Considering Layaway? BBB Says ask Key Questions First

While the countdown to the holidays has begun there’s still plenty of time to consider those layaway plans being offered at many retail outlets. The current economy has left many shoppers on a budget and searching for more affordable methods of paying for their holiday gifts. Many families will turn to alternate forms of payment to make ends meet, but before you take the dive into a layaway plan, the Better Business Bureau has advice on how to best use this payment plan in lieu of credit cards.

Buying items on layaway is different from putting them on a credit card because the buyer isn’t charged interest on the purchase and can’t take the item home until it is paid off. Typically a buyer will make a down payment of 10 to 20 percent and pay service or plan fees for the store to hold the item for them. The customer then has between 30 to 90 days to make periodic payments to pay off the balance. Once it is paid off, the customer can take the items home.

“Layaway services can be a great alternative to using a credit card,” said David Polino, Better Business Bureau President. “However, it’s extremely important that customers take the time to make sure the service being provided fits all of their needs and they know what fees to expect.”

As a complement to in-store layaway, some stores provide online layaway services for purchasing items through the retailer’s website. Additionally, third-party businesses have sprung up such as elayaway.com or lay-away.com for the purpose of setting up layaway plans online between customers and retailers that don’t already have a layaway program. Customers make periodic payments to the third-party layaway service provider. Once the item is fully paid for, the business then buys the item from the retailer and ships it to the customer.

BBB advises consumers considering layaway, to get everything in writing and offers the following key questions to ask first:

• How much time do I have to pay off the item?
• How much do I have to put down?
• Are there any storage or service plan fees?
• When are the payments due?
• What happens if I miss a payment? Are there penalties? Does the item return to inventory?
• Can I get a refund or store credit if I no longer want the item after making a few payments?
• What happens if the item goes on sale after I’ve put it on layaway?
• What if I don’t want the item after I put it on layaway?
• Does the retailer or third-party layaway service have a good BBB rating?

For consumers that decide layaway is their best choice, the BBB reminds shoppers to keep track of the use of their plans at each store. For some undisciplined consumers, it can be easy to get carried away and spend more than they can afford. Keep in mind that placing inexpensive items on layaway could add up in fees equal to or greater than credit card fees which defeats the purpose.