This is day three of our series about holiday budgeting, Put a Bow on Your Budget: 6 Days of Advice.
It seems like there are credit alternatives lurking around every corner, promising the benefits without any potential damage to your score.
Unfortunately, many of these options can be just as harmful to your financial stability as purchasing with a credit card, even when they are advertised as the solution to all your problems.
A popular credit alternative is layaway. Check out the facts about layaway programs to see if they are a good option for you, or if you’re better off taking the time to save up for that big purchase.
With the holidays just around the corner, you’ve probably noticed more department stores are offering a layaway program than ever before. Layaway faded from the public view during the rise of easy-to-get lines of credit of the ‘80s and ‘90s, but the financing option has reemerged during the recent recession.
Layaway is designed to help those who can’t purchase an item in full be able to afford it without using credit. The store will hold your item(s) for anywhere from a few months to a year while you make weekly payments until the purchase price is reached.
Some of the benefits include:
With all these benefits, layaway may seem like a no-brainer but there are also some unwanted downsides to layaway to consider as well. Here are a few potential problems:
The benefits of buying on layaway are mixed, so do yourself a favor and check the fine print and use common sense to make sure your credit score and bank account secure.
Thanks to Matthew Simoneau for the photo under a Creative Commons license from Flickr.