Are Layaway Plans Still a Thing? Yes — Here Are the Pros and Cons

As the holidays approach, people are seeking affordable ways to buy Christmas gifts for friends and family members. One time-tested method is “laying away” purchases and making incremental payments on those items: in other words, using a layaway plan. 

With Walmart eliminating its layaway program before the 2021 holiday season began, replacing it with a buy now/pay later program that may come with interest charges, it’s reasonable to wonder how many other store layaway plans still exist. 

This post will answer commonly asked questions, including:

• What is layaway?

• How does layaway work? 

• What are the benefits and disadvantages of using layaway?

• What stores have layaway?

• Can you do layaway online?

What is layaway?

Created during the 1930s in the Great Depression, layaway plans helped people with limited incomes who couldn’t pay for their purchases all at once. Consider layaway like the original payment installment tools like Affirm or Afterpay, except you work directly with the retailer instead of a third-party tool.

“Laying away” purchases involves a few simple steps: 

1. Shop for the items you want to buy, and then only pay a deposit on the amount owed. 

2. Then, the retailer typically schedules incremental payments that you need to make before the pickup date. If consumers can financially swing it, they can also pay the balance off earlier. 

3. Once the layaway amount is paid off, then the consumer takes home the paid-in-full items. 

Retailers may charge a small fee for this convenience and, if the total amount isn’t paid off, then items are returned to the store shelves. Depending on the retailer’s policies, the money paid to date may or may not be refunded. In some cases, it may be refunded minus a restocking fee. 

Although layaway plans became less popular once credit cards became more commonplace, it still has significant benefits.

What are the advantages and disadvantages of layaway?

When a retailer offers layaway plans, it’s a pretty low risk way of expanding customers options, especially for people with poor credit scores — or for those who have maxed their cards out. 

If someone doesn’t pay for the items in full, then they don’t get to take them home, meaning no inventory loss to the store. Plus, retailers may charge a fee for store layaways and perhaps a cancellation or restocking fee if someone doesn’t ultimately pay for those items.

For the consumer, layaway programs come with their own pros and cons. 

Benefits of layaway

• Big ticket purchases. Even if you don’t have a credit card, or have poor credit, layaway can help you purchase a big ticket item you may not be able to afford in cash.

• No interest charges. Unlike a credit card, layaway debt, if not paid in full, won’t trigger charges, like what happens when credit card balances aren’t paid in full each month.

• Affordable payment plan. Typically, you make payments to the retailer in affordable increments. If the payments sound too high, you can remove items from what you’d plan to lay away before committing to the payment structure. On the other hand, you can always pay off the item early if you can afford to.

Disadvantages of layaway

• A long lead time. Depending on the price of the item and when you want to take it home, you may have to start a layaway plan months ahead of time.

• No instant gratification. The store will hold the item you’re purchasing until it’s paid in full, so you can’t take it home right away,

• Another monthly payment. If you’re already juggling bills and payments, layaway plans are just another bill to add to the pile.

• Hefty cancellation/restocking fees. Some cancellation fees can be as high as $100, and if you don’t pay off the laid away items, you might not get a full refund upon cancellation. 

• Overspending. Because you’re not paying for the item all at once, you may tend to overspend. 

• No discounts or sales. Layaways typically don’t allow for price adjusting, meaning you could miss out on holiday discounts.

Now that we’ve confirmed that layaway is a thing, what stores have layaway?

What stores have layaway?

First, if you’ve got a favorite store, ask if they have layaway. Also, policies can change at any time so, if you want to use a retailer on our list, verify that it hasn’t recently canceled or changed its plan. 

Kmart

Kmart used to be among the royalty of layaway around the country. Nowadays, although there are far fewer Kmart stores, the retailer still offers store layaway plans. Only certain items are eligible, but you can use store coupons on them (not all retailers allow this). 

• Initial deposits: Typically $10 but may be 10% 

• Service fee: $5-$10 of the initial deposit is considered the fee

• Term: Eight weeks; twelve-week plans are available for layaways of $300 or more

• Cancellation fees:$15 for the eight-week plan; $25 for twelve-week plans

Sears

Like Kmart, there aren’t many Sears stores around, but it still has layaway plans. 

• Initial deposits: Typically $10 but may be 10%

• Service fee: $5-$10 of the initial deposit is considered the fee 

• Term: Eight weeks; twelve-week plans are available for layaways of $400 or more

• Cancellation fees: $15 for the eight-week plan; $25 for twelve-week plans

Gamestop 

This store offers a different twist on layaway. You can make payments via trading in used games. However, you’ll need to fill out an application before proceeding.

• Initial deposits: $25

• Service fee: None

• Term: Not listed

• Cancellation fees: Not listed

Burlington Coat Factory

This is another store that’s been offering layaway for a long time (45+ years). First-time participants often receive $5 for signing up. Food products are not included in the plan. 

• Initial deposits: 20% with another 20% due 14 days later

• Service fee: $5

• Term: 60 days

• Cancellation fees:$10 with remaining refunds provided via a gift card

Big Lots

Many Big Lots stores offer layaway plans on furniture, calling them “Price Hold” purchases. Specifics of the layaway plan will vary by location. 

• Initial deposits: 10%

• Service fee: $0-5

• Term: 90 days

• Cancellation fees:$5

Hallmark Gold Crown

This gift store offers layaway plans from July through December. Like Big Lots, specifics can vary by location.

• Initial deposits: 20%

• Service fee: Varies by store

• Term: 90 days

• Cancellation fees: Ask your store

Baby Depot

Some locations offer this program.

• Initial deposits: $10 or 20% (whichever amount is greater)

• Service fee: Typically $5

• Term: 30 days

• Cancellation fees: $10

Can you do online layaway?

It depends. Wherever you shop online, if you’re interested in the idea of layaway, check their payment options. For example, Kmart and Sears allow it while Burlington Coat Factory, Baby Depot and Big Lots don't. 

To layaway or not to layaway? That’s the question.

Like credit cards, layaway can help you afford items you may not be able to purchase in cash. However, unlike a credit card, layaway purchases don’t accrue interest, and if you pay it off in full, you won’t be subject to fees. For some, this may be a good low-risk way to purchase a big-ticket item. 

However, while they have fewer fees and interest, layaway plans are still a form of debt. Overspending on a layaway item could mean months of payments eating into your budget. 

If credit card debt has you considering layaway plans, it may be time to find a tool to help tackle it. Tally† not only offers a lower-interest line of credit to help pay down credit card debt, but it also compiles all your monthly bills in one place, helping you never miss a due date. 

†To get the benefits of a Tally line of credit, you must qualify for and accept a Tally line of credit. The APR (which is the same as your interest rate) will be between 7.90% and 29.99% per year and will be based on your credit history. The APR will vary with the market based on the Prime Rate. Annual fees range from $0 - $300.