Is layaway shopping right for you?

As the holiday shopping season fast arrives upon us, some are wondering how to go out and make their holiday purchases without getting burned by credit card debt or depleting their savings. One way for consumers make purchases while sticking to a budget is to use a layaway program.

Layaways, born during the Great Depression, made a comeback last year during the recession. The service generally works like this: Consumers enter into a contract with the store, make an initial deposit on the total purchase price and pay a service fee. The store holds onto the items until they are paid off. There are no interest fees, as the items are are kept by the store until they are paid in full.

Kmart and Sears are the two biggest retailers offering layaways. And according to Consumer Reports , other major retailers including Toys"R"Us, Babies"R"Us, T.J. Maxx, Marshalls and Burlington Coat Factory are also offering the service.

Though the service is good for consumers, the practice can be costly for retailers. The cost of holding items in the store or a warehouse can outweigh the benefit of providing the service. Walmart discontinued layaways in 2006.

But people like the convenience and some just hate to put anything on a credit card.

"When you don't really have the money to buy something, putting it on layaway forces you to budget," Kent Fong, a 45-year-old computer lab technician, told MercuryNews.com . "Use a credit card and you've already bought it and are enjoying it and you don't think as much about making the money to pay it off. So layaway is safer. This country wouldn't be in the credit-card mess we're in if we'd all just use layaway."

The Business Insider reported that 7 percent of consumers will use layaway this year.

Layaways are also getting a reboot in the form of a new technology-driven business model known as "e-layaway." Bankrate.com reported businesses like eLayaway.com simplifies layaway for both merchant and consumer by removing the costly, time-consuming storage and bookkeeping processes. The service works with many retailers.

To help consumers, the Better Business Bureau recently released a checklist  of key questions to ask before opening a layaway account.

• How much time do I have to pay off the item?
• When are the payments due?
• How much do I have to put down?
• Are there any storage or service plan fees?
• What happens if I miss a payment? Are there penalties? Does the item return to inventory?
• Can I get a refund or store credit if I no longer want the item after making a few payments?
• What happens if the item goes on sale after I’ve put it on layaway?

For more information, Consumer Reports provides some answers to the questions.

Also different retailers will have different layaway plans, so it's important to understand the agreement. The Chicago Tribune reports that Toys"R"Us requires buyers to put 20 percent down and pay a $10 service fee. (Also, to bring items home in time for the holidays, payments must by completed by Dec. 6.) Burlington Coat Factory gives consumers eight weeks to complete their purchases and the store requires a 20 percent deposit and a $5 service fee.