What Is 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.

Published October 18, 2018

BY:
SEAN FLYNN

Contributing Writer

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:

Bring the items you want to put on layaway to the customer service counter. (Some retailers offer online layaway services.)
Choose a payment schedule, the terms of which vary depending on the retailer.
Pay a deposit (usually no more than 10% of the total cost) and a nonrefundable setup fee (usually $5 to $10).
Make your payments on time and pick up the item(s) when you've paid them off.
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 may be 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 that 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.

This year, Sears Holdings Corp. has filed for bankruptcy. While the parent company of Sears and Kmart plans to stay in business, 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: August 31 to December 10.
Payment schedule: Final payment due by December 10, at the same store where you started payments.
Down payment required? Yes, $10 or 10% (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 return policy applies. For canceled layaway plans, any down payment and payments made will be refunded, minus a $10 cancellation fee.
Notes: Not available on Thanksgiving. Excludes wireless phones. 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 fee? $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? Yes, $10 or 10% (whichever is greater).
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.
AAFES
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 items, computers, peripherals, major appliances, furniture, mattresses, exercise equipment, seasonal/outdoor living items, and electronics costing $299 and up.

AAFES will waive the $3 service fee for items costing at least $25 that are placed on layaway beginning September 1 and paid for by Christmas Eve.
Marshalls
Dates: All year.
Payment schedule: Full payment 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: Excludes jewelry, food, furniture, and items that have been marked down. Only select Marshalls 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 payments will be credited to an account in the shopper's name.
Notes: Some items may be excluded from layaway.
GameStop
Dates: August 31 to December 19.
Payment schedule: Full payment required by December 19.
Down payment required? $25.
Setup fee? None.
Minimum amount? Unclear.
In-store or online? In-store only.
Returns/refunds/cancellations? Deposits can be refunded at any time. If you don't pay off your layaway item by December 19, you'll receive a refund of your payments.
Notes: GameStop has a list of layaway-eligible products. Customers can trade in their old video games, consoles, and accessories as a form of payment.
Buckle
Dates: All year.
Payment schedule: Full payment required within 60 days.
Down payment required? 20% deposit required.
Setup fee? None.
Minimum amount? None listed.
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
JCPenney
Macy's
Kohl's
Target

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!