Using Layaway Can Help You Manage Your Holiday Finances

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It is almost time for the holiday season to begin again. It is time to start thinking about holiday parties, holiday gifts, and how you will pay for it all. There are numerous ways to approach managing your holiday finances to ensure that you can do everything that you need to do without spending more than you intend. One effective tool that many people are using this year is the layaway programs available at various retailers across the nation. Here are some of the ways that using a layaway program can help you manage your holiday finances.

Spreading Out Costs

Using a layaway program allows you to spread the cost of your holiday spending over a longer period of time and allows you to make periodic payments towards the total you owe for your layaway purchases. The items that are placed on layaway are generally reserved during a single shopping trip made at least a month before the holiday occurs. The person knows exactly how much they will need to pay for all the objects they have placed on layaway and can budget their finances accordingly.

Lower Fees

Placing items on layaway at your favorite retail store can cost you much less in fees than putting the items on a credit card. Retail stores usually charge you a set rate for the items that you are reserving. This can be a flat fee or a percentage of the total purchase price of the items that you have reserved. Placing the items on a credit card subjects you to an interest rate that accumulates additional charges for every month that the balance on the credit card is not paid off.

Limiting Your Spending

Although it may seem counterintuitive, you will actually spend less if you get all of your shopping done in one trip and place the items on layaway instead of going shopping for a few items every time you get paid between now and when the holidays arrive. Studies have shown that people spend more over several smaller trips than they do during one big shopping trip because they are less concerned with placing small additional items into their cart. People that have a long shopping list have a limited amount of space to carry their items in, so they are more selective about what they put in their cart. If you do place items on layaway, be sure to pay them off before the holidays arrive or you may find yourself without the merchandise and paying substantial fees to the retailer for nothing more than storing the items in their back room for a few weeks.

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  1. Layaway program started to fade out in the late 90’s/early 2000’s because more people were putting their holiday purchases on their credit cards. After the financial crisis began in 2008, many companies brought back layaway programs to help their customers pay for the gifts they wanted. While no longer offered by a majority of retailers, those that cater to lower income consumers are likely to have some sort of layaway program for the holiday season. Walmart, currently the world’s largest retailer, offers a layaway program each year during the holidays, including the 2013 holiday season. http://www.walmart.com/cp/Layaway/1088466?fromPageCatId=1099264

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