Prior to the financial crisis of 2008 and the Great Recession, layaway had all but disappeared. Consumers preferred to put Christmas presents on credit cards, and then pay the cost off over time. However, with the financial scare, and a renewed focus on saving and responsible finances, many consumers began looking for ways to pay off debt and reduce their credit card debt.

As a result, many retailers began offering layaway plans again. This year, layaway is back, offered by retailers from Kmart to Walmart.

How Does Layaway Help Consumers?

For the most part, layaway is about creating a way for consumers to pay for high-priced items over time. A customer can take an item, reserve it, and then pay it off over the course of four to 12 weeks. Manageable payments are made so that the budget isn’t strained. Layaway is viewed in a largely positive manner by many consumers. shares this information from a survey conducted about layaway:

  • Helps a person buy larger items for the holidays that they couldn’t afford to buy all at once – 54 percent
  • Helps a person budget his or her money – 52 percent
  • Helps a person avoid using credit cards – 46 percent
  • Helps a person plan ahead – 43 percent
  • Lets a person reserve a popular item when they want it – 43 percent
  • A person doesn’t need to have good credit to use the programs – 33 percent

As you can see, there are many reasons that consumers feel that layaway is a positive development. Most of them have to do with budgeting money so that it isn’t a huge expense at once. Paying for a large item over time puts less strain on the holiday shopping list. Indeed, layaway can be a great way to plan ahead for the holidays, getting a jump on the process, and avoiding huge hits to the budget.

Drawbacks to Layaway

It is important to note that there are drawbacks to using layaway, according to Coupon Cabin. One of the issues is that layaway sometimes comes with fees. You might have to pay a small fee to use a layaway program. If you decide to cancel your layaway order, you will probably get your money back, but you might be charged a “restocking” fee, or some other service fee that reduces the total of your refund.

You should also pay attention to how long you have in order to pay off your layaway order. Some retailers will let you keep the items you want locked up for as long as it takes to pay for them. Other retailers, though, give you a specific time limit. If you don’t pay off the order in that time, the item is canceled, and the applicable fees come out of your refund.

Before you decide to sign up for layaway, make sure that you understand the terms of the agreement. You want to make sure that you are paying as few fees as possible, and that you can handle the payments that are required to meet payoff deadlines. If you plan well, layaway can be one way to ensure that your Christmas budget doesn’t get out of hand.



Miranda is freelance journalist. She specializes in topics related to money, especially personal finance, small business, and investing. You can read more of my writing at Planting Money Seeds.