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What's the Deal With Layaway?

Layaway offers you an interest-free way to pay for holiday gifts over time. However, you've got to watch out for steep fees.
what is layaway

Looking for a way to afford the holidays without killing your monthly budget? Layaway services allow you to make interest-free payments on retail purchases, picking them up when you've paid off your bill.

Here's everything you need to know about layaway, including which stores will offer it this holiday season, and which ones won't.

What Ever Happened to Layaway?

Layaway was a common part of the American shopping experience until the credit boom of the 1980s. Retailers realized credit made more money than layaway, so they started promoting in-store credit accounts and store-branded major credit cards.

But after consumer credit markets tightened during the Great Recession, retailers once again turned to layaway plans. Even Walmart, which officially killed layaway in 2006, brought it back in 2011.

How Does Layaway Work?

Generally, layaway works like this:

  1. Bring the items you want to put on layaway to the customer service counter. (Some retailers offer online layaway services.)
  2. Choose a payment schedule, the terms of which vary depending on the retailer.
  3. Pay a deposit (usually no more than 10% of the total cost) and a non-refundable set-up fee (usually $5 to $10).
  4. Make your payments on time and pick up the item(s) when you've paid them off.
  5. If you don't pay off your order by your scheduled date, your items will be returned to stock and your payments will be refunded, minus any setup and cancellation fees.

Is It Better to Just Use Credit?

Unless you finance more than a couple hundred dollars, layaway setup fees can exceed the interest you'd accumulate if you just charged your purchase to a credit card for the length of the layaway contract. If you have access to low-interest credit cards, it's almost always cheaper to purchase the item and then pay it off over a few months.

Layaway setup fees can exceed the interest you'd accumulate if you just charged your purchase to a credit card.

Payment Schedules Vary

Each retailer's layaway plan works differently; make sure yours works for you. Some retailers may insist on biweekly payments, while others just want you to pay everything off by the end date. Retailers who only do holiday layaway services have varying final payoff deadlines. If you're planning to put items on layaway for the holidays, check the schedule first!

Be Careful When Choosing a Retailer

Be cautious when setting up layaway deals with companies in financial trouble. When Kmart closed lots of stores in 2014, customers and employees alike received conflicting information about what would happen to their layaway orders.

SEE ALSO: Toys"R"Us Declared Bankruptcy. Now What?

This year, Toys"R"Us has filed for bankruptcy. While the toy giant plans to keep stores open through the holidays, prospective shoppers should be cautious and keep all their paperwork and receipts.

Stores That Offer Layaway

Interested in putting some merchandise away for the holidays? Here's a selection of major retailers who offer layaway services and a brief summary of their policies.

  • Walmart
    Dates: September 1 to December 11.
    Payment schedule: Final payment due on or before December 11, at the same store where you started payments.
    Down payment required? Yes, $10 or 10% of a single item (whichever is greater).
    Setup fee? No.
    Minimum amount: Individual items must be $10 or greater, and the minimum total for layaway is $50.
    In-store or online? In-store only.
    Returns/refunds/cancellations? The standard Walmart returns policy applies.
    Notes: Not available on Black Friday. Excludes wireless phones with contracts. Some Walmart locations offer year-round jewelry layaway.

  • Kmart
    Dates: All year.
    Payment schedule: Payments required every two weeks, on either an 8-week (online or in-store) or 12-week (in-store only with $300 order) payment plan.
    Down payment required? $10.
    Setup fFee? $5 for an 8-week plan, or $10 for a 12-week plan; nonrefundable.
    Minimum amount? None.
    In-store or online? Both; the 12-week plan is only available in-store. Only items marked "available for layaway" are eligible for online layaway.
    Returns/refunds/cancellations? There is a cancellation fee of $10 for 8-week plans or $20 for 12-week plans.

  • Sears
    Dates: All year.
    Payment schedule: Eight weeks or 12 weeks ($400 required for 12-week plan). Payments are due every two weeks.
    Down payment required? None required in-store; online layaway contracts require a one-cent deposit.
    Setup fee? $5 for an 8-week contract, or $10 for a 12-week contract.
    Minimum amount? Unclear.
    In-store or online? Layaway contracts and payments can be made online or in-store.
    Returns/refunds/cancellations? Layaway contracts can be canceled; refunds will be issued minus the service and cancellation fees.
    Notes: Missed payments have a 14-day grace period before your contract is canceled and Sears charges a cancellation fee.

