Should you use layaway? It can be a good way to spread out payments without paying interest, but use it responsibly. There are often fees associated with layaway, including cancellation charges. Like any purchase bought on credit, you want to make sure you can pay for it and stick to your budget even though you don’t have to pay now.
Layaway programs vary by store but in general, you choose an eligible item and make a down payment. The item stays in store until your final payment when you are able to pick it up. Layaway contracts are typically 8-12 weeks or 60-90 days. Payments are made at regular intervals and in some cases, can only be made in store.
There are often additional fees associated with layaway. A service fee of $5+ is common. Think of this fee as paying for storage of your item and processing of multiple payments. Some stores waive the service fee during holiday promotions. There is also typically a cancellation fee if you don’t fulfill the terms of your layaway contract.
Holiday Layaway Programs
Toys R Us & Babies R Us are offering free layaway this holiday season. Make a 10% down payment and the $5 service fee will be waived during the free layaway period. An advantage to their layaway program is you can make payments online as well in store, which makes it a lot more convenient. They charge a $10 cancellation fee.
Walmart’s layaway is going on through December 14 with no opening fee and a down payment of $10 or 10% (whichever is greater). Electronics, auto electronics, furniture, toys, select sporting goods, small appliances and jewelry are eligible. The total purchase must be $50 or more. Be sure to pick up your item by December 14, or you will be charged a $10 cancellation fee.
Kmart: No down payment required in store. One penny down required online. Members get $10 off any apparel, footwear and jewelry purchase of $50+ on layaway. (Good in-store and online with code LAYAWAY10).
Sears offers a similar program as Kmart with no money down layaway on purchases made in-store and one penny down online. An 8-week layaway contract incurs a $5 service fee and is bumped up to $10 for 12-week contracts (available in-store only with a total purchase of $400 or more). Sears cancellation fees are a bit more than competitors with $15 on 8-week contracts and $25 on 12-week.
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