Walmart's Layaway Plan Preys on the Desperate

Good news everybody: Layaway is back! Walmart recently announced that it was bringing back its program, allowing customers to hold items for two months for a mere $5 fee. That may sound like a swell deal for Americans who can’t get credit, writes Louis Hyman in the New York Times, “but the truth is the program is a bad deal for everyone—except Walmart.” For consumers, “layaway is decidedly worse than most credit cards.”

Put $100 worth of goods on layaway, for instance, and that $5 fee amounts to a 44% annual interest rate—“a level most of us would consider predatory.” Walmart can get away with this only because of “the desperation arising from many Americans’ inability to borrow.” Male median wages have declined since the 1970s, but easy credit softened the blow. Now that’s gone. Walmart says layaway is about giving customers choices, but really, “it’s a signal that in today’s cruel economy, there’s no choice left.” (More layaway stories.)