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What is Layaway?

Layaway is a way of buying where consumers pay a down payment and the store keeps it for them while they pay the rest of the price in installments, after which they own it. Installment plans ensure consumers get their choice of items after paying in full.

key takeaways

  • The term “on hold” refers to a retail purchase method in which consumers place a deposit on an item – “on hold” to pick it up later when they have enough funds to pay the balance in full.
  • Installment plans are often aimed at shoppers with limited income who may struggle to pay for their purchases in one lump sum.
  • Installment plans, created during the Great Depression of the 1930s, declined in the 1980s as the popularity of credit cards reduced their utility.

understand layering

Layaway is for consumers with limited disposable income and unable to make larger one-time purchases. Sometimes a fee is charged for this because the seller has to keep the item in the warehouse until payment is made. Sellers have little risk and can easily offer installments to people with bad credit. If the transaction is not completed, the item will simply be returned to the shelf. The customer’s money can be refunded in full, forfeited completely, or refunded less fees.

Installment plans also benefit low-income customers by allowing retailers to offer products as a savings plan. Because customers have committed to buying products on an ad hoc basis, they can’t succumb to the temptation to spend that money elsewhere.

Online installment payment

Online installment plans let consumers buy items with a predetermined deduction from their checking account. Online Installment Payments simplifies installment payments for merchants and consumers by eliminating the associated storage and bookkeeping costs. During storage, stored items remain in the distribution center instead of taking up valuable retail warehouse space.

Retailers often limit temporary purchases to more expensive items such as jewelry and electronics; smaller items such as toys are often not available through installment plans.

Layaways and credit cards

There are both similarities and differences between installment payments and credit cards. Both Layaways and credit cards are used to purchase items that an individual cannot currently afford. Both have late fees as well as penalties for breach of contract. Both allow installment payments over a specific period of time.

One of the differences between the two is that with a credit card, an individual can take home a purchase immediately; with a layaway, an individual can take an item home only after paying in full. Layaway requires a deposit, while a credit card does not. With installment payments, you don’t pay interest on the unpaid balance. With a credit card, you can do this, which can quickly add to the cost of the purchase and push the individual into credit card debt.

If you default on an installment plan, it won’t affect your credit score, as on a credit card it will. Also, you don’t need good credit to use an installment plan, but you do need good credit to get a credit card or at least good credit card terms.

A credit card is usually a better option if you can pay off the balance in full over the next month without incurring interest. A credit card allows you to build a strong credit history, take advantage of rewards programs to earn points or cash back, and receive your items instantly. However, if you can’t pay the balance in full next month, installment payments may be a better option to avoid accumulating high-interest credit card-related debt.

Origin of installment plan

Installment plans emerged during the Great Depression of the 1930s, when most individuals and households suffered enormous financial losses. It remained popular until the 1980s, when credit cards became more popular and became redundant. For example, in September 2006, Walmart ended branch service after 44 years, According to NPR. The company blamed falling demand and rising costs.

However, in September 2011, due to the new financial difficulties brought on by the Great Recession, and the consequent tightening of consumer credit constraints, Walmart resumed service. However, it was only brought back during the holidays. It stayed that way until 2021, when Walmart again discontinued its installment plan and replaced it with a buy now, pay later (BNPL) plan called Affirm.

Essentially, Affirm plans to borrow money from customers to buy their goods, and they won’t have to wait to take them home. They make regular repayments over a period of time, ranging from 3 to 24 months depending on the size of the loan. Items available for this type of financing include electronics, video games, tools, toys, musical instruments, jewelry, home improvement and apparel.

While there are some 0% promotional rates available, the rate on this offer is usually between 10% and 30%. Creating an Affirm account will not affect your credit score, but using it to purchase items will affect your credit score. These features differentiate the program from other BNPL products, making it more like using a credit card. However, unlike credit cards, Affirm does not charge any fees.

Is anyone still using Layaway?

As of 2021, some companies still offer installment plans, but the details vary. Here are eight.

Army and Air Force Exchange

The military retailer offers three sub-pack options.

  • 30-day storage period for all clothes, bags and shoes
  • 60-day delivery on all other items (except jewelry)
  • 120-day appointment for fine jewelry

Your purchase price must be at least $25 with a 15% down payment and a non-refundable $3 processing fee. If you cancel your purchase, a $5 fee will be charged. Excluded items include customs clearance items; computers, peripherals, and major appliances; furniture, mattresses, sports equipment, and seasonal and outdoor living items; and electronics priced at $299 and above. This service is only available in stores.

