BBB Advice: Using Layaway for Holiday Purchases

December 08, 2009
BBB offers tips to consumers deciding how they will purchase holiday gifts this season

RALEIGH, N.C. — Better Business Bureau serving Eastern North Carolina has noticed many businesses offering layaway programs this holiday season for consumers that are still feeling the effects of the economy. With layaway experiencing a comeback, BBB offers guidance on how to decide if this payment plan is a better option than credit cards.

Kmart's layaway program saw double-digit increases in customers and sales in 2008 and, according to the company, the word “layaway” had more than double the interest among U.S. web searchers in August 2009 than it had in August 2008.

Buying items on layaway is different from putting them on a credit card because the buyer isn’t charged interest on the purchase and can’t take the item home until it is paid off. When purchasing items on layaway, the buyer must typically make a down payment of 10 to 20 percent and pay any service or plan fees for the store to hold the item for them. The customer then has typically 30 to 90 days to make periodic payments to pay off the balance. Once it is paid off, the customer can take the items home.

As a complement to in-store layaway, some stores provide online layaway services for purchasing items through the retailer’s Web site. Additionally, third-party businesses have sprung up for the purpose of setting up layaway plans online between customers and retailers that don’t already have a layaway program. Customers make periodic payments to the third-party layaway service provider. Once the item is fully paid for, the business then buys the item from the retailer and ships it to the customer.

“Consumers are taking advantage of the ability to layaway everyday items and holiday decorations rather than just big-ticket items like TVs,” said Beverly Baskin, President and CEO of BBB serving Eastern North Carolina. “While layaway plans provide an attractive option for those still deciding how to purchase holiday gifts, it is important to ask a few questions about the plan and get the information in writing before you begin payments.”

When buying items on layaway, BBB offers the following checklist of questions to ask:

  • How much time do I have to pay off the item?
  • When are the payments due?
  • How much do I have to put down?
  • Are there any storage or service plan fees?
  • What happens if I miss a payment? Are there penalties? Does the item return to inventory?
  • Can I get a refund or store credit if I no longer want the item after making a few payments?
  • What happens if the item goes on sale after I’ve put it on layaway?
  • Does the retailer or third-party layaway service have a good BBB rating?

For more advice on how to be a savvy consumer this holiday season, visit