Layaway

Layaway is a purchasing method in which a consumer places a deposit on an item to "lay it away" for later pick-up when they come back and pay the balance. Layaway also allows the customer to make smaller payments on the product until the purchase is paid in full. A layaway plan ensures the consumer will get their chosen merchandise once they pay for it in full.

Layaway works for consumers who have a limited amount of disposable income and are unable to make larger purchases all at once. There is sometimes a fee associated, since the seller must "lay" the item "away" in storage until the payments are completed. With little risk involved for the seller, layaway can be readily offered to those with bad credit. If the transaction is not completed, the item is returned to stock; the customer's money may be returned in whole, returned less a fee, or forfeited entirely. It also works to retailers' advantage by allowing them to offer products to lower-income customers. Layaway can also be used as a savings plan; because the customer has already made a commitment to purchase the product on layaway, he or she can not give in to temptation to spend the money elsewhere. 

The advent of layaway came during the Great Depression of the 1930s. It fell out of favor during the 1980s, as the ubiquity of credit cards decreased its utility. Wal-Mart announced in September 2006 that it would discontinue layaway service in all its stores, citing the decrease in demand and a rise in cost of implementation. However, in September 2011, Wal-Mart resumed the service due to the new financial difficulties brought on by the The Great Recession and increased constraints on consumer credit. During the 2012 holiday season, many retailers were heavily advertising their layaway service and offering it for free (or effectively free) if all conditions were met. Kmart has continuously provided layaway in the United States for over 40 years. At one time, it the only major national discount retailer offering the service.

Online layaway allows consumers to purchase items through scheduled deductions from a checking account. Online layaway simplifies layaway for both merchant and consumer by removing associated storage and bookkeeping costs. Layaways remain at the distribution center during the layaway period, instead of taking up valuable retail warehouse space. During the Christmas season, and it has been a tradition for some individuals to pay for others' layaway purchases as an act of random kindness.