The Return of Layaway

Until recently, layaway was on the “endangered strategies list,” replaced by increased use of credit and gift cards. So why bring back this dinosaur of a payment practice? It’s simple…our economy. With banks being more cautious, consumer credit lines are withering.       Harvard Business Review

Everybody remembers layaway, back in the days before they gave out credit cards to anybody with a pulse. I remember layaway as that cruddy window in the back of the store, where you stood in line with your mom and all the other bored kids and their moms, sweating to death in your big old parka and getting nauseous from all the cigarette smoke. Good times.

Anyway, layaway is back in a lot of stores, but Wal-Mart is really making some noise. Their plan is probably pretty typical. Specifically…

 it kicks off on 10/17 and runs through 12/16. …an item has to cost at least $15, and the total minimum order is $50. [It is] limited to toys and electronics (and most cell phones aren’t eligible), and it applies only to in-store purchases. You have to put down at least 10 percent of the cost of the total order when you put the items on layaway…you don’t get charged interest on deferred purchases, [but] the layaway program isn’t free: Walmart is charging a one-time non-refundable $5 service fee for the service, and you’ll get hit with a $10 fee if the layaway order isn’t paid in full and picked up or canceled by the end of the day on December 16.  Consumer Reports

So, what do you think? Will you be taking advantage of this or other layaway programs? If you do, put me down for a Lost in Space robot, a Six Million Dollar Man doll action figure and an Evel Knievel dirtbike!

12 thoughts on “The Return of Layaway”

  1. i think its a great thing.many people use lawaways .they are an easy way to buy things without having to pay all at once.i can see the point of companies charging you if you dont pay in full buy the agreed date as well

  2. i would most definetly take a layaway over credit anyday, i will be calling toys ur us. to see if they are in or not .

  3. The old lay-away system had you pay a deposit fee (not part of the cost of the laid away items) plus a small part of the cost of the item. This seems in place with the revived lay-away-system of Walmart. However, old system did not, to my recollection, incur a penalty or extra charge if you did not pick up your item or failed to pay for it (that is redundant, isn’t it?). The penalty was that you lost your DEPOSIT and any payments you made on it. So if you had paid a DEPOSIT and had paid 75% of the item’s cost but did not finish the deal, you lost it all. That is hefty enough penalty. Same if you had made only the DEPOSIT payment and initial payment toward the cost of the item. You lost it all. Then the store put the item on the sale rack and made additional profit on the item.

    A much better way to purchase is to save toward that purchase and pay upfront.

    1. Another consideration, how in the world is Walmart going to collect the penalty fee for not finalizing the deal with your last payment?

  4. Good catch, Vera. The articles I read in putting together this blog post said that Wal-Mart is happy to be doing this, because of all the fees and penalties. Nowhere do you see any mention of discounts. Other than paying a girl to deal with you at the layaway window, the store is making out just fine!

  5. Personally, I see with affability that the layaway option can provide safer and the more economical avenue for the consumer. Layaway can help the consumer manage their money for things that are required at home, but cannot economically pay for. It offers the buyer the opportunity to make comfortable payments at the same time they can take advantage of special sales during the holidays. To a great effect, this commerce has the opportunity to increase the sales, since given the circumstances of the bad economy. Big markets such as Wal-Mart, Kmart and others can be enormously benefitted through a layaway plan because it is better to make a sale today then no sale at all.

    1. Barbara, sorry to have to disagree a mite with you. 1) if a person lays away $50 in merchandise and pays $5 in fees, then they are increasing the purchase cost by 10%. Also, some folks do this multiple times at several stores. Definitely not good shopping savvy. As far as taking advantage of sales, they would need to really have a good bargain to recoup the $5 fee and they would have to be positive that they would ABSOLUTELY be able to meet their payment schedule and get the product. A better option if they are able to manage a credit card is to get a credit card and pay it off every month with no interest charge. The main objective of layaway plans is to increase sales volume in stores and not to benefit the customer. The increase in sales PLUS the additional fee revenue has a tremendous advantage of increasing revenue for the stores.

  6. im just sad it only applies to electronics and toys. I get plenty of items that dont fall into those categories for my friends and family during the holidays. Id rather buy my toddler $50 worth of clothes than $50 worth of toys/electronics. I think you should be allowed to put anything on layaway as long as it meets the financial guidelines.

    1. hi lauren i thought it was for everything, good to know no surprizes when i get to the store. thank you.

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