Lay-by is still an option – one that helps you avoid interest rates
Remember the days of putting that dream product on lay-by? They’re still here. Though it is becoming less common, retailers report that there are still plenty of customers who use this method of payment.
Since lay-by sets out a time frame, usually a couple of months, to pay for goods – you can avoid paying interest rates of over 20 per cent if you use your credit card. You won’t get the instant gratification of buying something on the spot, but you will avoid leaving a huge dent in your bank balance.
Fees are still involved, though, so it’s most cost-effective to use lay-by for bigger purchases.
Big W still has hundreds of thousands of customers using lay-by every year. They charge a $5 non-refundable service fee for each new lay-by and you must leave a 10 per cent deposit when you sign up.
“Toys, expensive technology, substantial household items including televisions and vacuum cleaners, larger gifts such as bikes and new season apparel are among the most popular items to be put on lay-by,” a Big W spokeswoman said.
If you bought a washing machine for $750 on lay-by, with a $10 service fee and paid for it over eight weeks, the payments would cost around $94 per week and the total cost would be $760.
The same purchase using a credit card with an interest rate of 18 per cent could cost $1111 if you paid a minimum repayment of $20 from the first month. It would also take four years and eight months to pay off. The best way to use your credit card is to put the purchase on a 55-day interest-free credit card and pay it off before the interest-free days run out.
Myer also charges a $10 lay-by service fee to cover the administration costs. Goods must be $20 or more, and the customer also has to make a minimum deposit of 10 per cent. They get 60 days to pay it off.
Myer also offers promotional activities for toy lay-bys, especially around Christmas, that may involve extended payment times or no deposits.
“We have found that lay-by is not as common as it used to be and that more of our fashion conscious customers prefer to purchase the item straight away so they can wear it while it’s still on trend,” said a Myer spokeswoman.
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