Layaway is back. You might see signs for it at big stores or even online. It sounds simple: pay a little now, pay the rest later, and get your item when you’re done. For many, layaway feels like a safe way to shop without using credit cards. But things have changed. Layaway isn’t what it used to be, and the risks are bigger than most people realize. If you’re thinking about using layaway, you need to know what’s different—and what could go wrong.
1. Layaway Isn’t Always Free Anymore
Layaway used to mean no interest and no fees. Now, many stores charge service fees just to open a layaway plan. Some charge a cancellation fee if you change your mind or can’t finish paying. These fees add up. You might end up paying more than if you’d just saved up and bought the item later. Always read the fine print before you sign up. If you’re not careful, you could lose money even if you never get the item.
2. You Might Lose Your Money If You Miss a Payment
With layaway, you make regular payments. Miss one, and you could lose the item and some or all of your money. Stores have different rules, but most keep at least part of your deposit or payments if you default. This is a big risk, especially if your budget is tight. If something unexpected happens—like a car repair or medical bill—you could lose both your money and the item you wanted. It’s not like a credit card, where you keep the item and pay interest. With layaway, you get nothing if you can’t finish paying.
3. Layaway Can Make You Spend More Than You Planned
Layaway makes it easy to say yes to things you can’t afford right now. You see a new TV or a fancy toy, and you think, “I’ll just pay a little at a time.” But those small payments add up. You might end up with more layaway plans than you can handle. This can stretch your budget thin and make it hard to pay for essentials. It’s easy to lose track of how much you’re spending when it’s broken into small chunks. Before you use layaway, ask yourself if you really need the item or if you’re just caught up in the moment.
4. New “Layaway” Plans Aren’t Always Traditional Layaway
Many stores now offer “buy now, pay later” (BNPL) plans instead of old-school layaway. These plans, from companies like Afterpay or Klarna, let you take the item home right away and pay in installments. But they’re not the same as layaway. If you miss a payment, you could face late fees, interest, or even damage to your credit score. Some BNPL services report missed payments to credit bureaus. This can hurt your credit and make it harder to borrow in the future.
5. Stores Can Change or Cancel Layaway Programs Without Warning
Retailers can end or change their layaway programs at any time. If a store goes out of business or stops offering layaway, you could lose your spot—or your money. This happened during the pandemic, when some big chains dropped layaway with little notice. If you’re making payments over months, you’re trusting the store to stay open and honor the deal. There’s no guarantee. Always check the store’s policy on refunds and cancellations before you start a layaway plan.
6. Layaway Doesn’t Build Credit
Some people think layaway helps build credit, but it doesn’t. Layaway plans aren’t reported to credit bureaus, so they don’t help your credit score. If you’re looking to build credit, you’re better off with a secured credit card or a small personal loan you can repay on time. Layaway is just a payment plan. It won’t help you qualify for a car loan or a mortgage down the road.
7. Better Alternatives Exist
There are safer ways to buy what you need. Setting up a simple savings plan is one. Put aside a little money each week until you have enough. This way, you avoid fees and the risk of losing your money. Some banks offer special savings accounts for big purchases. You can also look for sales or discounts instead of locking yourself into a layaway plan. If you need something right away, consider a low-interest credit card—but only if you can pay it off quickly.
8. Layaway Can Delay Your Financial Goals
Every dollar you put toward layaway is a dollar you can’t use elsewhere. If you’re saving for an emergency fund, paying off debt, or working toward another goal, layaway can slow you down. It ties up your money for weeks or months. If something important comes up, you might regret not having that cash on hand. Think about your bigger financial picture before you commit.
Rethink Before You Commit
Layaway is back, but it’s not the safe bet it once was. The risks are real: fees, lost money, and missed opportunities. Before you sign up, look at your budget, read the terms, and consider other options. Sometimes waiting is the smartest move. Your future self will thank you.
Have you used layaway or a buy now, pay later plan? What was your experience? Share your story in the comments.
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The post The Return of Layaway—And Why It’s Riskier Than Ever appeared first on The Free Financial Advisor.
