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Does Layaway Make the Holidays More Affordable?


Does layaway make the holidays more affordable? In most cases, NO! You hear the ads on TV, see the signs at the stores and think to yourself,“What a great way to afford Christmas gifts!” But the truth is: if you were to make payments to your savings account rather than a layaway account you would save yourself more money in the end.

Layaway is a way for consumers to make installment payments on an item to avoid paying the entire cost up front. However, the item is not received by the consumer until it is paid in full, including any associated fees. Layaway plans are meant to sound alluring to consumers…how else would the stores convince you to pay them a service fee?

To save yourself from becoming another Service Fee Servant, be sure to read the fine print on the layaway plans. Most stores that offer layaway programs charge a service fee just for using the layaway service and charge cancellation fees if you opt out of the items before they are paid off; not to mention the list of restrictions made by each store for the items you can place on layaway. “Applies only to toys, electronics…excludes sporting goods, home/kitchen appliances…etc.”

Take, for instance, a few policies of some major retailers:

  • Wal-Mart requires a minimum down payment of 10% at time of layaway + $5 service fee. The total purchase must be greater than $50 and each item placed on layaway must cost more than $15. Online purchases do not qualify. Any layaway orders not paid for or picked up by December 16, 2011 will be cancelled. Any payments made will be refunded minus a $10 cancellation fee and $5 service fee.
  • Kmart’s layaway plan has an even higher cancellation fee of $15 and requires the consumer to make biweekly payments as stipulated in the 8-week contract that is entered into when the layaway order is placed.
  • Toys R Us has the highest down payment requirement of the three retailers listed here. It’s 20% + $5 service fee. Their policy also states that if at least 50% of the total layaway purchase is not paid within 45 days the consumer’s order will be cancelled, and a $10 fee will be assessed (although it is higher in some states- see local store for more information).

Instead of using a layaway plan this holiday season, save yourself the hassle and money by implementing a few easy money saving strategies:

  • Make a conscious effort to track your spending and make adjustments where you can.
  • Start planning ahead. It’s easy to get busy and just grab a meal on the go, so think ahead and avoid the costs of dining out by bringing a lunch to work or making dinner at home (you’ll enjoy it more when you do go out, and your wallet will thank you).
  • Look into savings options at your bank. Many financial institutions now offer a “rounding up” program on your checking account and will deposit the “change” into your savings account. This is a great way to start a holiday shopping fund without the effort.
  • You can even set aside the money you save from clipping coupons and start a “Christmas Fund.” When Black Friday comes around, take your stash and benefit from the great sales. You’ll enjoy great deals minus the service fees!!

This has been a guest post by Lacy from Brainerd, MN
Find out more about the KCL Contributor Network!

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14 thoughts on “Does Layaway Make the Holidays More Affordable?”

  1. Misha Mishka says:

    Last year I was buying online a train set for one of my grandchildren (they live in another state) and at the checkout I was informed that my purchase qualified for BillMeLater. I decided to give it a try. I am not sure if their terms and conditions are similar for every customer but I was at a liberty of making my own decisions on when to pay and how much as long as it was paid in full within 6 months- no interest or additional fees! I took advantage of that, even though I was able pay in full. If something like this comes along again, I may use their offer this year as well.

  2. Anonymous says:

    I agree that saving all ear is a great thing. I did it this year, but unexpected medical expenses forced us to use it up. Layaway would be a great option if we needed to use it, since we do not use any credit cards. (we already paid cash for all our shopping) While I see the point of this article, I think it’s an extremely negative view of a positive thing. At least stores are allowing customers who do not use credit, do not have credit, or waited til the last minute to save. There are downfalls, but there are downfalls to a lot of things.

  3. Casey Garber says:

    I’ve been saving $15 a week all year through ING. I made a recurring deposit and don’t even miss the money. It’s such a relief to have that money. I bought a few gifts already and didn’t have to touch it yet!

  4. I personally did do a layaway at WalMart. When I went in i had my toys R Us ad in hand and when i put it on layaway they price matched everything. I did have to pay a $5 fee, but since the closest ToysRUs is 30plus miles away i saved that in gas and sure i could have saved the money ($5) had I not put it in layaway and paid for it right then, but then i would have struggled for the rest of the month, which it is my fault for not planning earlier. I just started couponing about 3-4 months ago and have already started a Christmas club account for next year to have things planned better, but hey at least i saved money by price matching

  5. April McHugh says:

    I don’t use layaway but I think it could be good for larger purchases. It is much better than using a credit card and in the end, you have your item and you don’t owe money to anyone. I think it would be better to try and save year round but having two kids, I understand that this sometimes isn’t possible.

  6. Erin Lanahan says:

    I personally love lay a way. I get the presents I need for my son for an extra 5 dollars ( the fee it costs) at Kmart, but I also don’t have to hold the presents at my house and try to hide them. I also love giving him things so it saves me the trouble of trying not to give him things early. I don’t have a lot of room at my house to store these things. Plus I get October toy prices not November/December prices. For 5 dollars, no interest, and I can make bi weekly payments when we get paid. It’s great. This year I even put Paula Dean Kitchen accessories that were on sale at the time on lay a way. Merry Christmas to me!

  7. Anonymous says:

    I’ve used Kmart layaway several times. For me it’s better than a credit card. It helped me a lot when I was pregnant with my second child too.

  8. Anonymous says:

    I have never done layaway, which basically means you can’t afford it so don’t do it! With that said, I have bought Christmas presents in the past with a credit card without paying it off immediately which pretty much means the same thing but in reality paid more for it due to the interest. I’ve finally learned that I need to put my finances first before spending more than I should on a gift. It’s the thought that counts anyway right? I have only been couponing for the past 5 months and have been able to be creative and put gifts together that barely cost anything, but make sure I’m still buying things that the person will like, not just because its on sale or have a coupon for it. The important thing is to definitely plan ahead. The buying of gift cards ahead of time that was previously posted is a really good idea. I also use my rewards points from my credit cards to buy gifts and little goodies during christmas time which makes it even more fun because it’s free!

  9. Tuulily says:

    After being broke in January year after year, I started to collect money for my Black Friday/Christmas spending. I put certain amount aside from every paycheck for all year and can go shopping quilt free.

  10. Can you use coupons on layaway items?

  11. Heidi Snider says:

    Another way to put aside money towards the purchase of a larger item rather than using layaway is to put the money on a store gift card. It is less tempting to spend the money if it is on a gift card rather than in an account. Leave the card at home until you are ready to use it.