Layaway or Buy Now, Pay Later? Making Smart Payment Choices This Holiday Season

The holiday shopping rush brings pressure to purchase quickly, but not everyone has the cash on hand. Two popular payment options—layaway and buy now, pay later (BNPL)—offer ways to spread costs, yet they work very differently. Understanding these differences matters before committing to either approach.

How Layaway Works and Where to Find It Online and In Stores

At its core, layaway is a straightforward arrangement: you make an initial deposit on merchandise, then complete payment through installments or a final lump sum before taking it home. The retailer maintains possession until you’ve paid in full. While this once dominated retail landscapes, finding layaway stores online requires effort today. Traditional department chains have largely abandoned the service, but smaller retailers—vintage boutiques, pawn shops, and specialty stores—still embrace it. A handful of larger companies including Burlington, Hallmark Gold Crown locations, and Shane Co. continue offering layaway on select merchandise.

Key Differences Between Layaway and BNPL Plans

Both payment methods break purchases into chunks, but they diverge significantly:

Access and Timeline: Layaway forces you to wait. The retailer holds your item until the debt is cleared, typically across weeks or months. BNPL lets you take merchandise immediately—you then complete payments, usually six to eight weeks spread across four installments via companies like Afterpay or Klarna.

Payment Methods: Layaway accepts cash, checks, or credit cards per retailer rules. BNPL relies on credit cards, debit cards, or bank account links.

Credit Implications: This matters most. Layaway payments—whether on-time or late—stay off your credit report. The retailer’s collateral is simply your purchase. BNPL functions as a debt product. Late payments may be reported to credit bureaus, incur fees, or escalate to collection agencies, damaging your score. Neither on-time nor late layaway performance builds credit history, which is a missed opportunity for those rebuilding credit profiles.

The True Cost of Splitting Payments

Layaway avoids debt but introduces other expenses. Deposits and cancellation fees are common, sometimes nonrefundable. If circumstances force abandonment, you may forfeit all deposited funds. The total price could exceed what an outright purchase would cost, making it mathematically disadvantageous despite payment convenience.

BNPL typically charges no interest if payments stay current but stings with late fees and collection risks if circumstances shift. Many shoppers overcommit across multiple BNPL accounts without realizing cumulative obligations.

Is Layaway Right for Your Holiday Shopping?

If you lack credit cards or prefer avoiding debt entirely, layaway eliminates those concerns. It also guarantees stock availability during peak shopping season—a real advantage when popular items vanish quickly.

However, seasonal timing is brutal. Layaway typically requires months to complete, meaning holiday gifts may arrive too late. Plus, committing to a rigid payment schedule invites financial stress if unexpected expenses emerge.

Better alternatives exist: Hunt for open-box, refurbished, or secondhand inventory at retailers like Best Buy, Wayfair, and GoodBuy Gear—steep discounts without payment complications. Or build a dedicated savings fund and purchase when ready. This approach eliminates fees, removes uncertainty, and builds financial discipline.

Before signing any payment agreement, scrutinize terms ruthlessly. Understand cancellation policies, fee structures, and payment deadlines. The cheapest purchase is the one you can actually afford to complete.