Layaway an alternative to credit
Credit is not the only way to pay for holidaypresents.
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.”
By Mary Shedden
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