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Layaway to save

February 4, 2010 10:10:00 PM PST
Almost half of all Americans are using their credit cards less. And an old way to pay - layaway - is on the rise as more merchants offer extended payment plans. Today you can buy iPods, concert tickets, or even pay for your honeymoon on layaway. You put a bit of money down, pay for your purchase over time until it's paid off. And then you have your item or take your trip.

While stores such as Sears, Kmart, and Burlington Coat Factory have had layaway for years, now they offer layaway online.

There's also E-layaway that allows you to pay for items from Home Depot, sports tickets, or pet supplies over time. And with LayAway-Travel, you can pay for your vacation with installment payments.

Toys "R" Us is another big retailer that recently started offering a layaway program. It's called "Big Ticket Layaway" and it's available for expensive items such as children's furniture, bikes, and dollhouses.

Consumer Reports ShopSmart says that a big advantage to layaway is that you don't have to pay interest like with a credit card. But there are drawbacks.

Many plans charge a cancellation fee, which can be as high as $150. Some even charge a service fee. And if the store files for bankruptcy, you lose your money.

ShopSmart recommends that you sign up for automatic billing. You're less likely to miss payments and lose your merchandise. And if you're buying more than one item, be sure to bundle those into one order. That way if the store charges a service fee, you only pay once.

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