With the looming prospect of an even worsening economy, retailers are looking to take advantage of any opportunity to get shoppers to part with their money early and often. To that end, they’ve dusted off a blast from the past, the layaway plan.
Simply put, a layaway program allows shoppers to pay for a purchase with installments, typically at no interest.
Although a majority of shoppers would consider using layaway, it favors the store and you should never, ever do it.
The Downside of Layaway Plans
Layaway plans are a bad idea because you are essentially giving some store power over your money when you can accomplish the same thing yourself. If you don’t have enough money to busy something in full today, but think that you will over the next several weeks or months, then simply put that money aside and buy it when you have the money.
You can put the money towards savings or use it to pay down a credit card, either making or saving interest. If you end up buying it on your credit card (which means you probably don’t need it anyway) you’ll have the same card balance and may pick up a cash back bonus or points in the process.
Not convinced? Here are a couple of ways that layaway can go wrong:
- You fail to make the payments as agreed. This can be a little bad (e.g. you get your money back but don’t get the item you need and wasted your time), sorta bad (e.g you get hit with fees for late payments) or it can be very bad (e.g. you lose all the money you had on deposit.) It’s important to know the specific layaway policy of the store and keep detailed receipts for every payment you make.
- The item you purchased ends up going down in price. If you are buying something on layaway to lock in a good price, remember that what goes on sale will go on sale again. This means that you can lock up your money for no good reason and possibly lose money if the price drops further. This is a real possibility as retailers get more desperate closer to the holidays.
- The store fails to hold the item you purchased. You shouldn’t be surprised if you go back to a store to pick up your layaway item and find that it isn’t in stock. This happens all too often and you might end up with nothing more than store credit, and directed to pick out a more expensive item. Once again, based on the store layaway policy, they hold all the cards. Why go through that hassle?
So the bottom line is to avoid layaway like the plague, and save up for your major purchases.