In an era dominated by credit cards and Buy Now, Pay Later (BNPL) services, lay-by—a payment method that once seemed on the brink of extinction—is making a notable comeback in Australian retail. As economic pressures mount in 2025, more Australians are turning to lay-by as a safe, interest-free way to budget for larger purchases without the pitfalls of debt. What’s fueling this resurgence, and how does lay-by fit into the modern consumer landscape?
What is Lay-by and How Does It Work in 2025?
Lay-by is a classic payment arrangement where you pay off an item in instalments before taking it home. Unlike BNPL or credit cards, you don’t receive the product until you’ve paid the full price. Here’s how the process typically works in 2025:
- Deposit: You pay a small upfront deposit (often 10-20% of the item’s price).
- Regular Payments: You make regular, scheduled payments—usually weekly or fortnightly—until the full amount is paid.
- No Interest: There are no interest charges, though a small admin fee may apply.
- Collection: Once paid in full, you collect your item.
Many major retailers like Big W, Target, and some specialty stores have maintained or reintroduced lay-by options in 2025, often with digital tracking and reminders for added convenience.
Why Lay-by is Gaining Momentum Again
With the Reserve Bank’s cash rate holding steady at 4.35% and consumer credit card interest rates averaging above 19%, many Australians are wary of taking on high-interest debt. At the same time, the cost of living crisis has made budgeting more important than ever. Lay-by offers several unique advantages in this environment:
- Interest-Free: No risk of accumulating debt or paying interest, unlike with credit cards or some BNPL services.
- Disciplined Saving: Encourages saving and delayed gratification, helping shoppers avoid impulse buys.
- Budget-Friendly: Allows families to plan for big events (like Christmas or back-to-school) without financial strain.
- Credit-Free Shopping: No credit checks required, making it accessible to people with lower credit scores or those avoiding further inquiries on their credit file.
According to a 2025 survey by the Australian Retailers Association, lay-by transactions have increased by 16% year-on-year, with younger shoppers (Gen Z and Millennials) showing renewed interest as they seek alternatives to debt-fuelled consumption.
Lay-by vs. BNPL and Credit: What’s Best in 2025?
The rise of BNPL services such as Afterpay and Zip has changed how Australians pay, but concerns about missed payments, late fees, and impacts on credit scores are prompting some to reconsider traditional options. Here’s how lay-by stacks up:
| Feature | Lay-by | BNPL | Credit Card |
|---|---|---|---|
| Interest | No | Sometimes (late fees) | Yes (avg 19%+) |
| Access to Goods | After full payment | Immediately | Immediately |
| Credit Check | No | Sometimes | Yes |
| Impact on Credit Score | No | Possible | Yes |
| Budgeting Help | Strong | Mixed | Weak |
For Australians prioritising budgeting and debt avoidance in 2025, lay-by offers a safe, straightforward way to shop—especially for big-ticket items or seasonal purchases.
2025 Retail Trends: How Lay-by is Evolving
Retailers are modernising lay-by to suit today’s tech-savvy shoppers. Expect to see:
- Online Lay-by: Many major chains now offer lay-by through their websites, allowing customers to manage payments and track progress online.
- Flexible Terms: Some stores are experimenting with extended lay-by periods and even ‘reverse lay-by’ (where you pay ahead for recurring expenses like school uniforms).
- Mobile Integration: Automated reminders, payment tracking apps, and digital receipts make the process smoother than ever.
Real-world example: Kmart’s 2025 digital lay-by system lets shoppers set payment schedules, receive reminders, and even adjust instalment amounts mid-plan—all from their phone.
Is Lay-by Right for You?
Lay-by isn’t for everyone—if you need something immediately, you might prefer BNPL or credit. But if you want to avoid debt, budget carefully, and ensure you’re only spending what you have, it’s a tried-and-true method that’s never been more relevant.
