It is hard to believe that the holiday season is upon us again. And even though economic times are tough in Florida and throughout the country, friends and families are sure to find ways to hit the stores and buy their loved ones gifts no matter what.

It can be the most wonderful time of year but only if wonder doesn’t come at the price of excessive credit card debt. Some people find that a layaway system at stores helps them get their loved ones gifts, even when they don’t have all of the necessary money for the items all at once.

Financial professionals, however, have a few warnings and tips for those who turn to layaway as their shopping strategy. The strategy can be a financially wise one, but just like with any sort of finance option, it can turn into a detriment without proper discipline.

One tip is for consumers to not just assume that the price that an item is now is the lowest price it will be. Prices are slashed throughout the shopping season, and layaway shoppers should ask stores whether they are willing to meet lower prices on the item on layaway if the price drops. In some cases, it might be worth waiting for an item to go on sale rather than making payments on it that will add up to more in the end.

A second tip is that consumers should only use layaway as a strategy if they actually work toward saving the money they need to buy the layaway items. If you can’t pay for them by the end of the contract, you’ll often have to pay a cancellation fee and have nothing to show for that payment.

Many during this time of economic hardship don’t have access to credit or avoid using credit cards due to low credit scores. For those shoppers, layaway can be a good way to pay for gifts in installments without actually having to use credit.

A tip for people who do have access to credit and feel responsible enough to use it is that layaway might not actually be the wisest shopping strategy. The service charge it might cost to use a store’s layaway program could add up to more money compared to how much a shopper would end up paying in credit card interest if they charged it and actually paid off the balance of their gift in a timely manner.

The glitz and excitement of the holiday season can be dangerous. Sure, the joyful time is needed in times of struggle, but the holidays aren’t so joyful if they leave consumers in a financial hole by the new year. Everyone should come up with shopping plans when it comes to holiday shopping and not use the season as a reason to throw discipline out of the window.

Source

MSN Money: “3 Reasons not to use layaway,” Gerri Detweiler, Oct. 12, 2011