Back-to-school savings

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NEW YORK (CNNMoney.com) -- Can't afford that backpack? What about those notebooks and pens? Increasingly, consumers are using layaway plans as a way to pay for back to school items.

1. Know how it works

To start with, we don't recommend going on a layaway plan if you can help it. But some folks may feel they have no other choice.

Here's how it works. Some retailers like Kmart, Sears (SHLD, Fortune 500) and TJ Maxx have layaway policies. And when you use layaway, you typically put down a small fee -- $5 in some cases. And you also leave a deposit -- usually a percentage of the purchase price --and pay over time.

In return, the retailer holds the merchandise for you in reserve. Once you've paid for your stuff, you can take the merchandise with you. You don't need a credit card to use layaway.

These plans are generally used for bigger ticket items like electronics or TVs --but according to Sergio Pinon at eLayaway.com -- a site where you can put stuff on layaway virtually -- a lot of people have been putting smaller, back to school items on their lists -- like graphing calculators or backpacks.

Tom Aiello, a spokesman for Kmart's parent Sears Holdings Corp., says that the back to school layaway season is much stronger than last year. You'll find stationary, notebooks, pens and pencils all in the layaway section of these stores.

2. Get the terms

Get the layaway policy in writing. Find out how much time you have to pay.

Usually a layaway policy doesn't last more than a year. Find out what the minimum payment is. Inquire about extra fees and what the penalties are for late and missed payments.

And you'll want to think twice about putting something on layaway at a store that's on the brink of bankruptcy. You could lose your money.

3. Get your money back

Retailers will usually charge you a cancellation fee of $10 - $25 and the rest of your money will be given back to you. But other retailers may just give you a credit for the amount that you paid. So make sure you ask about those policies.

And remember, if you put something on layaway and it goes on sale later, make sure you let the store know. You may be entitled to the lower price.

-- CNN's Jen Haley contributed to this article.

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Talkback: Would you use ever consider using a store's layaway policy? Share your comments below.