As more retailers in Indianapolis and across the country are allowing their customers to put items on layaway and make payments on those items for the holiday season, economists are expressing concern that this option may not be the best for consumers.
Todd Roberson, a finance professor at Indiana University said “shoppers should be aware of service fees and other hidden charges”. For example: If you put $100 in purchases on layaway at Walmart for one month they will charge you a service fee of $5 and this equals to about a 60% interest rate for the year.
Credit Cards Are Better Option?
Many consumers who have been hit hard by the economic recession have found it difficult to hang onto their credit cards over the last four years but, the reality when it comes to layaway is that credit cards are sometimes a better option.
Most major credit cards charge a lower interest rate than the average layaway plan and the consumer is protected thanks to the wide variety of laws that regulate credit card companies nationwide.
Since there is no layaway law, companies like Kmart can charge whatever fees they want but other economists see layaway as being a better option. Layaway forces consumers to work with the money that they have instead of getting deep into debt like so many other consumers do during the holiday season.
Always Use Common Sense First
Before choosing a layaway plan with any store in Indianapolis this holiday season consumers should read the fine print of any contract before they sign. This step will enable every consumer to save money and avoid the heartache that comes from paying excessive fees.
Many stores like Sears, BestBuy and Toys R Us list items that are eligible for their layaway plans online. Doing a little online research before choosing a layaway plan can save any consumer money during the holiday season.