The Truth About Holiday Layaway Plans From Walmart & Others

Stay away from holiday layaway plans!

Whether you are looking to start your holiday shopping early or want to get that 4K TV you’ve had your eye on, taking advantage of all the holiday layaway plans that are popping up can be tempting.

Most major retailers, including Walmart, Kmart, Target, Sears and others are already advertising this option, and while it may seem like a good idea in theory, in practice it’s not.

Don’t get me wrong, I understand it may be the only way for some to afford gifts and is worth the compromises.

However, there are some major downfalls to using these plans that you should be aware of before going this route.

Layaway is seen as a convenience, but it is actually a way for retailers to put more money in their pocket by taking it out of yours

Here’s what you need to know:

1. You could end up losing money: The biggest problem with layaway is the potential to lose money.  Between set-up fees and penalty fees for late or no payments, you could lose more money than you thought.

Most retailers offer 8 or 12 week programs with a small down payment, but some also require an additional fee for using their program as well.

More importantly, layaway is structured- you don’t pay what you can afford when you can afford it.

You need to make set payments until it’s paid-off and that can be a problem.

From car trouble to the kids need new shoes, there are a million expenses that can come up and throw your payments off, which can result in not just fees but you losing the items as well.

Many stores offer a small grace period to catch up of you miss a payment, but if you can’t you lose the item and usually pay a cancellation fee.

For instance, Sears charges a cancellation fee of $15 for an 8-week contract, or $25 for a 12-week contract with their program.

Yes, you could put it on a credit card, but a lot of cards have high interest rates, so you will pay even more for the item.

For consumers on a tight budget, think carefully before singing-up or you could wind up in debt for items you don’t even have.

2. You could miss out on the big deals:  When you buy am item and put it on layaway, you may be locked into the price, so if it goes on sale you’ll lose out on those savings.

Some retailers offer price-matching, so you need to check store policy before committing.

Also, may stores, like Walmart, don’t offer layaway during certain periods, like Black Friday, when consumers could get a really good deal.

3. It may not be available everywhere:  Just because a retailer offers layaway doesn’t mean it is available at all locations.  Some stores only do it online while others only do select locations or in-store only.

Walmart, for example, only allows in-store layaway, which means gas/toll money and a considerable drive if there isn’t one near you.

Do your research to see where it’s available and calculate costs to see if it’s worth the trip beforehand to get the most for your money.

4. You may end up paying a 3rd party.  Some stores use 3rd party leasing companies for their programs, which means you are subject to their terms, not the stores.

Kmart, as an example, uses a leasing company for their Lease-to-own plan.

When using a 3rd party approval is usually subject to a credit check and some may be denied based on income.

If you are approved, you are technically under contract with them, not the retailer, so they are the ones who have final say if an issue arises.

Again, do your research to know who you’re paying and who is holding your merchandise until it’s paid in-full.

5. You could wind up making purchases you shouldn’t: Layaway creates the illusion that items are more affordable than they really are.

Using Walmart as an example, a $300 RCA TV, with 10% down ($30) and payments spread over 8 weeks works out to about $30 each week.

That may sound feasible, but $30 a week can put a bigger debt in your money than you realize.

Unless you really need what you’re buying, consider waiting if you think it will be too much.

Bottom line? Layaway is a commitment, a costly one if circumstances aren’t right.

So unless it is your only option, wait until merchandise is on sale to shop to save yourself the time and headaches.

Do you plan to use a holiday layaway plan or have you used one in the past?

Tell us if you have and how it worked out for you and be sure to  follow all my latest consumer news reports on Twitter!

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Author Profile: Consumer Expert Tracy Ortiz

I am a mom to 2 little boys: a 10 year- old and an 8 year-old and they are the only things I love more than writing. I am an avid reader, a big sports fan and love a good deal. Most of all, I love keeping up on the latest consumer news and sharing my findings with all of you. When I'm not writing I'm painting- check out my latest in my shop:

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