The holidays are just around the corner. Is your wallet ready? The average American planned to spend nearly $1,000 on holiday shopping last year, according to the National Retail Federation. That number is likely to grow for 2018, with the NRF predicting a 4.3% to 4.8% increase in overall retail sales for 2018.
Those numbers are good news for the retail industry, but they could be bad news for consumers. Twenty-nine percent of people admitted to overspending last holiday season, a WalletHub survey found, and 32% said they wouldn’t be able to pay off their holiday shopping debt before the end of January.
Retailers like Walmart have a solution to help you manage Christmas shopping splurges: layaway. It’s an old concept that’s found new life in recent years. Here’s what you need to know about Walmart layaway and how to tell if it’s a smart choice for you.
What is Walmart layaway?
Layaway is a payment plan for purchases. Instead of paying all cash upfront or using a credit card that you’ll have to pay off later, layaway lets you pay for your merchandise before you take it home.
Stores have offered layaway plans since the 1880s. Before credit cards were common, layaway was a way for people to budget for expensive items. The practice made a comeback during the Great Recession when money was tight for many shoppers.
Walmart is the biggest chain with a layaway program today, but it’s not the only one. Kmart and Sears both have layaway programs that run year-round. So do Burlington and some TJ Maxx stores. Walmart layaway is only available in the months leading up to the holidays.
How Walmart layaway works
Walmart’s 2018 holiday layaway program began on August 31 and runs through December 10.
To sign up, bring the items that you plan to purchase to the store’s service desk. Each individual item must cost more than $10, and your total purchase must be more than $50. Most in-store items are eligible for layaway, with the exception of cell phones. You can’t do layaway if you’re shopping online.
There’s no fee to start a layaway account, but you will need to make a down payment of either $10 or 10% of the total price, whichever is more.
You can make payments on your layaway at any time at any store register. Once you make all your payments, you’ll be able to pick up your purchases at a designated spot in the store.
Walmart gives you until December 10 to make your layaway payments. If you don’t pay for your item in full by then, your account will be canceled and you’ll have to pay a $10 fee. Any other payments you made will be returned.
Will Walmart layaway save you money?
Layaway has the potential to save holiday shoppers money. If you typically pay for Christmas gifts on a credit card and don’t pay the bill in full right away, choosing the Walmart layaway will probably save you money on interest and fees. In a worst-case scenario, you lose $10 with layaway. That’s a far cry from what you’ll spend on interest if it takes you months to pay off your credit card bill.
For shoppers without a credit card, layaway also helps spread out the cost of big purchases. Some people might find that layaway programs help them better budget for the holiday – it’s a kind of “forced savings” plan. It can also be a way to lock in a lower price on an item you think will get more expensive. Some parents even like layaway because they can hide gifts from snooping kids.
But layaway plans have cons too. If the price of your item drops, or your find it for less at another store, you’re stuck paying more than you should. And they can be expensive. While Walmart only charges a cancellation fee, other stores have service fees that make layaway a costlier option.
The bottom line: If you can use credit cards without going into debt or are disciplined enough to save for holiday shopping on your own, layaway might not make much sense. But if you want to get your holiday shopping done now, and pay for it later, layaway could be the right choice for you.
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