Layaway making a comeback

HARLINGEN - Mia Gomez has already begun her Christmas shopping, put a Hummer Ride-On Toy on layaway.

"I'm not even close" to finishing, Gomez, a Weslaco resident said recently.

Gomez, who works in finance, said she's being savvy about her holiday shopping by using layaway instead of instantly paying the full amount in cash or using a credit card.

"In reality you get to a point where you saw a deal but they raise the prices after Thanksgiving," she said. Sometimes, toys can go up 15 to 20 percent once holiday shopping starts, she explained.

With the current economic crunch, retailers like Kmart are promoting their layaway programs in a response to "belt-tightening moves" by families across the country.

Tom Aiello, a spokesman for Sears Holdings, which owns Kmart, said discussion for the program's promotion on television, in newspaper and online advertisements had a lot to do with the economy.

"Customers need great value and we need to merge it with this tough economy," Aiello said.

Kmart, he said, is the only national discount department store offering layaway.

In 2006, Wal-Mart ended its program after a decline in use, a 2006 news release states.

San Benito shopper Adriana Garza misses layaway shopping at Wal-Mart. For years, the grandmother of three used the store's program all year long.

"Now it's hard because you can't buy as much as you want to," Garza said.

This Christmas season, Garza said she plans to use Kmart's layaway program to avoid interest charges on her credit cards.

"I'd rather go that route," she said. "I wish more places had layaway."

Retailers like TJ Maxx, Marshalls and Burlington Coat Factory also offer layaway programs.

The response to Kmart's layaway thus far, Aiello said, has been enormous.

"This tough economy gives the option to a credit card," he said. "Customers can get items they want and space out payments for maybe eight weeks. This makes it manageable."

Layaway also allows customers to avoid tying up their credit or collecting interest charges, Susan Ehrlich, head of Kmart's financial services, said in a news release.

To place items on layaway, customers pay a one-time $5 fee with 10 percent of the item's cost. Payments are made weekly.

"It's pretty simple," Aiello said.

Should a customer cancel, they can get a full refund on their payments, after paying a $10 cancellation fee. The initial $5 fee is not returned, either, Aiello said.

"But customers get a seven-day grace period for payments," he said. "We want to make it very useful."

Last year, more than 3.2 million customers used layaway, Aiello said.

"We have every indication that number is really going to rise," he said. "Through the economic situation people want to be smart shoppers."

Customers like Gomez, Aiello said, are benefited from keeping their purchased items in the store.

"You can have your gifts out of the house, away from any wandering eyes," he said.

Gomez said she plans to get her items out of Kmart's layaway program two weeks before Christmas.

"I try to be as smart as I can," Gomez said.

Shoppers don't need to limit themselves to stores around town. Web sites such as eLayaway.com also offer unique programs.

Currently thousands of customers are using eLayaway.com, a Florida-based company that started in 2005. To use eLayaway.com, a 1.9 percent fee of the cost of the item must be paid up front.

The company serves as a payment agency for more than 1,000 merchants like The Gap and Bass Pro stores, said Michael Bilello, the senior vice president of business development for the company.

"The American consumer is going back to their roots," Bilello said. "They don't want to operate in credit to get what they want."

Major stores like Wal-Mart may have decided to do away with layaway, but consumers will use technology and the Internet to find a better deal, he said.

"Once consumers find out about this ... this will be the way to go," Bilello said.