Layaway returns in tough economic times

Layaway returns in tough economic times (Image 1)

An old way of doing business is back.  The economy is forcing more and more retailers to bring back layaway.

At Kmart, the program has never gone away but this year, at least five major retailers including Walmart, Toys R Us, Sears and TJ Maxx, are offering layaway primarily because customers have asked for it.

While layaway rules vary from store to store, there is usually a set period of time to pay off your purchase and it can't be taken home until it's paid in full.

At Kmart, customers make a down payment of $15 or 10% of the total cost, pay a $5 service fee, and make regular payments every two weeks.

Paid-in-full items are available for pickup anytime, even on Christmas Eve.

Kmart spokeswoman Susanne Batd told Nashville's News 2 more customers are using layaway this year because they've either lost their jobs or are under employed.

It can also eliminate paying high interest rates come January.

Renea Hall is using layaway this shopping season.

She told Nashville's News 2 she likes the program “because I can get what I want when I want it and just hold it.”

Hall added, “I don't have to come out when the psychos are out the day after Thanksgiving.”

At Kmart, Batd said if the price of an item drops after it's put on layaway there is the possibility of a price adjustment.

Despite the convenience that layaway may provide customers, experts warn the option is a good alternative to credit as long as shoppers understand the rules.  

Kathleen Calligan is the president and CEO of the Better Business Bureau of Middle Tennessee.

“It is short term, and you have to commit to a layaway plan. Sometimes there is a fee to participate, but it's usually a small fee I don't think I've ever monitored a fee that's more than $15 to $20,” she explained.

The fee many retailers charge covers the cost of handling layaway accounts, keeping workers to provide items when layaway is paid off and the cost of storing and restocking items.

“Consumers understand, you've taken this merchandise off the floor. No one else was able to buy that one of a kind thing that you were able to quickly snatch up and put in layaway so if it goes back you're going to pay a restocking fee,” Calligan explained.

According to economic experts, customers could end up paying just as much if not more in interest on layaway plan than buying with a credit card.

Walmart's layaway includes toys, electronics and fine jewelry.  There is a 10% down payment and $5 fee and items must be paid for and picked up by December 16.

Shoppers will make a 25% down payment at Best Buy and 20% at Toys R Us.

Both retailers charged $5 service fees and at Toys R Us, items must be picked up by December 4.

In addition to stores, there are now Web sites devoted to shoppers who want to buy using a layaway plan.  Visit or for more information.

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