Pros and Cons of Layaway Shopping for Christmas

Due to the rough economy and the fact that many people no longer have credit cards to shop with, Layaway has returned with a vengeance. Layaway was very popular in the 1970s and 1980s, especially in the inner city where people did not have credit cards. It was a way to choose your purchases, and then pay for them over time. Unlike with credit cards, however, anything purchased on Layaway was left in the store until it was paid in full.

Every store has different rules as to layaway use. Basically however, you are either charged $5 for order, or $1 surcharge each time you make a payment. (Stores seldom charge both.) If you decide to cancel your layaway item, you may be charged cancellation or restocking fees. This is understandable because items on layaway are taken out of inventory and put in storage to wait for customer to complete the purchase.

While layaway can make a purchaser comfortable enough to make a transaction, knowing they can pay for it over time, I can't think of a GOOD reason to use layaway. Here are four reasons that I feel this way.

#1 Con on Layaway Shopping for Christmas: You are increasing the price of your items. Sure, you don't have to pay interest as you would had you used a credit card, but after all of the fees are paid, the fee amount could actually trump the interest amount. Imaging paying $5.00 to put a $50.00 item on layaway for 6 weeks. You would be paying 10% interest on your item. Sure you can buy a lot more expensive item to put on layaway making the fees make more sense, but most people buy items under $100 on layaway.

#2 Con on Layaway Shopping for Christmas: You will miss out on the best price for your item. If you purchase a television on layaway and the item goes on sale while the item is still on layaway, you are out of luck. You will have to pay the full price for your television.

#3 Con on Layaway Shopping for Christmas: Instead of paying on a layaway bill, it may be smarter to put the money in an interest bearing account until it is time to make your purchase. When you buy an item on layaway, you are giving your interest to the store.

#4 Con on Layaway Shopping for Christmas: You can't change your mind. After you put something on layaway, if you decide you don't like it, you will need to pay cancellation fees. So if you find the item someplace for less, or find a better item you may be stuck getting the original item.

With that said, there are two reasons I think you may want to ignore my previous advice and use layaway.

#1 Pro on Layaway Shopping for Christmas: You can grab an item in limited supply and put it on layaway. If you don't have money today for the most popular must-have toy, you can grab it and put it on layaway, and pay for it when you do have the money.

#2 Pro Con on Layaway Shopping for Christmas: Black Friday is probably the only day that it makes to use Layaway. Plus stores usually do free layaway on Black Friday to encourage it. You will be getting items at rock bottom prices, if you can brave the crowds, and you don't need to have all of your Christmas money at once.