Layaway is a purchasing arrangement where a retailer reserves an item for a customer who pays for it in incremental installments over a set period. This method allows shoppers to secure a purchase without needing to pay the full price immediately, which is particularly appealing for managing a budget. Since the shopper does not take possession of the item until it is fully paid for, layaway plans are generally interest-free and do not require a formal credit check. This provides a straightforward way to budget for larger purchases without incurring debt or impacting one’s credit history.
Major Retailers That Offer Layaway Programs
Layaway has become less common at large general merchandise stores, but select retailers still offer it, often seasonally or for specialized goods. Traditional layaway, where the store physically holds the item, is used during back-to-school or year-end holiday shopping seasons to help families budget for gifts. Some stores offer the service year-round for specific types of merchandise.
A. Kmart and Sears
These retailers offer layaway for both online and in-store purchases, with the duration often dependent on the purchase amount. Shoppers can typically choose between an eight-week plan or a twelve-week plan for higher-value items, such as those totaling $300 or more. Payments are generally required every two weeks to keep the contract current.
B. Burlington
Burlington offers a layaway program throughout the year, available for most merchandise in its stores. The hold time for items is typically thirty days, though this can sometimes be extended around major holidays. A minimum initial deposit, such as $10 or 20% of the total purchase, is required to begin the contract.
C. Specialty and Jewelry Stores
Layaway is frequently offered by retailers specializing in high-value goods, such as fine jewelry stores. Many independent and national jewelers, including Shane Co. and Brilliant Earth, offer plans that can extend for up to six or twelve months for items like engagement rings. These extended plans allow customers to secure unique or custom pieces while spreading the cost over a manageable period.
D. Other Select Retailers
Some discount and home goods retailers may offer layaway on a limited basis for specific categories of goods. Big Lots, for example, has historically offered layaway only on furniture merchandise at certain locations. GameStop has also offered layaway for high-priced items like new gaming consoles, often requiring a substantial down payment to reserve the technology.
Understanding the Layaway Process
Layaway contract mechanics are standardized across most retailers, focusing on a clear schedule for payment and collection. The process begins when the customer selects an eligible item and takes it to the service counter, where the store initiates a contract requiring an initial deposit. This deposit is applied directly to the purchase price and usually falls within 10% to 20% of the item’s total cost, or a set minimum dollar amount.
Once the contract is established, the merchandise is removed from the sales floor and stored securely. The customer is provided with a payment schedule detailing the amount and frequency of future installments. Contract lengths vary, generally running from 30 days for apparel up to 90 days for higher-cost items. Payments are often required bi-weekly, and the customer only receives the item after the final payment is processed.
Fees, Penalties, and Product Exclusions
Traditional layaway is not always free, as retailers impose administrative charges to cover the costs of storing and managing the contract. A non-refundable service fee, typically ranging from $5 to $10, is charged when the layaway is initiated. This fee is separate from the down payment and does not go toward the purchase price.
If a customer fails to complete payments by the contract’s expiration date or cancels the purchase, a cancellation fee is imposed. This penalty is commonly around $10 to $20 and is deducted from the total payments made. After deducting the service and cancellation fees, the remaining balance is refunded to the customer, sometimes only as store credit.
Most retailers restrict the types of merchandise that can be placed on a layaway plan. Common exclusions include perishable items, such as food, or seasonal goods subject to rapid price changes, like clearance items. Retailers also set a minimum purchase price, such as $50, to justify the administrative effort of the service.
Modern Payment Alternatives to Layaway
As many large retailers moved away from traditional layaway, “Buy Now, Pay Later” (BNPL) services emerged as a popular alternative. Services like Affirm, Klarna, and Afterpay allow customers to split a purchase into several smaller, interest-free installments, typically paid over six weeks or a few months. This option is frequently integrated directly into a retailer’s online checkout or in-store point-of-sale system.
A major difference from layaway is that BNPL services allow the customer to take the merchandise home immediately, rather than waiting for final payment. This convenience often involves a soft credit check during the application process. While many BNPL plans are interest-free if payments are made on time, some longer-term plans, such as those offered by Affirm, may charge interest with an Annual Percentage Rate (APR) similar to a credit card.
Many former layaway providers, including Walmart and Target, now partner with BNPL companies to offer flexible payment options. A missed payment on a BNPL plan can result in late fees and may be reported to credit bureaus, potentially impacting the user’s credit score. Shoppers must review the specific terms of a BNPL service carefully, as they carry different financial risks compared to traditional layaway.