WATERLOO -- In the new economic climate, Kmart is banking on a classic retail tool to lure in holiday shoppers.

With the advent of credit cards, layaway programs have generally gone the way of toaster ovens.

However, layaway buying has shot up at the Cedarloo Kmart, according to store manager Dan Hewitt.

Tasha McGee said layaway purchasing is easier for big purchases, adding that the fees are lower than credit card interest payments.

"I'll do most of my Christmas shopping here because they do have layaway," she said.

Shoppers who are dealing with a sluggish economy and mounting credit card debt are probably looking for other means to buy big, Hewitt said.

Fewer retailers offer layaway programs as a purchase option, he added.

Wal-Mart did away with layaway in 2006, and Target doesn't offer the option. TJ Maxx in Waterloo will no longer allow layaway purchases, as of this month.

Customers at Kmart can set aside an item for up to eight weeks for a $5 service fee and 10 percent of the item's price. Only after paying off the item in installments, can the customer take the items on layaway home. Layaways typically rise during the holiday season, and Hewitt said the number people setting items aside has gone up.

"Our layaways are definitely up from this time last year," Hewitt said.

Shoppers usually put higher-end items, such as televisions, on layaway, Hewitt said, but he added that, during the holiday season, toys and clothing are the most popular items that customers set aside.

The store won't set aside consumable goods or prescription medication for layaway. All holiday decorations must be paid for by December 5.

Sears offers limited layaways on larger, seasonal items, such as snow blowers, Waterloo store officials said. Sometimes, layaway purchasing is available as part of a store promotion but is no longer a general practice.

McGee said layaway has another benefit by keeping Christmas and birthday presents out of her home a little longer and away from her curious 4-year-old son.

"My son gets into everything," she said. "If it looks interesting he'll just get into it."

Instead of layaway programs, some department stores, like Von Mauer, offer charge cards that carry no interest if the balance is paid off within a certain span of time. Credit cards and charge cards allow customers to take their unpaid-for item home, unlike layaway.

"We don't hear much about layaway," said Chad Brimeyer, personnel operations manager at Kohl's in Cedar Falls.

The store doesn't have a layaway policy but will occasionally place a hold on an item for a customer who has trouble getting to the store.

Contact John Molseed at (319) 291-1418 or john.molseed@wcfcourier.com