A blast from the past is making a comeback this holiday season and retailers are hoping that it builds revenue numbers in what is expected to be a slow holiday season. Unemployment is expected to continue rising and is nearly at 10% already, with certain states reporting unemployment rates that are much higher than the national average. California, for instance, the nation’s most populated state, is reporting current unemployment levels over 12%. Almost no one is in a better financial position today than they were a year ago or two years ago, and as a result expectations for holiday shoppers are tempered.

To help give holiday shoppers options for financing gifts this year, many large retailers are offering layaway plans. These programs were used extensively until the early 90’s when it became easy for anyone to get a credit card with a sufficiently large credit line. These plans offer customers the ability to make a down payment on an item and then make regular payments until the item is completely paid for, at which time the item becomes the property of the buyer. This is a viable alternative for consumers with credit cards that are maxed out or for people who don’t qualify for in-store financing. These tips will help consumers use layaway plans appropriately.

- Plan Ahead: Layaway programs are great for shoppers that plan ahead for major purchases but they don’t offer much to last minute shoppers. If you’re thinking of avoiding the giant credit card bill in January this year by using layaway programs instead, you should be out shopping now. Most stores require a down payment of 20% plus a small fee to participate in the program and many stores have a set deadline in order for the last payment to be received in order to guarantee delivery of the item by Christmas.

- Buy From Established Names: A lot of stores are offering layaway programs this year that haven’t done so in past years. However, retail stores are experiencing serious financial hardship and if the one you have goes under this holiday season, there’s a possibility that it could take your layaway dollars with it. A lot of small, individually-owned companies in your local community may offer a layaway plan but some of these stores are at the greatest risk of going under. Some stores offering layaway programs this year include Sears, Toy’s R Us, and Kmart. Companies like Home Depot and Best Buy also offer an online layaway program.

- Understand The Terms: Like any financing program, there are terms, conditions, and fees to understand. You should be clear on the payment schedule as well as any penalties for late payments or cancellation of the purchase. Most programs have a defined due date by which the purchase should be completed. The fees associated with participating in the program are also important to consider. Some stores have a fee structure that makes their layaway program an excellent alternative to a credit card purchase, while others charge a higher upfront fee and interest expenses that might make them less worthwhile to consumers.

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