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Credit Card Applications » News » Other » Stores Reintroduce Layaway Payment for Shoppers

Stores Reintroduce Layaway Payment for Shoppers

December 27, 2009
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Stores are reviving an old method of retail practice as an option for consumers, who are financially-broke or have limited credit lines or closed credit accounts.

Lay-away program is an alternative solution for shoppers who are short in cash, but opted not to use credit cards. In this method, stores and retailers allow consumers to purchase an item in staggered payment.

Unlike credit cards, lay-away have no interest charges.

Under this program, shoppers are required to make a down payment first, mostly 20 percent of the purchase price. Aside from this initial payment, consumers have to pay $5 as service fee for a lay away account. The store will hold the item until it is fully paid. A fine of $10 will be charged if customers decided to cancel the purchase.

Lay away is popular during 1960s and 1970s because credit cards were not yet emerging then. It became obsolete with the widespread use credit cards in 1990s.

Some stores in the US started reintroducing this program as early as October this year in response to the critical economic condition, massive reduction of credit lines and closing credit accounts.

Susan Grant, director of consumer protection at the Consumers Federation of America - an advocate group, said lay away is a better alternative to using credit cards. However, she advised shoppers to read and understand the policy before applying for the program.

She added that this is also a great way to adopt a new attitude - saving money first before buying. This practice is totally different from credit card's slogan: "shop today, pay later" - which drives most Americans to splurge in shopping, resulting to piles of debt.

Although only few stores and retailers are applying this old method, lay away payment has become popular overnight in the web world. In fact, more websites were built to accommodate online shoppers.

Electronics, appliances, toys and games are common items being sold in the websites. Unlike in stores, consumers are not required to pay service fees in layaway websites.

However, consumers who shop online will be charged more than one to two percent for transaction fees. The cancellation fee costs $25 to $35 or 10 percent of the cost of merchandise, which is much higher than what the stores are charging.

In December last year, lay away shared a very small percentage in the market, only seven percent of consumers opted to shop using such payment scheme.

The December 2008 survey conducted by Consumer Reports, 76 percent shoppers chose to use cash for holiday purchases, 51 percent respondents opted to use debit cards, and 50 percent still used credit cards.

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  • Larry
    With the Virgin / Barclaycard signature offer, there seems to be some consumer deception or maybe even outright fraud goin on.   I decided to jump on this offer..  read all the info on it..  was approved for their platinum card, paid the fee, then was only awarded 10,000 points instead of the advertised 20,000.   When i inquired about the less than advertised bonus points, Barclaycard claims only Signiture Visa cardmembers get the 20,000..  as a platinum cardholder, you don't qualify for that level of bonus, so you get 10k instead.   Well, in their current ongoing promotions, it states plain as day that....    Applicants approved for the Visa Signature or Platinum Card with $49 annual fee will receive 20,000 Bonus Points awarded to your Virgin America Rewards Account at the close of the first billing statement in which you make your first purchase or balance transfer (that is not returned or rescinded) and have paid the Annual Fee on the account (and such fee is not rescinded). They don't mention anything about a separate program for platinum cardholders..  However, trying to get someone to resolve this issue with either Virgin or Barclaycard seems to be rather impossible.. Seems to me they're simply drawing people in with the fraudulent offer, then simply saying, oh, we're sorry you don't qualify..  but thanks for signing up for our garbage credit card with insane fees..   
  • CreditLandCom
    Thank you for sharing your experience with us. We have reviewed this offer and you are correct, nowhere it is mentioned that 20,000 Bonus can become a 10,000 Bonus all of a sudden... We will mention this in our review of this card so others can make an informed decision. Another way to get Virgin miles is to get an American Express charge card: The Business Gold Rewards Card® now offers 50,000 Miles, though you do have to spend $5,000 in the first three months of card membership to get it. It also has $0 introductory annual fee for the first year, then $175. http://www.credit-land.com/details/the-business-gold-rewards-card-from-american-express-open.php Premier Rewards Gold Card now offers 25,000 Miles, though you do have to spend $2,000 during your first three months of Card membership. It also has annual fee of $0 for the first year, then $175. http://www.credit-land.com/details/american-express-premier-rewards-gold-card.php While we do not know If any of these offers make sense to you, we are at least sure that you will get advertised bonus in full if you decide to get them... Conversion rates for Virgin America are: 100 Elevate Points = 200 Membership Rewards® Points All the best.
  • Deborah Ellsworth
     would very much like to start a new credit history  by making payments on time I would tohave a credit card that is NOT PREPAYID! I don't need a card with a high limit just something to start a new credit history. Thank You Deborah Ellsworth
  • Deborah Ellsworth
    I would very much like to start a new credit line to get back on track. I DO NOT WANT A PREPAID CARD!! This new credit card if I am approved does not have to hace a high limit just something for me to start over again and prove myself ThankYou. D Ellsworth
  • Miss Edna
    there is a huge problem with the RFIP chip: it is easily compromised. There are already 'readers' in the form of what looks like a cellphone in a case, that scans all the info in the chip by merely walking near a person -- this 'reader' penetrates leather, cloth, spandex, etc. The only thing it will NOT penetrate is METAL. Perhaps one has seen commercials touting metal credit card cases. Here is my hint for a free fix: cut a piece of aluminum foil or use the foil that is used to keep foods fresh, like coffee. Cut it so that when folded once, it forms a sleeve for your credit card. place the credit card in the sleeve, then place the sleeve in your wallet.
  • Robin Parks
    I am looking to apply for the AARP Visa signature card from Chase that offers $100 after spend $500 in first 3 months, no annual fee and 0% interest first year; I don't want to mail in offer because of having to write in Social security #. Can you direct me to the proper on-line site?
  • CreditLandCom
    The Chase bank cards are not currently available at Credit-Land.com, but you can consider applying for the Citi® Dividend Platinum Select® Visa® Card - $100 Cash Back. The cards has similar terms and cash back program.
  • Becky
    This is Becky Now what do I do just waqit for acard to come to me?
  • CreditLandCom
    Once you have applied, you should receive a letter within 10 business days letting you know if you were approved and when your card will arrive. If you did not receive any letter or notification from the issuer, you should contact them directly. Also, you should contact the issuer if you’ve been waiting for your credit card longer than 30 days. Since we are not a bank and don’t issue credit cards, we cannot give you any information about your application or credit card.
  • SavingStar
    Thank you for posting about SavingStar. Just to clarify one sentence in your article, we have over 5 million members (not 500). Thanks, Josh
  • CreditLandCom
    Sorry for the misprint. We’ve corrected the sentence. Thank you for noticing that.
  • Eric
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