Back in the days when credit cards were a luxury, layaway was the easiest way to pay for large-ticket items or multiple purchases that couldn’t be purchased at the time with cash. Weekly or monthly payments were required by the retailer to maintain the items in lay-away. But layaway has made a comeback with so many American’s living hand-to-mouth while still hoping to provide the extras for their families or for a happy Christmas morning.

According to the About Group’s ConsumerSearch.com, more than seventy percent of consumers are open to using a layaway plan in the next six months. There are both positive and not so great reasons to consider using layaway. Here’s the scoop:

Fees for Layaway Plans

For consumers who chose layaway, whether for lack of cash or credit, it’s important to know what fees you’ll be paying to use a service. Most stores assess a $5 service charge on all layaways, with variables in the length of the agreement from 30 to 90 days. Layaway plans over sixty days are usually reserved for bigger ticket purchases. Down payments of 10 to 20 percent are required. If you don’t pay off your layaway by the deadline, you’ll be charge a cancellation fee of between $10 and $15. For a detailed explanation of how layaway works visit Wikipedia’s layaway page.

Negatives about Layaway

The biggest complaint against layaway, are the fees charged by the retailers for using the service. There is a charge to put an item on layaway, a charge if you need to cancel, and even worse, some may only give store credit, if you need to cancel or are unable to pay it off. When you consider the fact that layaway is often the last chance for low-income people to provide for their families, for people who are already living on a shoestring, the fees can be seen as gouging.

The second issue is one that many people may not consider and that’s the price freeze that is established once the items are placed in layaway. Unless you’re adding items over time as they’ve gone on sale, you’ll end up paying the highest price for those items. To get the best deals, buy items over time with cash, as they go on sale, that’s just plain smart money management.

Good Reasons To Use Layaway

It’s easy to see that paying over time, without incurring credit card debt, is a plus for layaway. There’s also a better sense of what you’re spending when you visit the store to make a payment, knowing that you will not receive the merchandise until the balance is paid in full. Layaway also gives people who lack a credit card the opportunity to make payments toward big purchases.

As a freelance writer for popular finance blogs and websites, Noreen Ruth provides readers with the most up-to-date information on credit, debt and other financial issues. Her goal is to help educate consumers about topics that may impact their ability to manage their credit/debt responsibly. Noreen shares tips on how to (understand credit cards, compare and apply for a credit card, manage credit card debt, apply for debt reduction help, etc.), in addition to reporting on the latest credit and debt news from government and other reputable sources.