Sep 29, 2009 10:41 pm US/Central
Best Holiday Savings Strategy: Put It On Layaway
CHICAGO (CBS) ―
It's only 86 days till Christmas. If you're on a budget like many Americans, you may be looking for a way to curb expenses. How you choose to pay for the presents could either cost you some money or actually earn you some money. CBS 2's Dorothy Tucker reports on the best holiday savings strategy.
In your mother's day or maybe your grandmother's, one of the most popular ways to shop for Christmas was layaway.
Chicago city residents Henrietta Limehouse and Karen Martsen are among the many shoppers reviving the tradition, and making layaway big business this holiday season.
Sears, Kmart, TJ Maxx, Marshalls and Burlington Coat Factory are among the major retailers offering the service. The average charge is a $5 fee with at least a month to pay off the bill.
Limehouse has relied more on layaway since she lost her job.
"It works good for my budget," Limehouse said. "Because I cannot afford what I used to afford."
Martsen also prefers layaway over plastic.
"Because with a credit card you're going to pay a lot of interest on it, and you're going to drag the payments out forever," Martsen said.
Good point. If you put $500 on your credit card and pay $25 a month, it'll take you two years to pay it and actually cost you $599.
Online layaway is another option to avoid credit cards. Online stores can take money right out of your checking account.
Dozens of websites offer the service. You pick out the product you want, and just like the brick and mortar stores you pay every week or every month, except you pay online.
Or how about a joining a Christmas Club and using cash for Christmas? Stores like Sears pay as much as 3 percent interest, but don't forget to read the small print.
"You can't have an early withdrawal. If you do, they're going to hit you with a penalty," said Attorney Robert Semrad, Debt Stoppers USA.
So follow the lead of William McHenry. The retired sheriff's officer opened up a Christmas Club account at Seaway bank.
"It helps because it automatically goes into the club savings account," McHenry said.
The automatic transfer keeps McHenry from spending the money.
"This way it's there for that purpose and it'll be there when the time arrives to use it," he said.
It's not too late to open up a bank or store Christmas Club account, but most will send you a check in mid-November, just in time for the Black Friday sales after Thanksgiving.
You've also got time to open up a layaway or online layaway, and get your merchandise in plenty of time for the holidays.
For more information on layaway options, click the links below.
Lay-Away
E Layaway
EZ-Layaway
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