Layaway makes its return as a cure for the holiday hangover


November 23, 2008|By DAN THANH DANG

We haven't even started imbibing yet, and already most of us are preparing for that mega-huge post-holiday hangover.

This is not the headache, regret and misery you get from attending too many Christmas parties or whooping it up like a holiday-happy lush. This is the headache, regret and misery you get from overindulging on gift purchases, whipping out the plastic one too many times for things you can't really afford and then realizing you have to pay that bill - with interest.

I kicked the habit a few years ago, but life as a recovering overspender in the heyday of easy credit was hard. It felt horribly gauche to save or (gasp!) abstain when the rest of the world was still lapping it up at the Bar of Instant Gratification.

But thanks to a nearly comatose economy, layoffs across the country and a credit crisis that continues to ooze, it's practically hip to be uncool again. Paying off debt, saving for the future, recycling and "repurposing" goods, as well as living within your means, constitute the new chic. Just look at what Kmart and Sears have been trumpeting in their commercials lately - the layaway plan, that odd creature from long ago that was almost killed off by credit cards.

For many, layaway allowed consumers who didn't have the money to pay all at once for some must-have object of desire to pay a small fee and set it aside at a store while you paid over time. You couldn't take the item home with you right away, but the upside was zero interest and no debt to speak of once you paid in full.

When I was a kid, my older sister took a dress she picked out for me at the now-defunct C-Mart up to the counter and handed over a small amount of cash to the salesclerk, who then wrapped it up in a bag and put it on a rack. When we walked out of the store, I puzzled over why she left the dress I really, really wanted at the store.

She patiently explained to me that she would pick it up once she finished paying for it.

At the time, it was hard walking away from something I really, really wanted, and harder still to grasp the layaway concept.

But as an adult trying to live within my means, it makes all the sense in the world.

Most layaway plans ask you for a small fee and 10 percent down to put a product on layaway and then give you a fixed amount of time to make payments, usually 30 to 60 days. Most will spell out exactly what you can put into layaway - certain toys but no clothes, for example. If you cancel, you'll get a refund, minus a small cancellation fee.

"Layaway may have gone out of vogue, but really, it's a very viable method to purchase things because it gets you back on a cash spending plan," said Stephen D. Hannan, executive director of the Maryland Consumer Rights Coalition. "There's still plenty of time between now and Christmas to make layaway worthwhile."

Even better, Maryland has laws protecting your layaway, Hannan says.

The Maryland Layaway Sales Act requires a merchant to give you a written agreement that spells out your rights and obligations when you buy an item on layaway. If the seller does not comply with this law, you may cancel the agreement and get a full refund. The written agreement must state the store's name and address, your name and address, a description of the merchandise, the cash price of the item, the amount you have deposited, how much you still owe, how many payments you must make and the date each payment is due. It must also state that you have a 15-day grace period in which to make a payment after one is due.

State law requires the merchant to hold the items or identical items you want, and deliver them to you on a specific date after you've finished paying.

"The law makes the price of the goods fixed unless the price goes down within 10 days of the agreement," Hannan added. "If the price goes down, the law says the seller must give you the reduced price. It should be automatic, but you should definitely keep an eye on it and ask if there's a price reduction before you pick up your goods. Remember that if you cancel, the merchant can only charge you 10 percent of the full price of the item."

Granted, this can be an expensive program for retailers because it takes valuable merchandise off the floor. But as the economy continues to tank and consumers continue to cut back, it's a smart program that may persuade people to shop smarter.

I'm sure some naysayers will gripe about how people shouldn't buy things they can't afford or preach about how it would be smarter to save first in an interest-bearing account before you shop. If this were a perfect world, those approaches would be best. But seeing as how we're in the process of bailing out banks, car manufacturers and others, let's please stop breathing that rarefied air for a sec and talk realistically.

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