Think Ahead With Layaway Plans

Layaway programs are becoming increasingly rare. New tech, the surge of online shopping, and the advent of Buy Now Pay, Later programs (BNPL) have all but made layaways obsolete. However, some big retailers — like Amazon — still offer layaway plans. With inflation making everything so expensive, you may consider using layaway during the holiday shopping season. Here are some pros and cons of these programs.

The Pros

• Spreading out Payments. With a layaway plan, you’re able to purchase something and spread the payments out over a few months. This is helpful if you don’t have the cash on hand. Unlike Buy Now, Pay Later, with a layaway plan, you must make all the payments before you receive the item.

• No Credit Check. If your credit isn’t the best, you’re in luck — there’s no credit check with layaway plans.

• Score Remains Intact. Since there is no credit check for layaway plans, if you’re unable to make the payments, there is also no impact on your credit score. Keep in mind that if you are unable to make the payments, you won’t receive the item.

• No Interest. There are no interest charges with layaway programs.

The Cons

• Locked Schedule. As US News notes, with a layaway plan, you’re locked into the payment schedule. That means even if you somehow end up with enough money to buy and receive the item, you have to wait and make the payments according to the plan.

• Fees. Layaway plans have fees, including restocking, service and cancellation charges. They can range from $5 to $15. General rule of thumb: The more expensive an item, the less fees matter. Using a layaway plan for something under $100 is usually not a good idea because of the fees involved.

• No Refunds. Most layaway programs don’t offer refunds on the associated fees. So if you start the program and then change your mind about the item, you’ve lost money.