Managing Debt

The Crazy World of Engagement Ring Financing

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Are you willing to go into debt for love? If you are ready to pop the question, but haven’t saved for the ring you want to buy, you may be tempted to finance the purchase. But do that, and you may find that already pricey engagement ring costs a lot more than you planned.

The average engagement ring cost $5,200 and about 12% of couples spent more than $8,000 for an engagement ring, according to the XO Group Inc. 2011 Engagement Engagement & Jewelry Survey. The average ring was 1 carat for the center stone, and 1.4 carats total stones.

If you haven’t socked that much away, don’t worry. All of the major jewelry stores offer financing, with many of them promoting interest-free financing for six to 12 months. (No interest, no payments is not common anymore thanks to the CARD Act). But there’s a catch: miss a payment or fail to pay off the balance and you’ll pay a lot more.

For example, here is what some of the major jewelry stores are currently advertising*. With all of these plans, if you make one late payment or fail to pay the balance in full during the promotional period, interest will be charged from the date of purchase — not from the date the promotional period ends.

Jared: 0% interest if paid in full within 12 months; up to 24.99%.

Kay Jewelers: 0% interest if paid in full within 12 months; up to 24.99%.

Shane and Company: 0% interest if paid in full in 6 months; 27.99%

Zales: 0% interest if paid in full in 6 months; 23.73% to 28.99%

While interest-free financing may work out fine if you are able to pay off the balance, it is risky if you aren’t able to come up with the cash to pay it off.

One more potential trap: Applying for one of the accounts will create an inquiry on your credit reports. Plus, if you accept the financing, you’ll have a new account with a balance listed on your credit reports, and that could potentially have a negative effect on your credit scores. That’s something to keep in mind if you hope to buy a home together soon, for example.

Avoiding Engagement Ring Debt

If you don’t want to wait much longer, you may want to consider more affordable options:

  • Buy a less expensive ring and start saving for an upgrade on, say, your fifth or tenth wedding anniversary.
  • Use interest-free financing for the initial purchase, then use a low-rate balance transfer to pay off the balance before the 0% store financing ends. I am not recommending this, since you can run into traps here too, but if you pull it off, it’s better than paying 25% or more for long-term store financing.
  • Get a part-time job in a jewelry store and save substantially on your purchase. Put all of your earnings toward a ring.

And when you do choose a ring, shop carefully to make sure you are getting the best deal. Jennie Ma, fashion editor, offers these tips:

  • Buy Shy and Save: Shop for diamonds that weigh just under certain weight thresholds. For example, if you want a 1.0 carat diamond, you can buy a .90 carat diamond and save more than $1,000. And buying shy will hardly affect the diamond’s outward appearance (the diameter of a 1.0 carat diamond is 6.5 mm, whereas the diameter of a .90 shy carat stone is 6.3 mm — the difference is the thickness of a piece of paper). The price difference between a 1.90 carat diamond and a 2.0 carat diamond can be as much as $5,000!
  • Hit the Internet: There can be some great deals found on the Internet — i.e. BlueNile and Union Diamond allow you to compare the going rate of loose diamonds and ring settings based on their grades and styles.
  • Buy Loose Diamonds: Don’t be dazzled by the pretty setting, the fancy box or the clever advertisements. Most jewelry ads are selling you on settings, not diamonds, even though the stone is a whopping 90 percent of a ring’s cost. It’s important to buy the stone loose, not mounted, so you can inspect the entire stone.
  • Don’t be Afraid to Negotiate: There’s always room for negotiation, so don’t be afraid to go after a deal. Never settle on the sticker price unless you’ve shopped around and you know it’s already a fair price.

Keep one more thing in mind before going into debt for an engagement ring: You’ve got a much bigger expense coming up soon — a wedding.

If you want to make sure your credit is in good standing before financing an engagement ring, you can check your three credit reports for free once a year. If you’d like to monitor your credit more regularly,’s free Credit Report Card provides you with an easy to understand breakdown of the information in your credit report using letter grades, along with two free credit scores that are updated monthly.

*This information may have changed from the date of publication. See each jeweler’s website for current rates and promotional offers.

Image: Ingram Publishing

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  • Dona Collins

    Fantastic points. Even as a woman, I do not understand the need for couples to start their relationships in debt; and (as a woman, again), I don’t understand the demands some women place on their significant others when it comes to the emotional value they put on the size of a ring. Does the size or ultimate price of the engagement ring really matter?

    I’d much rather see smaller ring investments and smarter investments into the future. The money saved could go towards opening a couple’s first joint savings account; towards the wedding; towards the downpayment for a new home; and dozens of other more practical things.

    My first engagement ring? It was the tiniest anniversary band in the store, with tiny diamond chips. I still have it and wear it. It cost under $200 (no, I did not forget a zero). I picked it out myself and wear it proudly because I know the ring isn’t what matters in our relationship; and when it comes to money, we’ll have other, more important obstacles to overcome.

    • Gerri Detweiler

      Dona – Great story! I would be a nervous wreck if my ring cost a small fortune. I take it off without thinking and “lose” it at least once a month if not more.

      Thanks for your comments.