  • Toys"R"Us and Babies"R"Us
    Dates: All year.
    Payment schedule: Payments must be made every 30 days as follows: 40% of the total price within 30 days, 70% within 60 days, and the total must be paid within 90 days, or prior to the end of the Holiday Layaway period — whichever is earlier.
    Down payment required? 10% deposit required.
    Setup Fee? $5 nonrefundable service fee. ($1 in Maryland, if your total layaway order is $500 or less.)
    Minimum amount? No.
    In-store or online? Layaway and pickup must be in-store, but payments can be made online.
    Returns/refunds/cancellations? Cancellation fees apply (varies in Rhode Island, Ohio, and Maryland).

    Dates: All year.
    Payment schedule: Payment required in 30 days for clothing, handbags, and shoes; 120 days for fine jewelry; and 60 days for all other merchandise.
    Down payment required? 15% deposit required.
    Setup Fee? $3
    Minimum amount? $25
    In-store or online? In-store only.
    Returns/refunds/cancellations? $5 cancellation fee.
    Notes: Excludes the following: Clearance, computers, peripherals, major appliances, furniture, mattresses, exercise equipment, seasonal/outdoor living items, and electronics costing $299 and up.

    AAFES has traditionally offered fee-free layaway during the holiday season, but has not yet announced it for the 2017 season.

  • Marshalls/T.J.Maxx
    Dates: All year.
    Payment schedule: Full payment is required within 30 days.
    Down payment required? 10% or $10, whichever is greater.
    Setup fee? $5.
    Minimum amount? None listed.
    In-store or online? In-store only.
    Returns/refunds/cancellations? $5 cancellation fee.
    Notes: Only select Marshalls/T.J.Maxx stores offer layaway; visit local stores for details.

  • Guitar Center
    Dates: All year.
    Payment schedule: Full payment required within 30 days.
    Down payment required? 25% refundable deposit required.
    Setup fee? None.
    Minimum amount? None.
    In-store or online? In-store only.
    Returns/refunds/cancellations? Items not paid for within 30 days will be returned to stock, and the payments will be made available to the shopper as refundable credit.
    Notes: Some items are excluded from layaway.

  • GameStop
    Notes: Gamestop offered a holiday layaway program in 2016, but has not yet announced such a program in 2017. Expect an announcement in mid-October if trends from previous years hold.

  • Buckle
    Dates: All year.
    Payment schedule: Full payment required within 60 days.
    Down payment rRequired? 20% deposit required.
    Setup fee? None.
    Minimum amount? None listed on website.
    In-store or online? In-store only.
    Returns/refunds/cancellations? No cancellation fee.

Retailers that DON'T offer layaway:

Not every retailer offers layaway. As you go into the holiday shopping season, keep these notable exceptions in mind:

  • Sam's Club
  • Costco
  • Best Buy
  • Bon-Ton
  • J.C. Penney
  • Macy's

Readers, have you ever used layaway? What stores offer the best deals? Which aren't worth the payment plan? Let us know in the comments below!

Contributing Writer

Sean is a freelance writer and photojournalist working in the Hampton Roads region. He has been a writer, adventure motorcyclist, drag racer, data nerd, shade-tree mechanic, and tornado chaser. Recommend good beers to him on Twitter at @wxgeek.
DealNews may be compensated by companies mentioned in this article. Please note that, although prices sometimes fluctuate or expire unexpectedly, all products and deals mentioned in this feature were available at the lowest total price we could find at the time of publication (unless otherwise specified).
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My mom used to do this at Kmart back in the 70's. Even as a child I could not figure out why people would do this.
To joe1512.

There is no advantage, it's for suckers.
I just cannot imagine anyone doing this.

You pay some, commit to paying off something and in exchange you get the item when you are done paying for it. Where is the advantage? You don't get the item any sooner after all.

Instead, pay yourself by sticking the money in a sock, then when you have enough go buy it. You might find a better deal in the meantime anyways. No fees. No committment needed.

If you have enough discipline to pay the layaway without getting charged tons of fees, then you should be able to put cash in a sock. If you just can't manage to do this, then you are gonna be fresh meat for the layaway companies who will take your money, charge you a fortune in fees and you won't get the item anyway!