Americans are expected to rack up record credit card debt again this holiday season, with the average shopper planning to spend over $1,000 on gifts, travel, and gatherings.
But a growing number of retailers are quietly pushing an old-school alternative that sidesteps interest entirely: layaway.
Walmart brought layaway back for the season, and stores like Burlington, Big Lots, and Kmart parent Transformco still run programs.
You pick your items, pay a small down payment, and the store holds them while you pay in installments over six to eight weeks.
Compare that to the typical store credit card, which now carries an average annual percentage rate above 30%, according to Bankrate.
Put $500 of gifts on a card and pay it off over six months, and you could hand over $80 or more in pure interest, depending on the card. "Layaway forces you to save before you buy," said Ted Rossman, a senior industry analyst at Bankrate. "A credit card lets you buy before you save, and that's where people get into trouble." The catch is that layaway isn't free in every sense.
Most programs charge a nonrefundable service fee, usually $5 to $10, and many require a down payment of 10% to 20% upfront.
Miss a payment, and the store can cancel your order and return your money minus the fee.
Some retailers only accept layaway on larger items like electronics, furniture, or jewelry, not everyday purchases.
With a credit card, you take the item home today and can return it easily.
With layaway, you often can't touch the merchandise until it's paid off, and cancellation policies vary wildly from chain to chain.
Still, for shoppers without emergency savings or a decent credit score, layaway can be the safer path.
A 2024 LendingTree survey found that nearly half of Americans with credit card debt carry it month to month, meaning those holiday purchases could still be costing them next summer.
Buy now, pay later apps like Affirm and Klarna have filled some of that gap, but they come with their own risks.
Miss a payment and you can face late fees, and some services report to credit bureaus.
Layaway, by contrast, doesn't touch your credit score at all.
The math is straightforward for anyone who can plan ahead.
If you have the discipline to make biweekly payments and don't mind waiting for your goods, layaway removes the interest trap entirely.
If you need the item now or want the rewards points, a credit card only makes sense if you pay the full balance when the statement hits.
Layaway feels like a commitment device, a way to lock in a purchase without the hangover of a January statement.
For households already stretched by grocery prices and rent, that certainty may be worth more than the convenience of plastic.
The bottom line: layaway isn't glamorous, and it won't earn you cash back.
Final Thoughts
But in a season built on temptation, paying before you play is a strategy that leaves you with gifts under the tree and nothing owed on the card.