Christmas Loans

The Holiday Borrowing Risk List


Ch. 3.6. Layaway

Layaway is a system for reserving an item you want to buy, but don’t have the funds to purchase up front.  Layaway was originally very popular during the Great Depression, but made a comeback around 2011 after the effects of the financial crisis took hold.23 While it can be helpful to use layaway to buy your Christmas presents if you don’t have the cash to buy the all at once, layaway is not a free service, and most retailers charge some sort of fee for utilizing it. In fact, most retailers charge fees for using it, and if you don’t pay for your item before your designated pickup day, you won’t get those fees back, AND you won’t get your hands on the item you were trying to buy.

Many major retailers offer in-store and online layaway programs, including Kmart, Wal-mart, Sears and Toys-R-Us, and most retailers charge a cancellation fee if you decide to back out.24 Budget-minded shoppers often prefer layaway as an alternative to credit cards that have high interest rates, and now that more retailers are simplifying layaway plans to be more competitive, it can be one option to help you stay on track with your holiday spending.25

Even at stores that offer it, layaway is not always available at every retail location, and sometimes it runs through a third-party vendor. Every retailer has varying rules for their layaway programs, policies and fees. Your best bet? A fixed layaway program that is set in writing, available either in a printed pamphlet or online, so you won’t get swindled at the last minute. Does this retailer have penalties or fees for late payments? What happens if you change your mind and want a refund? Make sure you have answers to those questions BEFORE you sign up for layaway.

If you decide to use layaway this holiday season, pay in cash. If you’re paying with a credit card, you’ll end up paying interest on those installment payments, negating any potential savings that layaway could offer.26

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