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The unlost art of layaway

In today's credit card society, fewer buyers are putting items on layaway. But some retailers still offer it, and experts say it makes financial sense.

Published November 26, 2003

PINELLAS PARK - Tonyia Bennett's cart is so heavily loaded with toys and electronics, she can barely maneuver it through the layaway line at the Wal-Mart Supercenter.

A karaoke machine, an electronic keyboard and a remote-control Hummer are just a few of the goodies she picked out to delight her three children. But before the presents land under her Christmas tree, they are taking a detour through layaway.

"I love layaway because I'm not paying any interest," said Bennett, 34. "If I put this on a credit card, I'd still be paying next Christmas."

Layaway shoppers put down a deposit and make payments but don't pick up the goods until they have paid in full. That's an increasingly quaint concept in a buy-now-pay-later society.

Beall's Department Stores, like many of its competitors, stopped offering layaway in the early 1980s.

"It's so much easier for people to get credit and get the stuff immediately that they really don't have to put things on layaway," said Stephen Knopik, Beall's president.

You won't find layaway at many other department stores either. Dillard's and Burdines don't offer it.

Still, layaway is far from extinct. The old-fashioned service attracts a small but ardent following. Among the big discount chains, Wal-Mart and Kmart offer layaway, but Target does not.

It isn't always advertised, but if you ask, you can find layaway at many stores selling clothing, electronics, jewelry, musical instruments or antiques and collectibles.

"It's a norm to offer it, though only the occasional customer does it," said Gayle Shaw, president of Treasures & Dolls Inc. in Belleair Bluffs. "It's most likely to be used for a high-end item like a real expensive antique doll."

Nowhere is layaway more popular than at Wal-Mart. By paying a 10 percent deposit, customers can put almost anything on layaway other than clearance items and hazardous materials.

Hundreds of bicycles with layaway tags hang suspended above the shelves at Wal-Mart's Pinellas Park supercenter. The layaway counter at the back of the store attracts a line of shoppers with carts loaded with toys and games that will be boxed and stored until redemption.

Many Wal-Mart customers use layaway year-round for big-ticket items such as televisions, bicycles and diamond rings. The service is also popular for back-to-school items such as uniforms, clothing and school supplies.

Normally Wal-Mart offers a 60-day layaway, but for the holidays, the layaway period starts in September and ends Dec. 12, allowing goods that aren't picked up to be returned to the shopping floor well before Christmas. Customers who don't finish paying for their layaway items get their money back minus a service charge of as much as $10.

Some stores restrict the use of layaway. At Circuit City, for example, it's not available for purchases of less than $50 or for computers or computer-related merchandise. Obsolescence is a big concern.

"If they don't pay it off, we could have a product that isn't worth as much as it was 90 days before," spokesman Steve Mullen said.

Some stores have a service charge up front for layaway, while others charge a fee only if a customer fails to complete the purchase and wants a refund.

Layaway appeals to people who like to do their holiday shopping early but don't have the cash in hand to pay for it. They can snap up this year's most popular toys while a good selection is still available.

"If you wait until just before Christmas, everything is gone," said Angela Bugner, 32, who puts toys and clothes for her three daughters on layaway.

Some people use layaway because they don't have a credit card or because the cards they have are charged close to their limits. Many others just don't like paying credit card interest.

"I have a credit card, but I only like to use it for emergencies," said Marion Ellershaw, 63. She was standing in the Wal-Mart layaway line to pick up gifts she had set aside six weeks earlier for some of her 16 grandchildren.

Because customers have to pay for their goods in full, layaway imposes the kind of spending discipline that financial experts applaud. You literally can't spend money you don't have.

Consumer complaints about layaway are rare, said Deborah Berry, an investigator for Pinellas County Consumer Protection. "Every once in a while the consumer will go back and the layaway item is no longer there for whatever reason. We try to work it out so they can get a credit or a refund. It's not that big of an issue."

The biggest potential problem is a retailer filing for bankruptcy, which could leave the layaway customer standing in line with other creditors, trying to get a refund.

Berry and other consumer advocates say it is important for consumers to take careful note of store policies about layaway and refunds.

Stores that offer layaway vary widely in the amount of the initial deposit required, the way payments are handled and the length of the layaway period, which can be as long as six months.

"There are no laws pertaining to what the stores can do in regard to their particular layaway program," Berry said.

-Helen Huntley can be reached at or 727 893-8230.

Five tips for trouble-free layaways

Know the terms. Find out about minimum payments and payment deadlines. Get it in writing if possible. Different rules may apply during the holiday season.

Ask about refunds. What happens if you do not complete your payments? Can you get a cash refund or just a store credit? Is there a service charge?

Locate your merchandise. Is it identified on your receipt? Does it have to be special ordered? Will it be separated from merchandise available for sale?

Shop with reputable, financially stable merchants. The last thing you want is for a retailer to file for bankruptcy holding your merchandise and your money. You might not see either one again.

Keep a record of your payments. It may be useful later if a dispute arises.

- Source: Federal Trade Commission

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