Layaway is hot again in 'average' holiday season

By Rachel Bennett - email

(RNN) - Layaway is making a big comeback this year with the revival of the program at the country's biggest retailer - Walmart.

The program is slated to open back up for the Christmas holiday on Monday, and last until Dec. 16, when final pickups have to be made.

But Walmart is by no means the only store offering layaway this year.

Some of the big retailers to look out for are: The Burlington Coat Factory, Marshall's, Best Buy, Toys "R" Us, T.J.Maxx, Kmart and Sears.

Kmart and Sears, both owned by Sears Holdings, have offered layaway for about 40 years. And, according to a spokesperson, the use of the program continues to rise.

"Since 2008 we've seen our layaway contracts double in volume," said Divisional Vice President of Layaway with Sears Holdings Salima Yala.

The popularity of the program waned in the 2000s and late 1990s as credit cards overtook the program, which generally requires stores to hold large amounts of merchandise on reserve.

But after the credit crunch of 2008, consumer credit has been down. According to the Federal Reserve, the total percentage of outstanding consumer revolving credit was down by 7.5 percent in 2010. This was after consumer credit use fell by 9.6 percent in 2009.

So far, consumer credit is also down for 2011, falling a whopping 10.1 percent during the third quarter.

According to the National Retail Federation (NRF), holiday sales are expected to rise 2.8 percent this year and consumer debt could be one of the reasons for the small forecast.

"The 2011 holiday season can be summed up in one word: average," the NRF said in a statement.

"Consumers have been paying down debt, they've increased their savings rate," Ellen Davis, with the NRF, told CNN.

This means people are relying on less credit for purchases, making interest-free layaway an option for holiday shopping.

Yala said that obtaining credit was much easier before 2008 than it is today, but she said she doesn't think the surge in Sears Holdings' layaway programs have been a result of the economy. Instead, she said layaway has been a marketing priority since 2008.

"We really don't think that layaway is becoming popular just because of recession and credit crunch times," she said, though she did call layaway a "financing tool" for customers.

It's a financing tool without the interest of a credit card.

Morgan Weaver, a stay at home mother of two, said she uses layaway for her Christmas purchases.

"I use layaway because it's easier for us as a one-income household to afford to purchase Christmas presents for our children and family members," she said. "This will be our second year using layaway."

Weaver said that layaway makes more sense than using credit cards.

"A lot of people purchase items they don't have the cash for with their credit cards. I think this is part of the problem that we are now facing with our economy," she said. "It just makes better sense to not pay interest on things!"

Although layaway programs do not charge interest, almost any plan at a major retailer has a service charge, and most require a base purchase amount or a percentage of the sale as a deposit. All services have a set program time limit and cancellation fees.

It's important to check your retailer's layaway policy because all of them are different, and may vary from store to store.

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