Remember the layaway plan?
It seems they're still popular with some shoppers and getting to be more popular among online shoppers, as well.
The idea behind the layaway purchase is for a store to hold a particular item that you want to buy while you make the payments over time. At the end of that timeframe, the item is paid for (sometimes with a layaway fee), and it's yours.
It's one way to buy something without incurring the interest expense of a credit card, or putting a big one-time dent in your wallet.
Over the past few months, I must admit I've noticed some shoppers asking store clerks if the business offered a layaway plan -- everywhere from a music store to a discount retailer.
Of course, many large retailers and discounters have always offered layaway plans. The increase in interest may be a sign of this troubled economy, as consumers try to lower credit-card debt or limit their purchases to those things they can truly afford.
As long as you allocate the money to make the installment payments, the idea sounds pretty consumer friendly. The "newer" layaway plans offered by online retailers are a bit more complicated. Some retailers may handle the layaway process, but a growing number are using third-party online payment services. Typically, once you've made the payments, the online service pays the retailer and then you receive the product.
Howard Schwartz, communications director with the Connecticut Better Business Bureau, says reading the fine print is always important.
"Layaway plans go back to the 1950s," he says. "It's not a new idea, but because of the economy and certainly with Christmas approaching during a period of widespread economic distress, the concept is coming back strong and large retailers seem to be offering it again."
Schwartz says that consumers "should understand all of the terms ... or they can end up with a huge headache and be very unhappy."
The Federal Trade Commission, along with the Better Business Bureau, offer some basic consumer alerts for all layaway plans, and they're worth noting. Among them:
In addition, the Federal Trade Commission has a toll-free number to call for information or consumer queries at 1-877-FTC-HELP. The federal agency points out that layaway plans aren't specifically covered by federal law, but the organization is responsible for any illegal or deceptive sales practices.
Anthony Cronin writes a personal-finance column for Grace magazine and also is The Day's business editor. He can be reached at a. firstname.lastname@example.org.
If you're considering a layaway plan, remember some simple steps that can save confusion or added financial cost:
Find out how the plan works. Check out the retailer's reputation. Ask about the retailer's fees and refund policy. Keep all your payment records.
Sources: Federal Trade Commission, Better Business Bureau