Layaway for Christmas How Does it Work?

Layaway for Christmas Popular AgainIn the last few years, stores had stopped offering layaway for Christmas. It required a whole team of people to keep the records straight; lots of room in the warehouse where the items had to be safely stored until the person picked them up; extra work for tagging the items and overtime the last two weeks before Christmas. They phased Layaway out because it was not profitable. The stores only made a small fee that was charged on each item which did not even pay the overtime salaries necessary to keep the program running during the rush season.

Everyone who hasn’t lived in a cave for the last thirty years knows what layaway for Christmas is. Mothers, fathers, grandparents, sweethearts find the perfect gift (that they can not afford) and put it on layaway so that they can pay for it by the week. Today it is not just the poorer class asking if they should use layaway for Christmas. There is such a financial pinch in the United States these days that even middle class and lower upper-class people are asking “Do you think I should put this on layaway for Christmas?”

What is layaway?

How does layaway work? Well, it does not matter whether or not you have perfect credit because the stores don’t check that. You find the item you want and take it to the special area in the store for it to be recorded. You make your first payment and learn how much you will have to pay each week and what day to pay it on. You can pay a little per week or a lot. The result is the same. The item(s) stays on the shelf in the layaway area until it is retrieved when the payment is fully paid.

It is called Layaway because it just “lays” in the warehouse until it is either retrieved when it is paid for or is returned to the shelf because of payment default to be sold again.

Some stores charge a small fee for each item put on layaway.

There is some manner of risk to using layaway for the buyer. How can this be? Well, if you, for whatever reason, do not make the final payment for the item before the deadline, some stores will return it to their “for sale” stock. You would forfeit money you have already paid and have neither the item nor the money. Check the terms and conditions of the layaway program before making the transaction.

What started stores using layaway? Money was scarce when layaway started. Today, it is an easy way for people who have either bad credit or limited money (or both) to make purchases on a time payment. Large stores don’t mind offering layaway to the customers because there isn’t any risk for them. If the client does not pay all the money, the item is returned to stock to be sold again. For the store, it’s a Win-Win situation. Layaway programs are very popular, and with today’s recession, it helps both the buyer and the seller. In this financial atmosphere, any store would welcome the extra income that will be provided from using layaway for Christmas.

What are the benefits of Using Layaway for Christmas?

Layaway can be a boon to the buyer as well as the seller; especially for larger items. Have you ever tried to conceal a bicycle from a nosy little boy or girl? With layaway, you just leave it at the store with a tag saying it’s yours. If you go in on Christmas Eve to pay the final payment, Santa can put it right into the sleigh before he takes off. Using layaway at Christmas also lets buyers purchase those high ticket items that they can’t afford to pay for all at once. It makes it possible for a boy to give his girl the diamond she is hoping to get.

Many large department stores and toy stores have expanded their layaway program and opened it early this year because of the financial straits that most middle-class people find themselves in this year. The early layaway programs are meant to get people in the mood to Christmas shop earlier than usual. Maybe that explains why so many stores put their Christmas items and decorations on display before Halloween this year.

Bad credit does not affect layaway. Neither does the buyer pay interest while the item lies in wait to be picked up.

Using layaway at Christmas is an alternative to piling more holiday debt onto your credit cards. It allows you to spend without accumulating more debt. It is a type of budgeting for an expense that is virtually unnecessary.

The problem with putting items on layaway for Christmas is the fees that are charged by the stores. The buyer needs to know, up front, what the fees are. If there are late payment fees to be added, that needs to be made plain at the beginning.

Some of the popular stores using Christmas layaway have either cut their fees or eliminated them altogether. This will be a great help to the consumer.

It seems that layaway for Christmas is becoming more and more popular. Stores are starting their layaway programs early, and this is giving the buyer the optimal amount of time to find what they want and pay for it.

Some of the most popular retailers that offer layaway for Christmas are Sears, Walmart, Kmart, and Toys R Us.

Are you asking yourself whether you should use layaway for Christmas? Maybe you should give it a try.

Monica Kowollik

Director at
Monica has covered credit card and personal finance news for over 15 years. From an early age, she developed an interest in financial literacy and saving money. Monica hopes to help others to improve their personal finances one article at a time.

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