Baby Warehouse and Burlington Coat Factory

The two stores are owned by the same company and offer the same layout plans. Not every store has one, though, so you should check the online listing on Burlington’s website.

You can put your item on hold for 30 days. Down payment of $10 or 20%, whichever is greater, plus a non-refundable $5 service fee. In-store payments can only be made by cash, check or credit card, and you can pay in installments or in full. If you cancel, there will be a $10 fee. Unqualified items include food, wall art, rugs, lamps and furniture.


Biglots has two installment plans. One is called price holding. This means that when an item is out of stock or you can’t pay in full, the store will keep the item’s current price. The price will remain the same until the item is restocked or you have paid in full. There’s no set time limit, but the company will ask you to notify it within two weeks of repayment to ensure pickup is available. The program is only available in stores that sell furniture, whose listings can be found using the store locator on the Big Lots website.

The Progressive Rental Program is a 12-month ownership offer (three months in California). You can take your item home, but you’re only renting it out until you pay in full. To be eligible, you only need to be at least 18 years old, have a valid Social Security Number or Individual Taxpayer Identification Number (ITIN), have an open and active checking account, and have a credit or debit card. There are no application or processing fees. Your payment will be withdrawn electronically from your credit or debit card.

You can buy products in advance, but the cost of doing so will be higher than the retail price (except in California). Eligible items include sofas, loveseats, sectional sofas, tableware and mattresses, as well as seasonal items such as outdoor patio furniture, gazebos, umbrellas, chairs, and more.

Iconic Gold Crown

Some Hallmark Gold Crown stores offer an installment policy. It is only valid from July to December and can be extended for up to 90 days. There is a 20% down payment. Policies may vary from store to store, so be sure to check with the salesperson for details on fees, cancellations, possible interest charges, etc.

Kmart and Sears

Online and in-store installment plans are offered by Kmart and Sears, both owned by the same parent company, Transformco.

The rest of the Kmart and Sears stores have an 8- or 12-week hold, with the latter only allowing in-store purchases of $300 or more. The down payment is $10 and must be paid every two weeks online or in-store. There is a $5 non-refundable service fee for 8-week items and a $10 service fee for 12-week items.

If you miss a payment, you have 7 days to restock, after which your installment plan will be cancelled and you will be charged a $10 or $20 cancellation fee, depending on how long your installment is. If you cancel your contract, you will receive a full refund of all monies paid to date, excluding service and cancellation fees. Only items labeled “Layaway Eligible” can be purchased with the program, which you can find online on the product page.

Unfortunately, according to Health website Best Life reportsKmart is closing most of its stores, with only six stores still open by the end of 2021. Chicago Tribune report As of September 16, 2021, only 35 Sears stores remain open. Their previous parent company, Sears Holdings, filed for bankruptcy in 2018 and was acquired by Transformco, which has been closing stores and selling assets.


Marshalls has a program called eLayaway, which provides loans through a company called Vivaloan. After filling out the seven-minute application, you can be approved the same day. A 10% down payment is required and there is a non-refundable $5 service fee. Installment payments begin within 30 days.

Even people with bad credit can get one; you only need to be 18 and have regular income. Report loan payments to credit agencies in a timely manner, which can improve your credit score over time.

What is an installment plan?

Layaways are a way of buying where consumers put a deposit on an item to “deposit it” for later pickup when they come back to pay the balance. It usually charges no interest and can be used by just about anyone, even those with bad credit. Late payments usually don’t affect your credit score, unlike BNPL plans and credit cards if you miss a payment.

What is the origin of Layaway?

The layoff plan, which first emerged after the Great Recession, was motivated by the economic hardship that many were going through. They remained popular until they were replaced by credit cards in the 1980s, then made a comeback after the Great Recession of 2008. Currently, their popularity has declined again, with the BNPL scheme proving to be more popular.

Is an installment plan better than using a credit card?

it depends on. A credit card allows you to own your purchases instantly and requires no down payment. Using them responsibly builds your credit score, which installment plans often don’t. Also, unlike installment plans, credit cards come with rewards programs.

That said, installment plans typically charge no interest, while credit card interest rates can be high and add up quickly. And in the event of a default, with a credit card, your credit score will suffer; with a layaway plan, it won’t be affected. Of course, you need good credit to get a credit card, but you don’t qualify for an installment plan.

If you can pay your credit card bill in full each month, it’s a better way to buy than an installment plan. However, if you can’t, then installment payments may be the way to go.

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