Buying merchandise under a layway plan is a simple concept. Unlike credit card or house charge account purchases, with layway the merchant does not release the goods to the consumer until they are paid for in full. Instead, the customer makes a deposit, usually with a modest service charge included, and the merchant puts the goods aside, or lays them away. Depending on the cost of the goods, there may be one or more additional payments over the course of a few weeks or a few months. If the customer fails to make full payment by the agreed upon date, the merchant has the option to return all payments, minus service charges, and put the goods back on sale.
Once a common offering by many merchants, layaway plans became rare in the 1970s, but now are making a limited comeback. Another once-popular form of consumer finance that is enjoying a small revival by retailers is the Christmas club.
K-Mart, Burlington Coat Factory and Marshall's are among the remaining large retailers that continued to offer layaway even as most competitors ceased doing so. Sears launched its own plan within recent years.
Giant retailer Walmart announced plans to revive layaway starting on October 17, 2011. The new plan is limited to select categories of merchandise, and minimum purchase amounts apply. A 10% down payment is necessary, and a nonrefundable $5 fee added to layaway purchases means that the wise shopper will select this option only for big ticket purchases. Cancelled orders will incur an extra $10 charge, deducted from any refund for prior payments. Walmart had dropped layaway in 2006, indicating declining demand for it by consumers, as well as stockroom clutter created by storing goods on layaway. ("How Bad Is the Economy? Wal-Mart Revives Layaway," The Wall Street Journal, September 9, 2011.
A website named eLayaway helps users find the right retailer with the right merchandise and the right layaway plan. Then eLayaway sets up automated payments from the customer's bank account to the retailer. The payment platform is designed and maintained by HSBC.
