Toys R Us’s Xmas layaway scheme – is it all it’s cracked up to be?

Toys R Us’s layaway scheme is hugely popular on Facebook and in the papers as a way to spread the cost of Christmas presents.

With Take Time to Pay, you choose your toys in store, pay a 20% deposit and then make payments in store every four weeks, over a period of four, eight or 12 weeks. (For this Christmas, you’re now looking at the eight-week option.) The items are put away when you take them to the till, and you can make additional payments whenever you like.

There’s no minimum spend on the goods you can put away, but it’s in store only. Most Toys R Us stores do it – see the link for exclusions. The scheme works all year round, though it gets the most buzz around Christmas.

Now, planning ahead to avoid Christmas debt is a fantastic aim. What’s commonly known as the Toys R Us layaway scheme is hugely popular and I feel a bit of a grinch for criticising it. Yet the reality is less impressive than it first seems…

You have to pay a £5 admin fee

There’s an annoying £5 admin fee per reservation – which, depending on how much you’re buying, can significantly ramp up the price. There’s also a further £10 admin fee if you want to cancel a reservation and get a refund. But if you were to simply stash your cash in a savings account, it’d pay YOU every month.

The scheme’s terms say if you fail to make the payments you sign up to, your order will be cancelled and the items put back on shelves. If you miss one payment, Toys R Us says it will try to arrange another payment date, but if you haven’t paid by the next payment date four weeks later, your order will be cancelled. A spokesperson said if you’re struggling to pay on time you should speak to the store.

If it went bust, you’d lose your cash

Crucially, Toys R Us doesn’t actually give you the items until everything’s paid off – this is cleverly spun as “we’ll keep your items so your little ones can’t find them”.

This means it’s effectively a savings club. Yet it’s important to understand you DON’T have the same protection as you would with savings in a bank (for more, see our Safe Savings guide).

If Toys R Us were to go bust at any point (there’s no suggestion it will, but it’s important to consider), you’d most likely lose your toys and cash. To drill this home, this is what happened with the Farepak debacle in 2006.

When we put this to Toys R Us, a spokesperson said: “Toys R Us is an established company and has been retailing in the UK for over 30 years – we are part of the global Toys R Us company. At present, the scheme doesn’t have this type of protection [similar to the Financial Services Compensation Scheme – see our Safe Savings guide for more], but it is something we are looking at.”

Toys R Us price matches – but not online

Toys R Us runs a price match scheme in store, and this is available on the layaway scheme too.

Handily, you can do this price match at any point while you’re paying off the item, so if you see a cheaper price elsewhere or the price drops in store during your repayment period, you could save some cash. If the price goes up in store, however, you won’t be asked to fork out any more money.

Annoyingly though, as is often the case, the price match scheme doesn’t include any websites, for example Amazon. So you’re limited to price-matching the handful of stores you might visit in person, rather than the whole of the world wide web.

That’s a real weakness. If what you’re buying is massively reduced in a flash Black Friday sale, for example, there’s nothing you can do about it – you’re locked in to the Toys R Us price.

How to do it yourself instead

Psychologically, I can see the appeal of Toys R Us’s scheme. You often hear people saying things like “it eases the pressure for parents” and “it lessens the burden”. But you can do something very similar yourself for free…

  • Put money aside from now: Set a target amount for prezzies, then create a direct debit to a savings account to build up the money. Setting up a direct debit to yourself is as easy as giving regular payments to Toys R Us. If you want to spend, say, £150 on toys, put £50 aside in October and November. Pay the rest from your salary in December.
  • Consider pre-loved presents: Second-hand doesn’t mean second-rate – and younger kids won’t be able to tell the difference anyway. Why not set up some eBay alerts, so you get an email when someone lists what you’re looking for? Plus try local Facebook selling groups – many specialise in kids’ items and can be a real treasure trove of toys.