Layaway
Layaway is back in full force. Wal-Mart, K-Mart, Toys R Us and other large retailers have recently announced that they have brought this service back for the holiday season. Layaway has proved over the years to be a great alternative to paying with plastic. This service offers the customer the ability to make payments over a period of time without accruing interest. Some stores do charge a fee, however it is a flat rate and usually more cost effective than interest payments on a credit card. Follow the tips below to ensure layaway works to your benefit this holiday season.
7 Important Questions to Ask:
- What is the total price of purchase including fees, or charges?
- When is the minimum payment due and how much is it?
- When must the final payment be made?
- Is there a cancellation or refund policy?
- Will the item you are purchasing be set aside so that no one can buy it?
- How much money do I need to put down?
- What is the store’s policy if the item goes on sale after you have put on layaway?
Benefits of Layaway
- Avoid snoopers! The store will hold your purchases therefore you don’t have to worry about your little ones or significant others finding the gifts.
- Eliminate credit card purchases. Many shoppers maximize their credit limits, which has two negative effects. The first one is the items you purchased you will be paying interest on so buying an item on sale really isn’t saving any money once you add on interest charges. The other negative effect is on your credit. Maximizing your credit limit will lower your credit score. You want to try to keep your credit debt ratio at 30% or below to secure a good credit score.
- Beat the crowds. You can shop before payday which means you won’t be doing last minute shopping and will avoid the majority of crowds.
- You have the option to secure items before they run out of stock.
- If you miss a payment to layaway it will not be reported to the credit bureaus.
Disadvantages of Layaway
- Many customers will overbuy since the items are not paid for immediately.
- If the items go on sale you may not be able to get that discounted price.
- Inexpensive items may not be worth putting on layaway after taking into account the fees associated with the service.
- Some fees associated with layaway can get expensive.
- If you cannot complete the payments you may not get your money back. Many stores will instead refund you with a gift card.
