By KORKY VANN
Christmas is just 100 shopping days away. Time to start budgeting for all those holiday gifts.
One way to avoid post-Christmas credit card bills is layaway and the old-fashioned, pay-over-time plans are suddenly hot retail news.
The basic concept is simple — you choose the merchandise you want, put items away and stop by the store periodically to make payments. Specifics vary from company to company, but most retailers require a 10 percent to 20 percent initial deposit, limit eligible merchandise, add a service fee and require customers to pay off the balance within a certain amount of time.
But this year, with competition heating up to get holiday shoppers in the door, some chains have cut or dropped those service fees and extended the time customers have to pay off their tabs.
In August, Toys “R” Us announced that it was waiving its upfront service fee for all layaway orders created by Oct. 31, expanding qualifying merchandise and giving customers until December 16 to pick up their orders. (You can set up a layaway after Oct. 31, but you’ll pay a $5 service fee.)
Additionally, the chain announced that almost all toys in Toys “R” Us stores and most items at Babies “R” Us stores nationwide are eligible for layaway. (Toys “R” Us introduced layaway in its stores in 2009, but limited it to “big gift” items such as bikes, swing sets, dollhouses and play kitchens.)
“Providing our customers flexible payment terms, without requiring an upfront service fee, is our most attractive layaway offer yet,” said Troy Rice, executive vice president, stores and services, for Toys “R” Us. in a press release. “We continue to look for ways to help our customers stretch their budgets, and by taking advantage of this free layaway option, they can make a series of small payments over time, as they begin to think about what might be on their children’s holiday wish lists.”
Earlier this month, Duncan Mac Naughton, chief merchandising and marketing officer of Wal-Mart., announced a “rollback” on layaway fees at Wal-Mart.
“When our customers speak up, we listen. Last year, they told us they wanted a holiday layaway program. We brought it back, and it was a success. This year, they told us they wanted more categories, more time and a different fee structure. And we responded again, said Naughton.
Wal-Mart’s holiday layaway begins Sept. 16 and runs through Dec. 14. The chain dropped its service fee from $15 to $5. Customers who make their final payment on time get the $5 fee back as a Wal-Mart gift card. The chain released an expanded list of eligible categories, including some small home appliances, sporting goods, electronics, toys and jewelry.
Last week, Kmart announced it will be removing its layaway service fee at Kmart stores through Nov. 17 and may do the same for Sears stores as well.
“At Kmart, we understand the excitement holidays bring, and the budget concerns that come with them,” Jai Holtz, vice president, financial services at Sears Holdings, said in a press release. “By providing ‘free’ layaway we want to help make holiday shopping less stressful.”
While layaway plans can help with holiday budgeting, there are things to consider. Before you sign on the dotted line, the Connecticut Better Business Bureau suggests you confirm how much time you have to pay off your purchase, how much you have to put down for a deposit, when payments are due and whether there are fees for using the service. You’ll also want to check on penalties for missing payments, canceling or forfeiting your order; whether you can get a refund if you cancel your order and if prices will be adjusted if any of your items go on sale while you’ve got them on layaway.
According to the state Department of Consumer Protection, stores must give you a layaway statement that includes the amount of your deposit, length of time the items will be held, total purchase price, a description of each item and a notice of cancellation policy. Pay attention to the terms or you could forfeit your deposit.
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