I was in Costco before Labor Day and they already had holiday displays. They seem to “deck the halls” earlier and earlier as each year passes. Personally, I am not thinking about the holidays this early, but it’s not a bad idea to think ahead.
How are you going to pay for your holiday purchases? Do you have savings set aside for this time of year? If not, you are not alone.
In this economy, stores are lobbying for dollars and they want yours. They know that people are cutting back on credit card spending so they’re bringing back layaway plans.
What is a layaway plan? It’s a little like store credit, with one big exception: the store keeps your purchase until you’ve paid in full.
Here’s how it works.
- You pay a down payment or deposit to start the process
- You may have 30-90 days or a “must be paid by” date that coincides with a holiday
- Usually, you can pay as often as you like. Many people pay weekly (after they get paid themselves).
- As soon as your purchase is paid in full, you can take it home.
Why use a layaway plan? It may help you stay within budget. Credit cards make you feel like you have endless money to spend. If you can walk out of the store with that cashmere sweater, then it’s all paid for, right? Wrong! Some people won’t have their holiday credit card bills paid down until next spring. A layaway plan, on the other hand, never lets you forget that you’re paying installments.
What are the costs?
As with any installment payment plan, there will be fees.
- Many stores charge a fee for layaway. For example, Wal-Mart is charging a five dollar fee, and Best Buy charges a five percent fee. These fees are typically non-refundable.
- In addition, there could be a cancellation fee if you change your mind.
You might be thinking, “Should I sign up for a layaway plan now or wait for the Black Friday sales?” That’s a question only you can answer. If you want to wait, start your own “layaway plan” by putting aside cash each payday. That way, you’ll have money for your purchase by Black Friday, whether it goes on sale, or not.