Holiday Central

New economic reality triggers return of payment plan of yesteryear

POSTED: Tuesday, October 2, 2012 - 10:00am

UPDATED: Tuesday, October 2, 2012 - 10:04am

An old-fashioned way of attracting customers is making a comeback, just in time for the holidays, and some of the biggest retailers around have latched on to the idea.

Walmart is resurrecting layaway again this year, starting earlier and with reduced fees.

Other heavy-hitting retailers like Toys r Us, Sears and Kmart are also using layaway.

"It's an about-face from companies saying layaway's this old thing that nobody wants to do to people saying layaway is a way that we can compete for holiday dollars," says NBC News Digital financial writer Allison Linn.

Obviously, layaway's comeback is geared toward Christmas 2012, and analysts like Linn have an idea what retailers are thinking.

"I've got them in the door in September buying an item at full price that they might be tempted to buy from a competitor on Black Friday for less money," Linn explains.

It's a way for retailers to sell products to customers who don't have the cash on hand to purchase it outright, who don't or can't use a credit card and don't want to buy online.

"It's a way for the brick and mortar stores to say 'I'm still relevant..you know I can still offer you this good deal," Linn says. "If you buy something online, you almost have to use your credit card."

Critics say layaway fees can be costly, and canceling will definitely cost you.

They offer alternatives.

"You'd be much better off putting that money into a savings account," says SmartMoney.com's Kelli Grant.

Grant advocates a do-it-yourself layaway plan.

"I think anyone who's considering layaway really should also consider the option of just putting aside some money in your own bank account. So, that way you're better prepared for when these holiday sales start," she says.

You also avoid fees and financing when paying with cash.

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