Consumer Watch with Natasha Pirrottina: Consider the old-fashioned lay-by instead of buy-now-pay-later traps

Whether or not you want to admit it, Christmas will be here before you know it. To avoid a frantic rush to the shops, you might like to get your gift shopping done early and maybe take advantage of a sale or two. Instead of falling into a buy-now-pay-later (BNPL) debt trap or paying interest on your credit card, have you considered using good old-fashioned lay-by? When money is tight, lay-bys are a great budget-friendly option. For many households, it is also an easy way to manage larger or seasonal purchases without financial strain. You pay a deposit, about 10 per cent, and then make regular payments over an agreed period. Lay-bys typically run for 10 weeks, and you’ll usually have to pay a small set-up cost. For most large retailers this fee is about $3. You can’t take the items home until they’re paid off, but the upside is you don’t have to worry about finding a hiding spot for the pressies. When you enter into a lay-by agreement make sure you receive it in writing and that you understand it before signing. This is your contract with the store, and it must set out key details such as the total price, the amount of the deposit, how much is still owed, the payment schedule, and the shop’s contact details. The agreement must also explain what happens if you or the store cancel the lay-by, including any fees that apply. You can change your mind and end the agreement before collecting the item. You’ll get back any money you’ve already paid but the store may charge a cancellation fee. This is usually between $10 and $20. This fee must be reasonable and reflect the store’s actual costs. For example, if a shopper cancels a lay-by for summer sporting gear late in the season, the store may need to discount the equipment, and the termination fee could cover that loss. If the store breaks or damages the product before the customer collects it, no cancellation fee can be charged. Stores also have rights under lay-by agreements. If you don’t keep up with payments or break the rules of the contract, the shop may cancel the agreement. When this happens, the store must return the money already paid, minus any fees. If you are finding it hard to make a payment, contact the store first to discuss your options before cancelling the lay-by. Most large retailers offer a lay-by service. Some will offer it a couple of months out from Christmas. Remember, lay-by is a great way to budget your spending and steer clear of unnecessary debt, making it a smarter option than using your credit card or a BNPL scheme. If you have an issue with your lay-by agreement, contact Consumer Protection for free advice on 1300 30 40 54. Natasha Pirrottina is senior regional officer for Consumer Protection in the Mid West