If you’re old enough to have parents who bought items on layaway (or did it yourself), you’ll understand Amazon’s latest perk for Amazon Prime: Amazon Layaway.
It’s available now, mostly pitched to back-to-school shopping, but many remember layaway generally as a department store holiday staple in the decades following World War II. The idea was – and is – this: You’d reserve big purchases like Christmas toys for the kids well ahead of the big day, and pay the store’s layaway department a portion of the final tab every few weeks until the item was paid for and ready to be retrieved, wrapped and delivered to eager children or other recipients.
Amazon Layaway works, virtually, in a similar fashion. Curiously, it’s the inverse of the intensely popular (and significantly more risky) buy now, pay later programs. Here, you pay now, get later.
Amazon says it has thousands of selected items ready for Amazon Layaway, and there’s no credit check, no interest charged and there are no cancellation fees. Items are clearly marked with a button that says “Reserve with Layaway.” Layaway customers pay 20% of the item’s total cost at initial checkout. The item is then reserved and the price is locked in.
Next steps include making equal payments every two weeks for up to eight weeks until the item or items are paid in full. A quicker payoff means a faster delivery. Not every item Amazon sells is available for layaway. Amazon advises if you want the items to arrive in time for December holidays to make your purchases by Oct. 23.
But is layaway a sound money-saving move?
Unlike buying via a credit card, layaway programs typically don’t charge interest – though some stores in the past charged small “layaway fees” to store the items – and aren’t considered a form of debt (thus, no need for a credit check).
Amazon isn’t charging any fees above the costs of the items, but should other retailers resuscitate layaway, consider whether they charge layaway fees (a decade ago, Best Buy charged 5% of the total layaway price and retailers including Burlington Coat Factory, Marshalls and T.J. Maxx charged a $5 non refundable layaway fee).
Other concerns include:
- Using layaway may cost you. If you lock in the price of a product and put it on layaway, you will miss out if and when the item goes on sale for a lower price, perhaps on Black Friday or during the busy holiday shopping season. Amazon confirms its prices are locked in at time of purchase and that’s the final price for layaway items, even if the product goes on sale. But, in these inflationary times, there’s also the upside that you’ve locked in a given price that could also go up.
- You might pay more to cancel. Amazon Layaway isn’t charging a cancellation fee. Other retailers have in years past and still might if they revive layaway.
- You might not be able to afford that layaway. On the face of it, layaway seems a more prudent option – and it is certainly better than buying something – or many things – that end up putting you in debt. And yet, the idea of taking an expensive item and breaking it up into more manageable payment chunks can end up disguising the sum cost. In short, can you really afford it? And if you face a cancellation fee, that’s bad money on top of bad money.
Bob was Senior Editor at Kiplinger.com for seven years and is now a contributor to the website. He has more than 40 years of experience in online, print and visual journalism. Bob has worked as an award-winning writer and editor in the Washington, D.C., market as well as at news organizations in New York, Michigan and California. Bob joined Kiplinger in 2016, bringing a wealth of expertise covering retail, entertainment, and money-saving trends and topics. He was one of the first journalists at a daily news organization to aggressively cover retail as a specialty and has been lauded in the retail industry for his expertise. Bob has also been an adjunct and associate professor of print, online and visual journalism at Syracuse University and Ithaca College. He has a master’s degree from Syracuse University’s S.I. Newhouse School of Public Communications and a bachelor’s degree in communications and theater from Hope College.
Six Steps to Take if You've Recently Inherited Money From a Loved One
It’s important to deal with the emotional aspect first before tackling the financial one.
By Kiplinger Advisor Collective Published
Alaska Airlines to Buy Hawaiian: Get Bonus Miles Now
How to use the Alaska Airlines credit card and frequent flyer program to save on trips to Hawaii, Alaska and beyond.
By Ellen Kennedy Published
Amazon Launches Virtual Healthcare Service for $9 a Month
Amazon's on-demand virtual healthcare service is available with a Prime One Medical membership.
By Joey Solitro Published
Four Tips for Renting Out Your Home on Airbnb
real estate Here's what you should know before listing your home on Airbnb.
By Miriam Cross Published
Five Ways to a Cheap Last-Minute Vacation
Travel Procrastinator? No matter. You can pull off a fun and memorable getaway on a moment's notice — without breaking the bank.
By Vaishali Varu Published
How Much Life Insurance Do You Need?
insurance Instead of relying on rules of thumb, you’re better off taking a systematic approach to figuring your life-insurance needs.
By Kimberly Lankford Published
Five Reasons You Shouldn't Shop on Amazon Prime Day
Smart Buying Think twice before getting lured into buying a bunch of stuff you don't need just because it's on sale.
By Andrea Browne Taylor Published
When Is Amazon Prime Day?
Amazon Prime In 2023 Amazon had two Prime Day events — one in July and another, called Big Deal Days, in October. We expect 2024 to follow the same schedule.
By Bob Niedt Last updated
How to Shop for Life Insurance in 3 Easy Steps
insurance Shopping for life insurance? You may be able to estimate how much you need online, but that's just the start of your search.
By Kaitlin Pitsker Published
Get Audible for Free This Fall
Amazon is now offering a complimentary 30-day trial of Audible, and you can either opt for a “Plus” or “Premium Plus” trial.
By Erin Bendig Published