4everHis Posted November 13, 2011 Share Posted November 13, 2011 http://abcnews.go.com/US/wireStory/apnewsbreak-senator-warns-layaways-cost-14942491 This story says that layaway cost more than using a credit card. Was layaway maybe a better deal back when people didn't have credit cards? I guess I never thought of it as credit since you don't get the item until it is paid off. Quote Link to comment Share on other sites More sharing options...
Parrothead Posted November 13, 2011 Share Posted November 13, 2011 True, if one has a decent pre-set spending limit one it can cost less if one pays in full within the allotted time frame. But if one carries a balance on one's card into the next billing cycle, depending on interest rate, it could cost more than layaway. Keep in mind that one does not want one's credit utilization to be more than 10%. After one's credit is reported to the credit reporting agencies (Transunion and the others) at more than 10%, one's FICO score starts to drop. If one were to make a large purchase such as a car or mortgage while still paying on those Christmas presents, one could end up paying more than the layaway charges in a higher interest rate. Quote Link to comment Share on other sites More sharing options...
Lily_Grace Posted November 13, 2011 Share Posted November 13, 2011 Yep, depends on your spending habits. Best option is to avoid both and just sock away that amount of money each payday until you can buy in full. Quote Link to comment Share on other sites More sharing options...
Parrothead Posted November 13, 2011 Share Posted November 13, 2011 Yep, depends on your spending habits. Best option is to avoid both and just sock away that amount of money each payday until you can buy in full. This would be dependent on whether one has an interest bearing bank account or not. If one can keep that money banked during the 50 days the charge is on the credit card, one can earn interest and actually make money by using the credit card. Still paying it off in full prior to any interest charges. Granted one won't make very much at today's interest rates, but one's money will be working for one. Quote Link to comment Share on other sites More sharing options...
Lolly Posted November 13, 2011 Share Posted November 13, 2011 This would be dependent on whether one has an interest bearing bank account or not. If one can keep that money banked during the 50 days the charge is on the credit card, one can earn interest and actually make money by using the credit card. Still paying it off in full prior to any interest charges. Granted one won't make very much at today's interest rates, but one's money will be working for one. :iagree: Not to mention the cash back that credit cards give. It is like an auto discount on the price of everything.:D Quote Link to comment Share on other sites More sharing options...
Mommyof4ks Posted November 13, 2011 Share Posted November 13, 2011 :iagree: it depends on your spending habits. I look for the best deal on everything I buy, so layaway is not a good option for me since it costs money to put stuff on layaway. My CC will give me cash back plus I can get added rewards online. My CC gets paid in full each month though, so I don't carry a balance. If I could not do that, then layaway might be appealing. Quote Link to comment Share on other sites More sharing options...
LidiyaDawn Posted November 13, 2011 Share Posted November 13, 2011 I didn't even know "layaway" still existed… I thought that had vanished with dial phones and television knobs. :001_huh: Quote Link to comment Share on other sites More sharing options...
4everHis Posted November 13, 2011 Author Share Posted November 13, 2011 I didn't even know "layaway" still existed… I thought that had vanished with dial phones and television knobs. :001_huh: Quite a few stores are bringing it back. I'm sure the credit card companies hate it and I guess if I were a store, it would be one way to take back power and $$ from credit card companies/banks. Quote Link to comment Share on other sites More sharing options...
peachskittles Posted November 13, 2011 Share Posted November 13, 2011 I didn't even know "layaway" still existed… I thought that had vanished with dial phones and television knobs. :001_huh: Kmart still has layaway. It made really easy to buy jeans for all the boys. Walmart and Toys R Us have layaway for the holiday season. Toys R Us normally has layaway on big items, but for right now all toys (not sure what else) is available for layaway there. If any other stores have it, I'm not sure. No wait, I think a store or two in this city has layaway actually. I like layaway. I'm a horrible saver and layaway makes it into just another bill for me. Christmas is actually on layaway this year, thank you Kmart and Walmart (even though Walmart layaway is annoying me). Quote Link to comment Share on other sites More sharing options...
ktgrok Posted November 13, 2011 Share Posted November 13, 2011 I have a gun on layaway right now, actually. It doesn't cost anything, and we did it because the sale was ending soon. If I had waited until I had the money I would have missed the sale price. Credit card is not an option as we don't put non essentials on a credit card, ever. Quote Link to comment Share on other sites More sharing options...
