Recently, we've heard the word layaway this time of year. It's an old fashioned way to buy something without going into debt. Well, layaway is back again this year.
Layaway is simply putting money down on something you want at the store. The store then saves the item for you, allowing you to make payments over time, minus interest charges. When it's paid off, you take it home.
For consumers looking to budget their holiday shopping, layaway is a shift from the buy-now-pay-later mentality of credit cards. And many big stores are playing the layaway game.
Kmart is expanding its layaway option this year, in anticipation of another tough Christmas, extending the program to as much as 12 weeks. Last year it was eight. Other retail chains offering layaway this year include many T.J. Maxx and Marshalls, Sears and Toys R Us.
Layaway started during the Great Depression when people simply didn't have the cash to buy something all at once. It went away for years, but made a comeback in recent years during the economic downturn.
Layaway plans vary slightly from store to store, but generally a 10% to 20% down payment is required, not every item is included, and there's usually a non-refundable service fee. The Better Business Bureau recommends if you do layaway, get everything in writing.
Click here for more tips for buying on layaway.