What you should know about layaway

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Sometimes cash or credit is just not a feasible option, especially during the holidays. When that's the case, consider layaway - a program some retailers offer that lets shoppers pay for items over a specified time using a payment plan. Here's all you need to know, including which major retailers offer it.

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What is it, exactly?

Layaway is basically the opposite of a credit card. Instead of buying something, taking it home and paying it off later, with layaway, your purchases aren't yours until all payments are made over a specified time frame. The store will keep your things for you until then. Shoppers have the option of paying off the items as quickly as they want.

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Which big stores are offering layaway this holiday season?

Major stores offering layaway include Walmart, Kmart, Sears, Marshalls, TJ Maxx and GameStop.

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Contracts vary from store to store

Different stores have different layaway programs. Some stores, like Sears or Kmart, allow shoppers an eight- or 12-week period to pay off their items. At TJMaxx and Marshalls, the layaway must be paid in full and picked up within 30 days. The length of the layaway is something shoppers should confirm before putting any money down.


Layaway may not be available everywhere, or all the time

Some stores like Walmart offer layaway only during the holiday season, and this year it's limited to Aug. 30 through Dec. 9, with the exception of Thanksgiving Day. TJ Maxx and Marshalls, on the other hand, offer layaway year-round, but only at specific locations, so be sure to double-check. T.J. Maxx stores that have layaway are indicated by a little clothing hanger icon in the store locator online.

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Is there a minimum amount an item must cost in order to be layaway eligible?

Stores typically require an item to cost a minimum amount in order to be held in layaway. At Walmart, individual items have to be $10 or greater to qualify for layaway and total purchases must be $50 or more.


Know which items qualify for layaway and which items don't

Make sure you know whether the item you want is eligible for layaway - some places have restrictions but they should be easy to determine. At Walmart, for instance, layaway is available for electronics, large furniture, toys, select sporting goods, small appliances and jewelry, but not for cell phones that require contracts.

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You might need to put a down payment

Most places require a percentage of the total price be paid upfront before the items are put in layaway, but it will vary by retailer. At Walmart, the down payment is $20 or 20% - whichever is greater. If the layaway is canceled, some stores, including Walmart, will refund the down payment. At Kmart, the minimum down payment is $10.


Find out the return policy for layaway items

According to the Federal Trade Commission, policies may differ between retailers - some issue a full refund while others might charge a service fee for restocking the items. In some cases, stores will offer only store credit for the amount paid. Definitely check with a store associate or manager beforehand. At most stores, however, the regular return policy applies to layaway items as well.

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Know where the items are being stored

Many retailers will remove the layaway items from the sales floor and store them in the back until they are paid off and picked up. Other places might store the merchandise off-site at a warehouse if they don't have space in their back room. If that's the case, it's a good idea to find out how long it will take for the item(s) to be ready to ship or ready for pickup. This is especially important for holiday gifts.

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Save your receipts

Keep a record of the payments you've made in case the store makes a mistake.


Are there fees associated with layaway?

Many layaway programs charge a service fee - Walmart and GameStop, however, do not. At Kmart, an eight-week contract comes with a $5 fee and a 12-week layaway comes with a $10 fee, except where prohibited by law. Putting down $10 to hold a $500 chair is reasonable, but on, say, a $50 product, a $10 fee is equal to 20% of the cost of the item. In that scenario, you'll need to consider whether the additional cost is worth it.

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What about online layaway?

At most retailers, layaway is available online. Sears even allows layaway purchases and payments to be made from its app, as well as in-store and online. At Walmart, however, layaway is not available for online purchases.


Understand the cancellation policy

If you can't make the payments or if you change your mind, many layaway programs have a cancellation policy. Walmart, for example, will refund the down payment and any payments made, but will charge a $20 cancellation fee. According to the FTC, some stores might let a layaway completion date go by if the payments are almost complete and will send a notice with a new deadline. Always make sure to read the fine print before signing up.

And while you're shopping for the holidays, consider these 15 secrets shopping malls don't want you to know.


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