Samiam Posted November 13, 2011 Share Posted November 13, 2011 I really don't get layaway at all. It's a payment plan, on someone else's terms, with extra fees. If you don't make that weekly payment (which what a PITA!), your layaway is cancelled. Why not just sock that $10-$15 away every week, or whatever your payment is. I mean, create your own "layaway". I just do not comprehend the benefit of it at all. Wait, I kind of get it, when there is that one really HOT item. Remember that year when Tickle Me Elmo was hot. I knew a few that got it, early in the season, when people were fighting in the aisles, and put it on layaway....so they were able to get it without having to pay up front in full. On the other hand, I heard of a few that their Elmo went missing out of their layaway pile, and the store could not explain (course everyone knew what happened, some store employee had taken it out of their layaway pile and sold to a family/friend), and did not have any more, so just had to refund that $$. Quote Link to comment Share on other sites More sharing options...
Veritaserum Posted November 13, 2011 Share Posted November 13, 2011 I like cash. :D Dh and I did the credit card earning miles thing, but we spend less when we use debit cards instead. WRT layaway, if people don't have a credit card layaway may be their only option. I've never done layaway, but a $5 fee doesn't sound unreasonable for a more expensive item. Obviously it wouldn't make sense for something that only costs $10 total, but wouldn't most people realize that? I thought layaway was for larger purchases, like if you want to buy your kid a $60 bike. Quote Link to comment Share on other sites More sharing options...
AngieW in Texas Posted November 13, 2011 Share Posted November 13, 2011 Guitar Center has a very nice layaway program that doesn't charge any interest. They will put the guitar on hold for you. You pay 10% down and have 60 days to pay it off. You can switch your downpayment to another guitar without penalty and you can choose to not buy the guitar at all and get your downpayment back (as long as it's within the 60 days). My dd put a guitar on hold with 10% down and then shopped around for the next 30 days. She even went back and visited the guitar several times which was useful when she wanted to compare guitars. When she went in to switch her layaway to another guitar, she was very fortunate that a guitar had just been traded in that was exactly what she'd been hoping for. She switched her downpayment over to that guitar (with some extra cash because it was a more expensive guitar) and was able to pick it up 2 weeks later when the police hold cleared. *Guitar Center puts all used instruments on police hold for 2 weeks in Texas (not sure how long it is in other states) so there's time to make sure it isn't hot. My dd's guitar still had all the original registration paperwork with it, so they knew it wasn't a problem, but we still had to wait for 2 weeks. Quote Link to comment Share on other sites More sharing options...
Tabrett Posted November 13, 2011 Share Posted November 13, 2011 People who use layaway are not the type of people who would pay off a monthly balance on a cc and most would not have an interesting earning bank account in which to save money. People who use layaway don't have credit and/or work on a cash bases only. For layaway to work you need to be paid weekly or biweekly. A person who is paid monthly, I would guess, would have a higher income and would be able to pay off a cc monthly. For a person who uses cash only, I could see buying all your Christmas presents, 3 or so months in advance, at one store so there is only one fee and paying it off by Christmastime. It would prevent you from over spending on a cc and prevent you from delaying or only paying the minimum amount of a cc. It would also allow you to get the presents you want. If one saved up for 3 months to buy the presents, most likely the presents one was saving up for would be gone. I think banks are worried that people might quit using cc and are trying to use scare tacticts to get people back in the habit of cc's. It would be better for people to layaway items, pay them off and then get the items, than to get a cc, with a much higher credit limit than the layaway purchase price. Having a cc would tempt a person to over spend and start making only the minimum payments and be in debt. It is silly for an article to site making a $10 purchase and paying a $5 fee. I don't think most people are that stupid!:tongue_smilie: Many people can't control cc spending habits. I don't have a cc and will not get one because my dh can't control using one. It is embaressing to admit this. The temptation is too high. If I really wanted particular Christmas present for my family, I would be temped to use layaway. It would be a good option for a person with a, should I call it, 'credit addiction'?:lol: if people with credit addictions start using layaway, it is going to hurt the banks even more, but it will help businesses. Quote Link to comment Share on other sites More sharing options...
