TBO.com - TBO is Tampa Bay Online

Layaway: Another Way To Pay

ADVERTISEMENT

By MARY SHEDDEN, The Tampa Tribune

Published: November 9, 2007

TAMPA - Credit is not the only way to pay for holiday presents.

Shoppers without credit or those trying to avoid high-interest card payments continue to look to financing classics like layaway for big-ticket items.

A year after mega-retailer Wal-Mart abandoned layaway, national chains such as Kmart and TJ Maxx continue to offer the installment payment programs as a popular alternative. These companies say they have no plans to get rid of a financial option many shoppers consider essential.

"This is something our customers value and we plan to continue," Kmart spokeswoman Kim Freely said of the discount retailer's eight-week payment plan.

Each store handles layaway differently, but the basic concepts are similar. A person pays a small fee and between 10 and 20 percent of the total cost of the purchase. Then customers have 30 to 90 days to pay off the balance. The store holds on to the purchased products until it's completely paid.

Layaway items tend to be larger-ticket items many customers can't afford in one trip, said Mark Swafford, sales coach at the Tampa Kmart on North Dale Mabry Highway. Video game systems, furniture sets and high definition TVs are among the most likely purchases at his store.

"Layaway always picks up during the holiday season," Swafford said.

Layaway contributes to 35 percent of annual sales at Value Pawn & Jewelry shops, Vice President Lawrence Kahlden said. The regional chain with 62 locations in Florida, Tennessee and Georgia has been buoyed by Wal-Mart's departure from layaway.

"Since Wal-Mart did away with it, we probably have seen a 20 to 30 percent jump in what we do with layaway," said Kahldan, who added that just 20 percent of their sales involve credit cards.

Wal-Mart, the nation's largest retailer, ended its layaway program a year ago saying demand had waned significantly. Credit cards have become far more readily available to middle- and low-income shoppers, avoiding the need to wait to get a present.

That access to credit contains enormous risks, said Karin Klaassen, community relations manager for Tampa's Consumer Credit Counseling Service,

With two-thirds of Americans carrying a balance on their credit cards, excessive holiday buying can magnify debt. Gift giving is great, until the bills come.

Klaassen said people should never try to spend beyond their means. Good planning and budgeting can make holiday spending more manageable.

"You're not going to avoid it," she said. "Go with it, but keep it in control."

HOLIDAY SPENDING

Credit cards may seem like the easiest option for holiday spending. But there are alternatives that won't result in high-interest balances in the new year:

•Layaway. Shop at stores that give you 30 or 60 days to pay for the purchase.

•Piggy bank. Set aside money each week, and use cash to buy presents.

•One credit card. Use one for all your purchases so you can wipe out the balance sooner.

•Budget for gifts. Write out a list ahead of time and determine spending limits.

•Budget for extras. Wrapping paper and holiday dinners add up. Add them to the budget.

•A free "budgeting for the holidays" workshop is being held Nov. 27 at 6:30 p.m. at the 78th Street Library, 7625 Palm River Road, Tampa. To reserve a seat, call 1-800-741-7040, Ext. 4.

Source: Consumer Credit Counseling Service

Reporter Mary Shedden can be reached at mshedden @tampatrib.com or (813)259-7365.

Share this:

Loading Comments...

Email Print

ADVERTISEMENT