Updated Nov. 6, 2015
With the holiday season just around the corner, you may already be thinking about getting a head start on holiday shopping.
If you have no credit, limited credit, or you just want an alternative that allows you to spread out the cost of paying for gifts, layaway can be an effective way to pay. It can even be a good way to keep gifts hidden from kids who try to get an early peek at their presents.
Today, most major retailers offer the option of buying by layaway. Some retailers began their holiday layaway programs as early as August to encourage consumers to use their service.
How layaway works
Layaway plans allow you to make a deposit on an item you want to purchase. (Some larger retailers are even offering no-money-down layaway offers.) You make recurring payments over a period of time, either weekly, biweekly or monthly. The item is held at the store until you pay all the payments.
Some plans may require a minimum purchase amount.
Some retailers also offer a layaway option for online purchases. They may require automatic withdrawals from your checking account as payment.
Always pay close attention to a store’s terms for layaway. Make sure to keep a record of each of your payments.
If you purchase by layaway, you must be given a receipt that contains:
- A description of what you are buying.
- The total price of the goods and other charges.
- The amount of your deposit.
- The amount of your payments and when they are due.
- The length of time the goods will be held for you on layaway.
- The store’s refund policy.
Layaway sounds great. What could go wrong?
If you don’t make your payments or pick up the purchase as agreed, you may lose all payments you’ve made.
If you change your mind and do not want the product, you may not get your money back unless the store allows for refunds. Check a store’s refund policy ahead of time.
Some stores may charge storage or service plan fees.
If the merchandise is damaged after you put it on layaway, or the business does not have it at the end of the layaway period, they must return your down payment and any payments you made.
Questions you should ask a retailer before using a layaway plan:
- How much time do I have to pay for the item?
- How often do I have to make payments?
- Are there service fees or other fees I must pay?
- What happens if I miss a payment or make a late payment?
- If I decide I don’t want to purchase the item, do I receive a full refund? Are there cancellation fees?
- What happens if the item goes on sale while I’m still making payments?
For information on shopping safer online, read our article on cyber security.
If you have a question about purchases or any consumer issue, contact us at (800) 593-8222.