4everHis Posted November 13, 2011 Author Share Posted November 13, 2011 People who use layaway are not the type of people who would pay off a monthly balance on a cc and most would not have an interesting earning bank account in which to save money. People who use layaway don't have credit and/or work on a cash bases only. For layaway to work you need to be paid weekly or biweekly. A person who is paid monthly, I would guess, would have a higher income and would be able to pay off a cc monthly. For a person who uses cash only, I could see buying all your Christmas presents, 3 or so months in advance, at one store so there is only one fee and paying it off by Christmastime. It would prevent you from over spending on a cc and prevent you from delaying or only paying the minimum amount of a cc. It would also allow you to get the presents you want. If one saved up for 3 months to buy the presents, most likely the presents one was saving up for would be gone. I think banks are worried that people might quit using cc and are trying to use scare tacticts to get people back in the habit of cc's. It would be better for people to layaway items, pay them off and then get the items, than to get a cc, with a much higher credit limit than the layaway purchase price. Having a cc would tempt a person to over spend and start making only the minimum payments and be in debt. It is silly for an article to site making a $10 purchase and paying a $5 fee. I don't think most people are that stupid!:tongue_smilie: Many people can't control cc spending habits. I don't have a cc and will not get one because my dh can't control using one. It is embaressing to admit this. The temptation is too high. If I really wanted particular Christmas present for my family, I would be temped to use layaway. It would be a good option for a person with a, should I call it, 'credit addiction'?:lol: if people with credit addictions start using layaway, it is going to hurt the banks even more, but it will help businesses. I agree with you. These are all valid arguments for and against layaway. Quote Link to comment Share on other sites More sharing options...
gardenmom5 Posted November 13, 2011 Share Posted November 13, 2011 (edited) I've never considered layaway a deal, but a way for people to get the store to hold the item they want, but don't have enough money to buy now. You pay extra for that privledge, and if you don't make all the payments, the store keeps the item and you are out the money. iow- it's a good deal for the store. we use credit cards (generally just one - easier to track), and pay them off every month. It is also buyer protection, as if you have a complaint, the credit card company will usually back you up. stores have to pay the credit card company to accept their credit cards. that is the big reason why stores are constantly trying to get people to use *their* own credit cards. (then they save the user fee instead of paying the user fee to the issuer of the credit card. while banks are big issuers of the "main" cc, so are airlines, amazon, paypal, and MANY other stores are now issueing "main" cc's so people can use *their* cc elsewhere (and they would then collect the user fees paid by those non-related entities that accept the "main" cc's. so this is NOT about "banks".) Edited November 13, 2011 by gardenmom5 Quote Link to comment Share on other sites More sharing options...
Samiam Posted November 13, 2011 Share Posted November 13, 2011 . You pay extra for that privledge, and if you don't make all the payments, the store keeps the item and you are out the money. iow- it's a good deal for the store. Hmm, pretty sure that is not accurate. From the very brief look I've taken at layaway, mostly while standing in line at the customer service counter at Kmart last year (they had it posted on the wall), and then taking a brief peek at a article online earlier this month (not the one linked here), the store does not keep your money. I think that would be illegal anyway. They charge a fee upfront to start the layaway. There's late fees if you don't make your payments. And then if they finally cancel it for non-payment, they have a cancellation fee (I assume their theory is that your layaway pulled inventory off the shelf, which prevented them from selling it, thus justifying their fee). But you'll get most of your money back if you fail to make payments or cancel your layaway. Of course, it varies from store to store, but pretty sure none of them keep ALL of your money. But, yes, it's always a win for the stores....it's a sale, in a tight economy, with extra $$ on top from their fees. Quote Link to comment Share on other sites More sharing options...
6packofun Posted November 13, 2011 Share Posted November 13, 2011 I don't know anyone who puts ONE item on layaway with a $5 fee. LOL! That just seems silly... Usually it's about $300+ worth of items and then the $5 fee is not outrageous AND then you just pay off the price of the items in a specific time frame. What's the big deal? You can get the items on sale AND usually go back to the store if any of your layaway items goes on sale while it's in there and change those to a sale price, too! I dunno, it's not brain surgery. If you know what you want, are sure of what you're putting on layaway and watch the sale flyers, it's a pretty straightforward business, IMO. Quote Link to comment Share on other sites More sharing options...
extendedforecast Posted November 14, 2011 Share Posted November 14, 2011 I just see layaway as another option. It may be a better option for some people, and a worse option for others. I don't believe that one is better than the other or the other (cc, cash, & layaway) 100% of the time. I'm considering using layaway to avoid finding storage for all the gifts until closer to Christmas. Then I can bring them home when the tree is up, wrap them, and put them under the tree. We will not be using credit cards this year; it's either cash or layaway. Quote Link to comment Share on other sites More sharing options...
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