Walmart Ditches Layaway in Favor of Affirm

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Walmart will not offer layaway this year, ditching the popular interest-free payment plan in favor of Affirm.

A prominent “buy now, pay later” service, Affirm charges 10 to 30% interest depending on your credit (or 0% APR for select promotional items). Affirm allows you to take home the item immediately instead of getting it only once you’ve paid for it in full.

Although Walmart charged a $10 cancelation fee if you end up not buying the item, its layaway plan did not charge any interest. It also required just $10 or 10% upfront, whichever was greater.

Walmart Ends Layaway Program

Walmart’s layaway program was especially popular in the fall. That allowed customers to make regular payments on items until mid-December, just in time for the holidays.

The company has worked with Affirm, a point-of-sale or installment loan company, since 2019.

According to Business Insider, Walmart phased out its layaway program starting last year, “offering it on select jewelry items. But recently, Walmart made it clear that it no longer offers layaway and began promoting Affirm more heavily.

Money expert Clark Howard isn’t a huge fan of “buy now, pay later” services unless you have the money to pay for the item and you’re going to make every payment on time.

“My real problem with ‘buy now, pay later,’ which is so, so ‘in’ right now across America, is that it creates real personal financial danger for you,” Clark says. “Because we already know that when you pay for something with a credit card — even a debit card — you feel it less than if you pay with cash. But you go a step further where you don’t even have to pay for something. You just leave and it’s yours.

“But you’ve created an obligation. What happens is that human nature being human nature, we will buy more stuff and spend more money.”

Although Affirm doesn’t charge late fees, if you miss a payment, it could report the event to the Experian credit bureau. So instead of a simple $10 cancelation fee, you’re risking your credit score. That’s in addition to potentially paying interest.

“Walmart offers easy and affordable monthly payments online and in stores with Affirm. Alternative to layaway, you can purchase immediately and pay over time at a pace you choose — from 3 to 24 months,” Walmart says on its website.

Affirm’s program offers merchandise amount limits between $144 and $2,000.

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You can select Affirm on the checkout page at Walmart.com, or you can download and sign up for the app before paying in-store. The service runs a soft credit check to determine your creditworthiness.

Walmart says that if Affirm approves you, you can purchase from the following categories:

  • Electronics
  • Video games
  • Toys
  • Home
  • Arts & crafts
  • Musical instruments
  • Home improvement
  • Auto
  • Sports & Outdoors
  • Tools
  • Baby
  • Jewelry
  • Apparel

Here are the categories that Walmart doesn’t allow you to finance through Affirm:

  • Alcohol
  • Baby Consumables
  • Gasoline
  • Groceries and food
  • Merchandise at the register
  • Miscellaneous supplies
  • Money services
  • Personal care
  • Pet supplies
  • Pharmacy, health and wellness
  • Temporary specialty items
  • Tobacco
  • Weapons, ammunition, air guns, gun accessories and hunting supplies
  • Wireless services plans
  • 1-hour photo

Although you can automate your payments within the Affirm app, it isn’t set up like that by default.

According to a Credit Karma study, 16% of Americans have missed a payment with a “buy now, pay later” service. Although Credit Karma did not make a direct connection — their scores could have suffered for other reasons — the website said 72% of the people who missed at least one payment saw their credit scores decline.

“That’s a huge, huge number and very worrisome to me,” Clark says.

“And the harm to your credit lasts a good while when you go delinquent. So if you want to use a ‘buy now, pay later,’ you’ve got to make sure you can come up with the money to pay it on time.”

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