Credit Infocenter

Layaway Q & A: Does It Make Good Shopping Sense?

December 2nd, 2013 · No Comments · Budgeting

by Kristy Welsh

(Last Updated On: February 26, 2018)
Piggy bank with Santa Claus hat

Will layaway make or break the bank this holiday shopping season?

If you have your heart set on specific gift items this year, but don’t have enough cash on hand right now to make the purchase, layaway can seem an attractive option. And the more popular the item you have your eye on, the more layaway could help in the event it’s out-of-stock closer to Christmas.

Or, if you could wait until closer to Christmas to do your shopping, but you’re afraid you won’t be disciplined enough to save up enough cash between now and then, again, layaway may sound good as it forces upon you some discipline to make good on the payment plan.

Either way, it’s worth exploring whether layaway really is good way to go.

How does layaway work?

Layaway is an in-store program customers may use to set aside items for pick-up once an agreed-upon payment plan is complete. These payment plans may vary from store to store, but likely includes a weekly payment schedule and a final payoff date.

How much does layaway cost?

Some stores are actually waiving layaway service fees these days, but the typical fee to set up a layaway plan is $5. That’s plus, of course, the cost of your actual purchases.

Can I cancel a layaway plan?

Yes, you may cancel a layaway plan at any time.

If I cancel a layaway plan, can I expect a full refund?

Yes, in the strictest interpretation of this question, you can expect a full refund of whatever you have already paid toward your purchases. However, there is typically a cancellation fee of $10, which will be subtracted from your refund amount.

Do I need good credit for layaway?

No, stores that offer layaway plans do not check your credit score. In fact, this serves as a huge incentive for people with poor credit who cannot simply charge their purchases to credit cards.

Does a layaway plan come with interest fees?

No, there are no interest fees associated with a layaway plan. The only thing you will pay above and beyond the actual cost of your purchases is the $5 service fee to set up the plan, as well as the $10 fee in the event of cancellation.

Is layaway a better deal than using a credit card?

It depends. If you charge purchases to a credit card and pay off the balance within 30 days, you can avoid all interest fees. In this manner, you are only paying for the cost of your items. However, if you carry a balance forward, you will be charged interest. If this interest exceeds the $5 set-up fee for a layaway plan then, yes, layaway is the smarter choice. So if you are someone who historically carries credit card debt from month to month, then layaway is likely the better option for you.

Do all stores offer layaway plans?

Only some stores offer layaway plans. Popular ones include Burlington Coat Factory, Hallmark, Kmart, Sears, Toys R’ Us, and Walmart. Of course, this list is by no means exhaustive. If you have a favorite store you’d like to shop at this holiday season, check with them individually.

Will you use layaway this year? Why or why not?

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