By Jim Donovan

PHILADELPHIA (CBS) — In this tough economy more and more stores will be doing anything they can to encourage cash-strapped customers to spend this holiday. In fact many are reviving an old-time payment plan, layaway. 3 On Your Side Consumer Reporter Jim Donovan takes a look at whether it may make sense for you.

Its seems the old fashioned layaway plan is making a comeback. Edgar Dworsky of Consumer World says,
“I think retailers are recognizing the economy is not great for consumers and they’re trying to find ways to allow them to make purchases on easier terms.”

Layaway programs let you put aside merchandise and make payments on it. When the full price has been met, you get the item. Joe Ridout with Consumer Action says, “Wal-Mart is bringing back layaway after a hiatus of about 5 years and Sears, Toys R Us, KMart, other stores also offer layaway largely because the economy has been so bad to so many families.”

For consumers without good credit, these policies may make a lot of sense. Ridout says, “You won’t run the risk of going over your head in debt and then paying, say 30% interest on a credit card for something that you couldn’t afford.”

Wal-Mart is offering layaway on electronics, jewelry, and toys. You’ll pay a 10% deposit, plus a 5 % layaway fee. The plan is good on total purchases over $50 and each item must cost over $15. At Best Buy items over $250 are eligible for layaway. The store requires you to pay a 25% deposit and a fee of 5%.
At KMart you pay a $5 fee and a deposit of $15 or 10% of the cost of the item, whichever is more.

But before putting anything on layaway be sure to read the fine print! Dworsky says, “They’re a little simpler than the credit card agreements that you see, but they’re very rigid.” For example most layaway plans charge a cancellation fee of a few bucks or a percentage of the total purchase. Finally, be sure to ask if the store will honor price breaks. Some stores will give you at least one price adjustment if an item goes on sale.

So what happens if you miss a payment? It depends on the store. Sears for example has a seven day grace period. If you don’t pay by then they’ll cancel your contract, the items are returned to stock and a cancellation fee will apply.

Reported by Jim Donovan, CBS 3

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