Vacationing -- on the installment plan

At Sears and Kmart this holiday season, shoppers can put as little as $15 down on retail purchases and pay in full later.

At eLayaway.com, which manages installment purchases for various merchants and about 75,000 customers, sign-ups last month surged ninefold, said Michael Bilello, senior vice president of business development for the 2-year-old Florida-based website.

Now, some big travel companies are starting to show up at the layaway table. Hyatt Hotels and Resorts last week began marketing gift cards and check certificates through eLayaway that are good for hotel stays, meals and other services.

Bilello said eLayaway was signing up other hotel, cruise and airline companies for launch early next year.

It's easy to see the appeal of buying a trip (or anything else) on the installment plan. You don't have to commit hundreds or thousands of dollars up front. If you pay by cash, check or, as with eLayaway, by electronic debit from your bank account, you avoid interest charges and maxing out credit cards.

With most banks tightening up on issuing credit cards and many lowering credit limits, cash looks golden.

Layaway, however, carries risks and costs.

Cash transactions don't carry the same consumer protections as credit cards. You may have limited recourse if the companies involved commit fraud or go bankrupt. And you may pay service and cancellation fees.

Personal Travel, a small travel agency in Greenville, Ind., offers layaway, said owner Kimberly Kane. About 90% of her clients use the program.

Lay-Away.com, a small, 9-year-old company in Chicago, drew 1,000 hits a day after a blogger mentioned its new vacation program, said Robert Holland, the company's president.

But the practice doesn't seem widespread in travel.

Under the https:// www.billmelater.com/index.xhtml "> www.billmelater.com/index.xhtml program, several airlines let customers delay payment up to 90 days. But after that period, they may owe nearly 20% annual interest if the amount has not been paid in full.

If you decide to go the layaway route, here are issues to consider:

Fraud and bankruptcy: Under the federal Fair Credit Billing Act, people who buy a product or service with a credit card and fail to receive it can dispute the charge and ask for a refund.

Other forms of payment, including electronic debits from checking accounts, aren't covered by this law.

Countless vacationers have used the federal act to get their money back after they were victimized by scams or legitimate companies that suddenly went out of business, taking customers' deposits with them.

"It always makes sense to pay by credit card whenever possible," said Tod Marks of Consumer Reports. "Paying by cash for . . . big-ticket items is never a good option."

ELayaway's Bilello said his company was careful with customers' money. Deposits are held in an electronic account at giant HSBC Bank USA until a purchase is completed. Merchants are vetted, he added.