4 Reasons Layaway Is a Horrible Idea

Written By Jeff Hindenach
Last updated December 1, 2020

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Money Saving Tips
September 17, 2016

Simple. Thrifty. Living.

It’s about that time to start your holiday shopping, and while you want to get a jump on the holiday shopping, one tradition of early shopper should be avoided. While many big-named stores offer a layaway program, it’s not always the best idea to use it. While it can be convenient to delay paying for your items, it can end up costing you in the long run. Here are 4 reasons to avoid layaway this holiday season:

Many of the bigger stores will charge you a fee for putting things on layaway. Make sure you read the fine print before signing up for a layaway plan. Stores can charge a simple initial fee ($5-$20) or charge a percentage of the cost of the item (5-10%). Why pay the fees when you can save and buy the item for the actual price later?

The biggest problem with layaway is that you are spending money that you don’t have, which can cost you more in the long run. If you put something on layaway and find out later that you can’t afford it, you will have to pay a cancellation penalty. These penalties are huge, usually $5-$15, but if you also paid an initial fee, you could be out upwards of $30, which could be another present you could have bought.

Most of the biggest sales happen later in the season. Instead of putting something on layaway, start saving for it now. When it gets later in the season and the item goes on sale, you’ll already have the money to buy it. Look for online sales, too. A lot of sites offer free shipping or discounts later in the season to move more products. Be informed and keep track of sales at all times during holiday season. It can end up saving you hundreds.

If you really want to delay paying for your holiday gifts, sign up for a 0% intro APR credit card. These credit cards let you avoid paying interest on your purchases for up to 14 months, which gives you over a year to pay off your holiday purchases without being charged interest. These credit cards also usually come with either cash back or travel rewards, which means you can actually earn money back for your purchase, instead of paying fees to the store. Here’s a good list of 0% intro APR credit cards to choose from.

About the Author

Jeff Hindenach

Jeff Hindenach is the co-founder of Simple. Thrifty. Living. He graduated from Bowling Green State University with a Bachelor's Degree in Journalism. He has a long history of financial journalism, with a background writing for newspapers such as the San Jose Mercury News and San Francisco Examiner, as well as writing on personal finance for The Huffington Post, New York Times, Business Insider, CNBC, Newsday and The Street. He believes in giving readers the tools they need to get out of debt.

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