A tradition of American retailing, the layaway plan, is fading away at the nation's largest retailer. Wal-Mart has announced it is phasing out its layaway program because of increasing costs and declining use.

With the layaway plan, consumers who cannot afford to pay the full price of a particular item may put it on "layaway," picking it up and paying for it at a later date, when they have the money.

Wal-Mart said it is exploring other financing options to take the place of its layaway program.

"Demand for layaway service has declined steadily as consumers turn to other options, such as online shopping, gift cards and no-cost credit alternatives," said Pat Curran, a spokesman for Wal-Mart.

The retail giant said consumers who apply for a new Discover or Wal-Mart credit card will get $20 cash back if they purchase at least $100 on their card on the same day.

The company said customers can also make zero-interest payments on merchandise up to 12 months if they have a Wal-Mart account.

Meanwhile, Wal-Mart competitor Kmart said it has no intention of doing away with its layaway program.

Kmart senior vice president Don Germano told Reuters that the layaway program is offered as a convenience to customers who have purchased an item as a gift and want to keep it a secret.

"Layaway service is a way for gift-givers to keep presents away from prying eyes," Germano said.