Layaway offers some advantages if you’re cautious about fine print

Tucked away in the back of Kmart stores there is a little room that is marked “layaway.”

The term may conjure up images of a time before credit cards became so much a part of daily life, but the traffic to this part of the store has been picking up in recent years.

Layaway allows customers to reserve an item while making payments until it is paid off, at which time they can take it home.

No interest is charged on the purchase, but there are often service and cancellation fees associated with it.

Experts say the resurgence of layaway is a good sign that consumers are looking for ways to live within their means and not racking up a lot of credit card debt.

The return of layaway also shows the power that consumers hold with retailers, said Richard Feinberg, professor of retail management at Purdue University.

Wal-Mart reintroduced layaway this year after discontinuing it in 2006 when credit was still readily available and consumers were less cautious about accumulating debt.

Toys R Us recently expanded its program to include all products this year after bringing layaway back in 2009 for big-ticket items.

And Kmart and Sears have revamped their programs to include online payments and a 12-week option instead of just an eight-week program.

Matt Arnold, a retail analyst with Edward Jones, said Wal-Mart’s decision to bring back layaway was largely driven by customer feedback.

Sears and Kmart never did away with their layaway programs. But they launched an awareness campaign to highlight them in 2008, said Salima Yala, vice president of the layaway division for Sears Holdings.

Another perk of layaway programs is that they allow customers to reserve some of the season’s hottest toys and electronics that might not be available closer to the holidays.

But consumers should be careful when signing up for a layaway plan. Read the fine print of the layaway contracts and make payments within the allotted time.

Layaway plans

Toys R Us

Service fee: $5

Down payment: 20 percent

Cancellation fee: $10

Other details: Christmas orders must be paid in full by Dec. 16.

Wal-Mart

Service fee: $5

Down payment: 10 percent

Cancellation fee: $10

Other details: Each item must have a price of $15 or more, and customers must have a total minimum purchase of $50. Program runs through Dec. 16.

Kmart

Service fee: $5 for eight-week contract, $10 for 12-week contract

Down payment: $15 or 10 percent for eight-week program, $30 or 10 percent for 12-week contract

Cancellation fee: $10 for eight-week contract, $20 for 12-week contract

Other details: 12-week option is available only for purchases of more than $300.

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