eLayaway

Buying on layaway seen as alternative to credit

This holiday season, Janet Groschel, 34, of Medford, like many other cash-conscious shoppers, is saying goodbye to credit cards and hello to layaway.

When she began setting up her home 10 years ago, she put a deposit on the merchandise, making regular payments until she owned it and could take it home. After a decade hiatus, this year she put $250 in gifts on layaway at Kmart for her niece, nephew and 1-year-old son.

Her thinking: Why create a credit card bill for January when "God only knows what January is going to bring," said Groschel, who works part time in medical billing.

So many others have the same idea that Sears has cleared the mothballs off its layaway program, suspended in 1989 on all items but jewelry. Its revival was due to customer requests, plus more layaway traffic at its sister Kmart stores, said Tom Aiello, division vice president at Sears Holdings in Hoffman Estates, Ill.

It's not just the "economically challenged" who are taking advantage of this payment option, he said. Shoppers just don't want to face credit card bills early next year. Plus, he pointed to an added bonus - merchandise can be kept out of the house until right before Christmas, safe from children's prying eyes.

The pay-as-you-go alternative to credit cards is "a way to rein in spending" and avoid piling new debt on top of old, said Gail Cunningham, spokeswoman for the Silver Spring, Md.-based National Foundation for Credit Counseling. In fact, she said, this is a particularly smart approach for those "entering the 2008 shopping season still paying for holiday purchases in 2007."

At Sears, customers put 20 percent down on merchandise and pay a $5 service fee, with a deadline to pick up goods by Dec. 23. Not all products are eligible: Excluded are goods such as home appliances, cell phones, personal computers and items that are flammable or contain certain chemicals.

Layaway has been on the rise this year at Kmart, said Amy Morey, sales manager at the Kmart in West Babylon. Shoppers are even coming from Queens - where stores in Rosedale and Middle Village do not offer layaway - to take advantage of the pay-as-you-go approach, she said. Kmart also has locations that offer layaway in Huntington, Bohemia and Farmingville.

Shoppers there pay a $5 fee, put at least 10 percent down and make biweekly payments, with a pickup deadline of Dec. 5 for layaways containing seasonal/holiday merchandise, Morey said.

But those looking to avoid the in-person crush of holiday shopping can lay goods away virtually through eLayaway.com, an online service started in 2005 that charges shoppers 1.9 percent of the purchase total. Consumers select goods on participating merchants' sites, and when it comes time to pay, they choose the eLayaway option. An online calculator helps them set up a payment schedule and their checking accounts are tapped each month for the designated amount until paid in full, at which time merchants can ship goods automatically. Among the 1,200 participating merchants are affiliate retailers Swarovski, Apple, Dell, the Gap and the Discovery Channel Store.

Consumers - more than 75,000 are registered - can also set up payment schedules for travel, sporting events and health care needs, said Michael Bilello, senior vice president of business development for the Tallahassee-based firm. People have made payments on everything from a barbecue accessory set to hip replacements, he said.