What to Consider Before Starting a Layaway Plan

When times are tough, layaway plans tend to thrive. This was the case during the Great Depression, when cost-conscious shoppers needed easier ways to make purchases. So they purchased items in installments, periodically giving the store money until they paid the total. Layaway fell somewhat out of favor for a while, especially when credit cards came on the scene in the 1950s and 1960s, but the plans started to make a comeback during the Great Recession. And during this year's pandemic holidays, layaway will likely be popular among some shoppers.

If you're contemplating using a layaway plan, here's what you need to know, from how to get the most out of them to the stores that offer layaway programs.

[See: Prepare Your Finances for the Holidays.]

What Is Layaway and How Does It Work?

Layaway plans are designed for shoppers who want to make purchases but may not have all of the cash on hand. Layaway is essentially an installment payment plan, where you pay for merchandise over a period of weeks or months. Instead of paying for an item after you receive it -- as is often the case with credit cards -- you make layaway payments before you receive your purchase.

Most people who want to buy something but lack the funds will wait until they have more cash and then make the purchase. So why use a layaway plan?

In some instances, you might be worried that the item won't be around by the time you have enough money. If money is tight, you might be worried you won't have the discipline to save specifically for those purchases. That's where a layaway program can come in handy. If you pay a store $50 toward a $300 gift, you'll likely make sure that you continue to make periodic payments and end up buying the item.

If you're short on cash, but a store doesn't have a layaway plan (Target, BestBuy and Amazon.com don't offer one, for instance), you may consider looking into whether it offers a "buy now, pay later" installment plan program.

These programs aren't quite the same as layaway, which follows a "pay now, buy later" payment plan. With these payment plans, you receive the merchandise right away and pay in installments. Just as in a layaway plan, you generally don't pay interest as long as you make your payments on time. If you don't make your payments on time, you will end up spending additional money (which is also the case with layaway).

The Pros and Cons of Layaway Programs

The main advantages of a layaway program:

-- You don't have to pay for the purchase all at once, and you're able to spread out payments.

-- No credit check required.

-- No interest is charged.

The disadvantages of a layaway program:

-- You pay on the layaway plan's schedule, not yours.

-- There are usually fees, such as service, restocking and cancellation fees.

-- You may get a refund if you cancel or don't make all the payments, but program fees are usually nonrefundable.

Of course, there are other pros and cons. For instance, a major upside of using a layaway program is not having to worry about going into deep debt. Even better, if you have trouble making the payments, your credit won't be affected, says Zachary Johnson, an associate professor of decision sciences and marketing at the Robert B. Willumstad School of Business at Adelphi University in Garden City, New York. Layaway can be a smart idea for consumers who don't have strong credit, he says. "It gives the consumer an opportunity to purchase an expensive product with payments on a weekly, biweekly or monthly time period."

But if you're struggling with credit and money in general, a major drawback can be the fees associated with layaway programs. A rule of thumb: The more you pay for the merchandise, the less the fees matter, says David Friedman, a professor of law at Willamette University in Salem, Oregon, who specializes in behavioral economics.

"Fees at most retailers for layaways can be fairly low -- like $5 or $10," Friedman says. For this reason, it would make "almost no financial sense to put a $100 toaster on layaway," he says, explaining that an additional $5 or $10 means that toaster is really 5% to 10% more expensive. But if you use a layaway option to buy an appliance with a price of, say, $2,000, Friedman says, that $5 or $10 is less than 1% of the entire cost.

Keep in mind that if you can't complete the purchase, you will lose some money because of the associated fees. For instance, if you have to pay a nonrefundable fee at the outset, you won't get that back. Plus, you may have to pay a cancellation fee and lose additional money. So while it may seem like a no-brainer to do a layaway program, if you're living paycheck to paycheck, you still might be taking a financial risk.

[See: 9 Holiday Shopping Habits That Will Make You Go Broke]

Stores With Layaway Plans

If you're looking for a layaway program, here are popular stores that offer it:

-- Walmart.

-- Burlington and Baby Depot at Burlington.

-- Kmart and Sears.

-- Gamestop.

-- Hallmark.


Walmart's holiday layaway program in 2020 lasts from Aug. 28 to Dec. 14, though some stores offer year-round layaway on jewelry. The program doesn't cover everything -- you won't be buying a bottle of wine or a bag of chips on layaway -- but you can purchase many gift items, including select electronics, furniture, toys and sporting goods.

Also keep in mind that the promotion is only available in stores. You'll pay a down payment of $10, or 10% of the purchase price, whichever is greater. You can only put things on layaway if the total purchase is $50 or more, but individual items of $10 or more can be part of that $50. There is no specified time you must make payments within the layaway period; you can make payments any time through Dec. 14 until you've paid for the purchase or purchases.

Burlington and Baby Depot at Burlington

Both stores offer layaway year-round, but the program itself is usually a 30-day, in-store layaway option. To participate, you must put down a 20% deposit or $10, whatever is greater. There is also a nonrefundable $5 service fee, though in some cases, promotions will negate that by giving you a $5 gift card for in-store purchases. If you can't make all of your payments or you cancel the layaway order, there will be a $10 cancellation fee in most states (plus tax where applicable).

Kmart and Sears

Both stores, which are owned by the same company, offer layaway in-store options and online layaway programs. You can put items on layaway for eight weeks if you do online layaway and 12 weeks if you make a purchase in the store and if the purchase is $300 or more. You're required to make layaway payments every two weeks. You also have to put a down payment of $10, and cancellation fees are either $10 or $20, depending on whether you opted for an eight- or 12-week layaway program. There are also $5 and $10 service fees, depending on whether the layaway was for eight or 12 weeks. If you can't pay for the entire purchase, you will get a refund minus the service and cancellation fees.

[Read: How to Get the Best Prices on Everything, Every Time You Shop.]


Gamestop has a layaway program with pretty flexible terms. There's a $25 deposit, and you don't need to make scheduled payments, though weekly or bi-weekly deposits are encouraged. There are no fees. You won't be able to do this through the website; you'll have to make your arrangements with the actual brick-and-mortar location.


Many of the Hallmark Gold Crown stores have layaway programs lasting from July to December. You can put a hold on an item for 90 days -- inside the store and not online -- and simply ask the store associate if you can put the item on layaway. You'll need to pay a minimum of 20% of the total purchase and will be given a written copy of the terms and conditions (which vary by store).