that they might not make otherwise. In other words, you may find yourself spending money that you don’t need to spend on items you don’t need by getting sucked into the allure of spreading out the spending over time.
Commonalities in Layaway Plans:
Whatever your decision about using layaway plans you should know that the majority of layaway plans have several things in common.
- All stores have product exclusions, and you need to research carefully to plan for what can and cannot be purchased using a layaway plan.
- All stores have exclusions regarding sale prices and specials. Know that odds are you will be paying full price for all of your purchases.
- Some states such as Maryland have very specific guidelines that stores must follow negating the plans listed below. Be sure to familiarize yourself with your state rules and regulations regarding layaway plans.
With that said here is a breakdown of 5 major retailers popular layaway plans.
5 Layaway Plans for 2012
1. Babies “R” Us and Toys “R” Us: In Store Only
Special: Service fee refunded once all payments are made if layaway program before 10/31/2012.
Down Payment and Service Fee:
- 20% of total
- Taxes
- $5 Service Fee
- 3 months or 90 day payment plan
If you cancel or are late paying:
- Product is returned to the shelf
- $10 Cancellation Fee
- $5 Service Fee
- Payments minus cancellation fee and service fee are returned
- Cancellations must be made in person or in writing
- If merchandise is not picked up within 7 days after it is made available the product will be returned to shelf the product will be returned to shelf and the rules for cancellation applies.
- 50% of payment plan must be paid by the 45 day marker of the payment plan or by the holiday cutoff, December 16, 2012 (whichever is sooner). If not, the rules for cancellation applies and the product is returned to the shelf.
2. Best Buy: In Store Only
Down Payment and Service Fee:
- 25% down payment
- 5% non-refundable lay away fee
- Must spend $250 or higher
- Payments every 2 weeks
- There are 6 biweekly or 4 biweekly plans available
If you cancel or are late paying:
- Service Fee is non-refundable
- Item is returned to the store shelves
- Best Buy makes no mention of returning payments made up to this point or of cancellation fees. “If a payment is missed, Best Buy reserves the right ot return the product(s) to store inventory.” So be careful and ask specifically about financial penalties for non payments.
3. Kmart: In Store and Online depending upon payment plan
Special: Service fee refunded once all payments are made if layaway program started from 9/19/12 to 11/17/12.
Down Payment and Service Fee:
- *8 week contract: $5 + $15 or 10% (whichever is greater)
- **12 week contract: $10 + $30 or 10% (whichever is greater)
- Payments due every 2 weeks.
If you cancel or are late paying:
- Service Fee is non-refundable
- You pay a Cancellation Fee: 8 week contract: $10, 12 week contract: $20
- Item is returned to the store shelves
- You will receive a refund of payments made minus the Service and Cancellation Fees.
Pick up items after last payment or schedule pickup.
* Available in store and online.
**12 week contracts are in store only and require that you spend $300 or more. 12 week contracts are not available at all locations.
4. Sears: In Store and Online depending upon payment plan
Special: Service fee is refunded after all payments are made if plan is started from 9/29/2012 to 10/29/2012 and 11/2/2012 and 12/3/2012.
Down Payment and Service Fee:
- 8 week plan: $20 or 20% (whichever is greater) plus a $5 Service Fee
- *12 week plan: $35 or 20% (whichever is greater) plus a $10 Service Fee
- Payment Plans:
- 8 week plan: 4 payments of 25% of balance due after down payment
- **12 week plan: 6 payments of 16.7% of balance due after down payment
If you cancel or are late paying:
- 7 day grace period for late payments
- Service Fee is non-refundable
- You pay a Cancellation Fee
- 8 week contract: $15
- 12 week contract: $25
- Item is returned to the store shelves
- You will receive a refund of payments made minus the Service and Cancellation Fees.
*Purchase must be $400 or greater to qualify for a 12 week plan.
**12 week plans are in store only.
5. Walmart: In Stores Only
Special: Service fee refunded when payments are completed if layaway plan started from 9/16/2012 to 12/14/2012.
Down Payment and Service Fee:
- $10 or 10% down (whichever is greater)
- Open Fee (service fee) – $5
- Purchase Minimums:
- $15 per item
- $50 per purchase
If you cancel or are late paying:
- All items returned to the shelves
- Down payments and payment refunded
- $5 Open Fee not refunded
- No cancellation fee
Are you thinking about using a layaway plan to shop this holiday season? Why or why not?
Kelly Kinkaid
Did you like this post? If so check out these other posts about holiday shopping.
- Black Friday Shopping Tips
- Save Money Holiday Shopping
- Holiday Shopping on a Budget: A Guide for Large Families
- Holiday Shopping Guide: Be Safe, Be Tech Savvy
Image courtesy of imagerydomestic / FreeDigitalPhotos.net
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