Comments on: LayAway is Back!

By: Steven

Steven — Wed, 19 Oct 2011 21:52:32 +0000

I think it’s funny. I read this article shortly after reading the other Mint article discussing the top 5 stupid things that consumers do offline. Ironically enough, “Utilizing Layaway” wasn’t one of them. However, that article talked heavily of not buying what you don’t need, and buying without thinking. In this case, anything you put on layaway you don’t need, and/or cannot afford.

If you cannot afford it at the moment, don’t buy it. Save up, and then buy it. There’s no reason to put down an exceess fee amount on something, pay for it monthly for a period of time, and then finally get the item AFTER you’ve paid for all of it. You’re much better off just saving the cash, waiting until you can afford it, and then pay for it at that time.

Not to mention, by saving all the cash for it up front before getting it, you will have the money to spend one something you actually DO need, if the need arises in the meantime.

By: Kila

Kila — Sat, 15 Oct 2011 18:24:34 +0000

I completely agree with the previous posts here. My husband grew up in a family that utilized layaway on a regular basis. I grew up in a family that would use our credit union’s Christmas club or other saving (usually interest earning) measures. I think lay-a-way, just as credit cards, appeals to those looking for instant gratification. Delayed gratification is a lesson often overlooked anymore. Like a carrot in front of the donkey’s nose, it drives him forward. However the donkey with carrot already in his teeth often doesn’t even leave the starting line.

By: Maria

Maria — Sat, 15 Oct 2011 14:43:52 +0000

Yes, this is truly ridiculous. Especially with consumer electronics and fashion, paying up front for something that will be outdated in a couple of months sounds like a scam. Get a part time job at Walmart of TJMaxx and you will get your extra $$ in a few weeks.

By: Steve

Steve — Fri, 14 Oct 2011 19:16:10 +0000

I think layaway has become so popular because even with the fees involved, it is still cheaper than putting it on a credit card. There are also other options out there if people don't want to use credit cards. There are many options such as prepaid cards that allow people to put their own money on a card to use when shopping. Yes there are some fees, but it is still cheaper than credit cards and even layaway.

By: Brenda

Brenda — Fri, 14 Oct 2011 15:49:53 +0000

Note that if you are buying at Sears (at least in Canada) if you change your mind or return there is a 20% restocking fee for things like vacuums and appliances which you are expected to know because they have a sign near the till, but no one, at least my salesperson did not inform me of this practice or show me the sign.

By: ShavenYak

ShavenYak — Fri, 14 Oct 2011 14:37:35 +0000

Comparing the service fee for layaway to a credit card’s APR is just stupid. With a credit card, you get the item immediately, and if you pay your card on the same schedule as the layaway, you’re likely to end up only paying interest on about half the cost for one month – in that case, the 15% interest is less than a $5 service fee unless your item is $800 or more.

On the other hand, if you don’t need the item yet, why wouldn’t you just put the money in a savings account (or even a cookie jar) until you’ve got the full amount, rather than paying a service fee for a layaway?

By: Grant

Grant — Fri, 14 Oct 2011 13:42:10 +0000

The $5 fee does NOT beat the APR unless you’re putting in excess of $200 of stuff on layaway.

Using your 15% example and the 60 day payoff time frame (which is roughly from here to Christmas). A $5 fee on $200 is 2.5%, but it’s only 1/6 of the year. So multiply by 6… and you get 15%.

However, you forgot a bit. When you buy with a credit card, you usually get until the end of the cycle before it shows up, then 25 days to pay it off before interest. So you’d get from 25 to 55 of those days interest free. Taking the average at 40 days, the effective interest rate is then 5%, which means now you’d have to put $600 or more on layaway for it to be a good deal.

Furthermore, with the card you take it home today, not when you’re done paying. And lastly, if you don’t pay off layaway on time, you don’t get the item and they usually charge you another $5 fee. If you don’t pay off the credit card, you just keep getting charged interest.

By: Speewack

Speewack — Thu, 13 Oct 2011 22:23:12 +0000

I never understood Layaway. If I can make monthly payments to a store to buy a product only to get it when I make the last payment, why would I not just put the same money in a savings account, make a tiny bit of interest, and avoid the fees?

I must be missing something.

By: Shevonne

Shevonne — Thu, 13 Oct 2011 20:17:45 +0000

I don’t understand the appeal of layaway (also credit cards). Wouldn’t it be better to just put that money into a savings account?

By: Steve

Steve — Thu, 13 Oct 2011 19:31:54 +0000

Why wouldn’t you advise people to put that money into an interest-bearing account until they can pay in full, rather than suggesting they pay a pointless $5 fee for the privilege of fronting a company money?