The benefits of buying on lay-by over credit

Buying on lay-by is better than collecting bad debt.

Historically, we see a surge in spending in December, the start of the gifting season for many of us. If you have no choice but to spend before you’ve saved up, then consider lay-by purchases instead of opening a store credit account. Here are four good reasons why.

1. Celebrate no interest rate

Whether you’re in-store or online shopping, lay-by payment options are available to you at all major retailers. What is lay-by? How does lay-by work? You commit to buying something, but instead of paying the full price for it in one go, you pay the same amount in four or more instalments. You are not charged any extras – there are no fees, interest nor penalties that come with buying items on lay-by. It is purely an arrangement between you and a store.

Lay by

2. Delight in delayed gratification

Where credit cards and store accounts give you an instant thrill – and the resulting debt. Lay-by traditionally means you reserve something for purchase (so no one else can buy it), pay it off and collect it later. Lay-by buying has changed a bit over the years and you can, in some cases, take possession of the item immediately. This will depend on the individual store’s policy or the terms and conditions set by specialist companies like Payflex. You could look at lay-by is just another way of saving, suggests @MayaOnMoney.


3. Enjoy consumer protection

When you buy on lay-by, you are covered by the Consumer Protection Act and you can change your mind at any point while paying the instalments. The store is then legally obliged to give you your money back (less 1% to cover their admin costs). That means that if you buy something and then suddenly lose your job or have other more urgent expenses, you will not be in trouble about not being able to keep up with your monthly payments like you would with a credit facility.


4. Contribute to your credit score

Paying for something in instalments can increase your credit score without taking out credit. More and more, lay-by technology links information about how you’ve responsibly paid off your purchases to the Credit Bureau. So, if you go to the retailers listed on LayUp, you could start creating a credit record for that day when you decide to take a business or home loan.


You can check your financial wellbeing by taking our quick and easy quiz. And before you buy anything over the festive season, be sure to use our free budget planner.