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BBB advice on the layaway process

The Great Recession is over, but its effects are still being felt. One of those effects saw layaway plans reintroduced into the marketplace. With many shoppers still minding budgets and searching for more affordable methods of paying for big-tick...

The Great Recession is over, but its effects are still being felt.

One of those effects saw layaway plans reintroduced into the marketplace. With many shoppers still minding budgets and searching for more affordable methods of paying for big-ticket items, layaway plans are worth exploring. Better Business Bureau of Minnesota and North Dakota (BBB) is offering advice on how to use this payment plan in lieu of credit cards.

Once considered a dated, old-fashioned method of payment, layaway services are back, with many retailers offering payment plans for today's more frugal consumers. Buying items on layaway is different from putting them on a credit card because the buyer isn't charged interest on the purchase and can't take the item home until it is paid off. When purchasing items on layaway, the buyer must typically make a down payment of 10 to 20 percent and pay any service or plan fees for the store to hold the item for them. The customer then typically has 30 to 90 days to make periodic payments to pay off the balance. Once it is paid off, the customer can take the item home.

"For many people, layaway plans are a preferable alternative to taking on more debt via their credit cards," said Dana Badgerow, president and CEO of BBB of Minnesota and North Dakota.

As a complement to in-store layaway, some stores provide online layaway services for purchasing items through the retailer's website. Additionally, third-party businesses have sprung up for the purpose of setting up layaway plans online between customers and retailers that don't already have a layaway program. Customers make periodic payments to the third-party layaway service provider. Once the item is fully paid for, the business then buys the item from the retailer and ships it to the customer.

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When buying items on layaway, the BBB advises consumers to get everything in writing and offers the following checklist of questions to ask:

• How much time do I have to pay off the item?

• When are the payments due?

• How much do I have to put down?

• Are there any storage or service plan fees?

• What happens if I miss a payment? Are there penalties? Does the item return to inventory?

• Can I get a refund or store credit if I no longer want the item after making a few payments?

• What happens if the item goes on sale after I've put it on layaway?

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• Does the retailer or third-party layaway service have a good BBB rating? Research them for free at www.bbb.org .

For more advice on how to be a savvy consumer this holiday season, visit bbb.org.

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