More stores offer layaway programs

By: | SCNow
Published: November 26, 2009

This year, more stores and more stores are offering layaway programs for the holidays.

But what used to be a normal practice is now a novel idea for today’s consumer.

With the economic downturn and decline in consumer spending in 2008, stores such as Kmart, Sears and Toys R Us dusted off their layaway programs as a way to allow consumers to purchase items without paying the entire cost at once. Rather than taking the item home and then repaying the debt on a regular schedule, as in most installment plans, however, the layaway customer doesn’t receive the item until it is completely paid for. The program usually lasts about eight weeks, with payments toward the purchase being made either weekly or biweekly.

Kathy Graham, president/CEO of the BBB of Coastal Carolina Inc., said these programs are extremely beneficial to today’s consumer.

“It can help train people to put themselves on a budget. They learn to budget for what they can afford,” she said.

With usually low service fees — Kmart, for example, charges $5 on layaway purchases in addition to a down payment of 10 percent of the purchase price of the item — Graham said it is a much better alternative to credit cards with high finance charges.

“We all know that life happens. If you can’t pay it off, the store usually refunds your money or gives you store credit,” she said.

Graham cautions, however, that consumers need to ask questions and understand all the policies associated with each individual layaway program.

Compared with the established and well-known policies of stores that have been offering this program for awhile, she said, new online layaway programs make her a little nervous.

But Graham still feels it greatly benefits the consumer, even if it creates a little more work for the retailer.

“It just really shows a store cares about their customers,” she said.

— Staff writer Samantha Shepard can be reached at (843) 317-7261. Comment on this story at www.scnow.com.