By Amy Winter

September 24, 2010 5 min read

With the holidays around the corner, layaway services provide a way for customers to budget their spending and make sure they have reserved the perfect gifts for loved ones. It gives shoppers an early start when going through their gift giving lists. As they make payments on the items, they can rest assured that the gifts are safely stored.

Burlington Coat Factory and Kmart offer layaway services for all of their products -- except perishable items at Kmart. Both programs are available year-round as a convenient shopping option for consumers, but they become more popular around the holidays. Salima Yala, divisional vice president of financial services for Kmart/Sears, says that customers embrace the layaway service and that it helps Kmart deepen its relationship with shoppers. Toys R Us provides a layaway program that features favorite toys, such as bikes, dollhouses, play kitchens, outdoor play equipment, water slides, karaoke machines and indoor table games.

"Burlington Coat Factory's layaway service is popular with customers because it allows them to get a head start on shopping," says Susan Hilton, vice president of customer service for the company. "Our layaway service enables customers to select the newest items for back-to-school, holiday, birthday and everyday shopping while making payments at their convenience that fit within their budget."

The economic downturn has brought layaway back as a valuable option when shopping. At Burlington Coat Factory and Kmart, layaway has been available for years, but Toys R Us just started its layaway program last year. Yala says layaway has returned big and strong because of the bad economy and the situation with credit card companies. With credit card companies limiting their customers, layaway provides an opportunity for shoppers to budget and make small payments without affecting their credit.

"Layaway services teach responsibility," Yala says. "It trains customers to be fiscally responsible and plan ahead. It teaches them discipline, which they aren't necessarily getting through credit card companies."

Once shoppers find their gifts, they can make small payments without worrying about accruing interest. Yala says that Kmart provides two payment options: the eight-week plan or the 12-week option. For the eight-week plan, shoppers need to make biweekly payments with a $5 service fee and an initial down payment of 10 percent of the purchase or $15. The 12-week plan requires a higher fee with a minimum purchase of $300, according to Yala. Burlington Coat Factory and Toys R Us require a deposit of 20 percent of the total purchase. Hilton says Burlington Coat Factory has a $5 service fee. Customers must pay off the merchandise within 60 days. Toys R Us requires a $10 service charge, and the order needs to be paid off within 90 days (50 percent of it must be paid by 45 days), according to Katie Reczek, who works in corporate communications for the company.

Once the amount is paid in full, the shopper can pick up the product. During the layaway period, items are stored at the department store. Some customers appreciate having the items stored for them. They don't have to hide the presents at home from their children, according to Yala. Reczek says it can take seven to 10 days to receive the merchandise; therefore, Dec. 13 is the last day for final payments on Christmas items. Payments can be made at Toys R Us anytime with a debit card, a credit card, a check, cash or a gift card. Last year, Kmart started offering online layaway. This allows customers to complete their payments on the Kmart website instead of having to go into the store, according to Yala.

Without leaving your home, you can use eLayaway to find holiday gifts with a click of a button. Jesse Stickle, director of media relations for eLayaway, says that the website is similar to traditional layaway but that it has a "modernized spin." Launched in 2006, the website allows users to shop with several merchants and choose from thousands of items. Stickle says payments are taken automatically from checking accounts. Customers can pick their own payment plans, as long as the items are paid off between two and 12 months.

Unlike credit card companies, layaway programs help you avoid hidden charges and monthly interest fees. And they don't require credit checks.

"The programs offer added convenience and flexibility by providing customers another option for budgeting their holiday spending by allowing them to make smaller payments over time," Reczek says.

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