Millennials, the largest living generation, spend $600 billion in the U.S. each year, and more than half of their purchases are made online. However, an overwhelming 63% of them don’t have a single credit card.

Since student loan debt has increased 164% from 1990 to 2015, it makes sense that millennials are skeptical of traditional financing and building additional debt.

They’re not comfortable borrowing money, but they still want things they can’t afford.

Enter a loophole: the rebirth of the layaway program.

Layaway originated as a payment arrangement during the Great Depression. A consumer could pay for a product in installments over time, and receive the product when they completed their payments. Today’s layaway programs operate the same way, except for one major difference: customers receive their product as soon as they would with any other payment method.

“Layaway plans are essentially an interest-free payment plan. Even if a fee is charged, it is likely a lower-cost option than financing, particularly with a high interest rate credit card,” according to Greg McBride, chief financial analyst at

Finance online purchases with Affirm

Buy now, pay later, but with zero interest.


Consumers can buy furniture, electronics, clothing, and even book flights using layaway plans. The layaway financing option is available at well-known retailers such as Wayfair, Best Buy, Cole Haan, Urban Outfitters, and Expedia.

For instance, a customer could buy a $950 sofa sectional from furniture retailer Birch Lane by paying $57 a month for 18 months with Affirm. For a millennial who is paying rent and/or student loan repayments each month, this is a great option.

The same customer could stay in a deluxe room at the Ritz Carlton in New York City’s Central Park (a total cost of $915.77 including taxes) by paying $83 a month for 12 months, regardless of their credit score.

Customers can finance a purchase of as little as $35 from NARS, a cosmetics company, with Afterpay.

Yes, that means financing lipstick.
Pay for lipstick with layaway payment option

Choosing Afterpay at checkout allows customers to pay for this lipstick set in four equal payments over eight weeks.


The length of the payment term varies between layaway services. Depending on the purchase amount, customers using Affirm can choose to pay off their loan in 1-48 months. Afterpay, QuadPay, and Sezzle require customers to pay off their purchases in four equal payments over a span of 6-8 weeks.

Retailers are not at risk of losing money or wasting inventory space because Affirm and Afterpay pay them the total cost of the purchase up front. Utilizing a layaway program as a payment option is a great way for retailers to hook millennials and reel them in for the long term.

The millennial generation is not wealthy, so they like receiving rewards and discounts for their purchases. That’s why 77% of millennials participate in a loyalty rewards program. That’s also why they like having layaway as a payment option.

If a customer can pay off an item in parts without using a credit card, the sticker price seems smaller.

It also means customers are more likely to opt for more expensive items instead of sacrificing quality for a lower price. Not only does this mean customers will ultimately spend more, but that items are less likely to sit in shopping carts indefinitely.

The ability to pay $57 a month for that $950 sofa sectional will make a customer less likely to seek out better prices from competitors. Instead of searching high and low for the same sectional priced at $900 elsewhere, the customer can just select a layaway program as their payment method at checkout.

Layaway programs are also beneficial for retailers when running promotions. Millennials who can’t afford something even when it’s discounted can lock in the sale price and pay for the item over time, while the retailer can make space in their inventory right away.

65.8% of Affirm’s transactions are from repeat users.

That number indicates that customers remember which retailers use layaway. Affirm, Afterpay, and Sezzle list their store directories on their websites. A person who took advantage of the layaway option on Birch Lane, for example, could visit Affirm’s website to see other retailers offering the service. From that percentage, retailers can conclude that offering the payment option creates loyal customers.