WTHR |Layaway makes a comeback

Layaway makes a comeback

Jennie Runevitch/Eyewitness News

Indianapolis - If you're not sure how you'll pay for all your holiday gifts, retailers are going back to basics, and launching an old-fashioned system in stores and even online: layaway. The shopping trend of Christmas past is the new reality of Christmas present.

"My parents did it," said shopper Don Bristow. "As a matter of fact, when we first got married, that's what my wife and I had to do."

"I've used it in the past and it was very disappointing when other stores stopped it," said shopper Stephanie Ewart.

Layaway allows shoppers to pay for items over time in installments. There's usually a $5 to $10 fee. Retailers also charge a fee if you cancel your order. You pick up your product when it's paid in full.

University of Indianapolis finance professor Rachel Smith says layaway is back because of the tough economy, and the hit retailers took last year. But consumers, she says, can benefit.

"Basically it's a forced savings plan for consumers. It allows them to make those small payments. The other benefit is they don't have to pay the interest expense that they would on a credit card and also not incur the debt that they would," Smith said. "Plus, if the item is on sale you can lock into that sales price."

K-Mart, Sears, and Burlington Coat Factory all have layaway. This week, Toys-R-Us added holiday layaway for big-ticket items like bikes and cribs.

"I think it's great if it's going to help people spread money out," said shopper Matt Hahn.

"I think it'll help people out a lot and let some kids have some Christmas they maybe wouldn't have if they had to pay it all in full," added shopper Tim Guilfoy.

Not only are stores bringing back layaway, there's a new surge online to shop and pay over time.

At least two websites, eLayaway.com and la-away.com, boast hundreds of items for layaway.
Smith says it's a sign retailers expect another sluggish holiday shopping season.

"Retailers are doing whatever they can to boost those sales and they're trying to make it easy and flexible and convenient," Smith said.

Most layaway programs allow eight weeks to pay off the product, so to get the toys and TVs by Christmas, experts say now is the time to buy.