  • Jesse Schlaud

    I recently proposed to my girlfriend without buying a ring first. I have some money saved but it seemed silly to spend so much on a ring when I knew she woud rather have a nice wedding and honeymoon. She said yes, and afterwards we went ring shopping together. We looked a lot of places and couldn’t find much that she liked within our budget (a few thousand dollars). My mom suggested we try Sam’s club. I was skeptical, but while the selection wasn’t great the prices were easily half what they were at the jewellery stores. We ended up getting a white gold ring with a half carat main stone and 1 carat total diamonds for $699. Plus while we were there we picked up a rotisserie chicken for dinner, win/win. We took it to the local jeweller to get it resized and they said it was a really nice ring.

    My advice for men thinking about proposing, skip the jewellery stores and go big box. You’ll save a lot of money and, assuming she’d care in the first pace, she’ll never know the difference.

    • Gerri

      Not all women would find it terribly romantic to go to Sam’s and pick up a ring with the chicken but I think there are plenty who would prefer a financially sensible spouse. :)

  • jamie

    so – read the terms and conditions of the financing agreement before you sign up? bit of a no brainer really.

    if your betrothed wont want anything less than an Elizabeth Taylor rock, then you might also want to revisit why you want to be with her.

    i asked my fiance to marry me without a ring – because i knew she’d want to get something unique to her. i bought a £10 placeholder ring the next day (which she still wears) and over the next 6 months we worked with a local jewellery designer to make her ‘proper’ ring. It cost £460 and my fiance wouldnt have anything else.

    money isnt everything.

    • Gerri

      Sounds very sweet.

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  • Paul Chernoff

    Nothing new about this type of financing. Used it the first time we bought carpeting 20 years ago. Read the terms carefully and realized that if we didn’t pay it off in 1 year interest would be large. Paid it off in 2 months.

    My wife picked out her own engagement ring. $250. Everything to do with the wedding was paid in cash.

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  • pdq

    I’m female and a jeweler – I make the stuff. I’ve seen far too many guys either feel like they have to overspend or be snookered into overspending by their girlfriends (“Is that all I’m worth to you?” yeeeech).
    Do yourselves a favor: if you really feel you MUST have an engagement ring, SET YOUR BUDGET FIRST. Then go shopping. Don’t let them bump you up (the advice about avoiding certain carat weight thresholds & upgrading later is utterly sound).
    Remember diamonds aren’t rare; the prices are kept artificially high by the likes of DeBeers. If you need to impress someone with rarity, go for very high clarity and color saturated gems like ruby or emerald. Note: these, being truly rare, will cost you far more than a comparable diamond weight.

    My engagement ring? When my (now) husband proposed, he wanted to go buy a ring, but there was a problem with the heatpump at his house where we planned to live. I opted to get the heater replaced. A diamond, no matter the beauty, would do absolutely zero to keep me from freezing in January.

    • Gerri Detweiler

      I love it! Good advice.

      • pdq

        It’s a real shame a lot of guys leave this to a moment of inspiration. “I NEED THIS BECAUSE I’M PROPOSING TONIGHT!!!1!1!” happens way too much. Give her a bubblegum machine ring and then go shopping, because you’re sure not making rational informed decisions while you’re fantasizing about romance.

        As one of my co-workers sez (translated roughly from Moroccan Arabic), “No money, no honey!” lol

  • pdq

    A side note: Jared & Kay’s – as well as JB Robinson, Marks & Morgan, LeRoy’s and Belden Jewelers (as well as several others) are all owned by Sterling, the U.S. arm of Signet Group, Ltd., so you can expect credit inquiries there, too.
    Advice: a good solid independent jeweler. Ask around and TAKE YOUR TIME SHOPPING. This is something you only do once in your life (well, most of us anyway).

    • Gerri Detweiler

      Makes sense – the financing terms on a lot of these offers look the same.

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  • Charlie Weisel

    Here’s the way to get the best looking engagement ring for your money:

    1. Get a little education and buy the right grade of diamonds. Most people can’t see the difference between a G color diamond and a perfect D color. And they can’t see the difference between a slightly included clarity (SI1 or SI2) and a more expensive grade (VS or VVS clarity) without magnifying it. If you buy the higher grades, you’ll either have to pay more, or buy a smaller diamond.

    2. It’s no longer true that 90% of the cost is in the center stone, with most of today’s ring styles. Look at the total cost instead. For example, the halo designs with small diamonds make the center diamond seem larger, at a lower price per carat.

    3. Shop around. Many retail jewelers know they have to compete with online dealers, and will give you comparable prices with the benefits of personal service and a local jeweler to stand behind the product.

    Remember this: your diamonds will hold their value as long as you live, and you can pass them on to your loved ones. You’ll get many years of use and enjoyment from them, too. All that most couples will have to show for the money they spend on their wedding later is a photo album, a video and a wedding gown. That puts them in perspective, from a purely financial point of view. There’s absolutely nothing wrong with buying an expensive ring and having an inexpensive wedding if that’s what the two of you want to do. (And don’t worry – you don’t have to spend a lot of money on either one to have a great marriage.)

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  • deedee

    Hello, i have recently purchased a watch for over 800 dollars, i have made all my payments on time and even a weak ahead of time. when i fist asked if would receive a credit score every month for my payments they said yes that it is all reported, but when i went in to pay my last payment they said that they do not report anything. Now, can i do something in regards to that return the watch, sue, i am not sure what to do since i am just starting my credit and i was lied to just to get me to purchase the watch.. thank you!!

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