New reports suggest that in order to decrease credit card debt, consumers are increasingly turning to layaway as a shopping option this holiday season.
Layaway, once a common method for consumers to make large purchases, had been overshadowed by credit card use in recent years.
Due to the demand, many companies are reinstating the option, including Burlington Coat Factory, which extended its plan by 30 days, and Kmart, which instituted a three-month payment plan, according to Buffalo News. Some stores have even begun offering Internet-based installment plans.
“I got most of my Christmas shopping done, and I’ll have weeks to pay for everything,” Angela Roberts, a Buffalo native, told Buffalo News. “Layaway gives me more time to budget my money and I’m able to stretch it out, so I can get the things I need.”
Consumers have been drawn to the option as it is typically devoid of late fees and interest charges. However, cancellation fees can be costly, amounting to as little as $5 to $10 dollars to 20 percent of the purchase price, the news source says.
The Federal Trade Commission recommends getting a written copy of the agreement to avoid unnecessary cancellation charges.