Engagement Ring Financing: A Comprehensive Guide

An engagement ring is an exciting purchase, but make sure you strategize how you’ll pay for it.

Understanding engagement ring financing

What is engagement ring financing?

Buying an engagement ring is a big deal. It takes research, patience, and decisiveness. Of course, whenever you start thinking about an engagement ring, it’s not long before the cost comes into play.

Engagement ring financing makes it easier to get the best ring for the special person in your life. It breaks down the large purchase into smaller monthly payments spread across multiple years.

Why consider financing an engagement ring?

Engagement rings are expensive, and financing may be the most viable way for some people to buy the right ring.

Getting a loan for an engagement ring can also shield your emergency savings. That way, you have extra cash on the sidelines in case of an emergency. It’s better to borrow money for an engagement ring than it is to wait for a loan to get approved during an emergency.

Popular financing options for engagement rings

One thing that’s for sure, though, is that you shouldn’t spend outside of your means. When you’re ready to pop the question, and in a financial position to do so, there are a few ways to pay for an engagement ring.

In-store financing plans

You do have the option of financing a ring with a loan arranged through your jeweler. Using loans to make major purchases and keep cash on hand can be a smart financial move, and in some cases, the loans offered by your jeweler may fit your needs.

Here are a few of the financing options available through popular jewelers:

• Blue Nile: Financing is available via Blue Nile’s credit card. Depending on the price of the ring, consumers enjoy 0% APR for the first six or 12 months after purchasing. If you choose a longer payment plan, with equal payments, there’s a 9.99% APR.
• Ritani: Ritani offers financing via a Synchrony bank credit card. You can choose from the following options: no interest for 12 months, 9.99% APR for 36 months, or 9.99% APR for 60 months.
• Tiffany & Co.: The brand’s credit card offers a 0% intro APR for 12 months, or a 7.99% APR for 24 months.
• However, jewelers’ financing options may not have the best terms or interest rates, and you generally won’t earn you any cash back or rewards on the engagement ring purchase.

Credit card financing

Fortunately, there’s another option. Instead of taking out a traditional loan, or financing a ring through a credit card offered by the jeweler, you can use one of the best 0% APR credit card offers for a certain amount of time.

That means that instead of paying cash all at once, you can charge the ring to the card, and pay it off over a bit more than a year without having to pay any interest. As a nice cherry on top, you may even get a sign-up bonus for opening the card, and cash back on the ring itself.

The key is to make sure you pay off the whole thing before the introductory APR ends and the normal one becomes effective. A great feature is that you have extra flexibility if you go this route. If you come into some extra cash, or decide that you want to just finish the payments from savings, you can pay off the balance in full at any time.

Another benefit to using a credit card for your engagement ring purchase is that you can enjoy purchase protection, which is especially important when you’re buying such a big-ticket item. For example, Chase credit card purchase protection covers eligible items against theft and damage within 120 days of the purchase.

Personal loans for engagement rings

Many traditional banks and online lenders offer personal loans with terms ranging from a few weeks to seven years. These loans give you the capital you need and allow you to make fixed monthly payments instead of saving up the entire lump sum.

You will get the best rates and terms if you have a 740 FICO score or higher. However, some personal loan providers have much lower credit score requirements. Having a low debt-to-income ratio will also increase your chances of receiving a sufficient loan. You can improve this ratio by making more income, paying off debt, or consolidating existing debt into long-term debt to reduce monthly payments.

Tips for choosing the right engagement ring-financing option
Evaluating your budget
It’s good to see how much you can afford before committing to an engagement ring. In addition, you should gauge how quickly you can pay off the engagement ring and how much room you have in your monthly budget. Opening a new credit card with an intro 0% APR is the best option if you can pay off the engagement ring within a year or so.

However, you may need a personal loan if it will take much longer than one to two years to cover the debt. A long-term personal loan lets you minimize monthly payments so they can fit more comfortably into your budget.

Comparing interest rates and terms

Lower interest rates make it more affordable to borrow money. You can find the best rates for a personal loan or credit card if you compare numerous options. However, if you want to jump-start your research, these are some of the top credit cards to consider for engagement ring financing:

While there are a few different cards that offer introductory APRs, a strong option is the Chase Freedom Unlimited®.

The best rewards credit cards for engagement ring financing

It’s one of the best balance transfer credit cards, but in addition to offering a 0% intro APR on purchases and balance transfers for the first 15 months (which goes up to a normal 19.74% – 28.49% Variable afterward), it offers generous earning rates and a welcome bonus offer of additional 1.5% cash back on everything you buy (on up to $20,000 spent in the first year). The card earns 5% cash back on travel booked through Chase Travel℠, 3% back on dining and drugstores, and 1.5% back on everything else.

Plus, if you have a premium card from Chase, like the Chase Sapphire Preferred® Card, Chase Sapphire Reserve®, or Ink Business Preferred® Credit Card, you can move points from the Chase Freedom Unlimited® to the premium Chase card. That way, you can do things like transfer Chase points to frequent flyer partners, which is usually a much more lucrative way to use them than redeeming them for cash back.

Here are some other cards with intro APR periods for purchases:

• Blue Cash Everyday® Card from American Express: 0% intro APR on purchases and balance transfers for 15 months from account opening, then 18.49% – 29.49% Variable
• Capital One Quicksilver Cash Rewards Credit Card: 0% intro APR on purchases and balance transfers for 15 months (3% fee for the first 15 months, then 4% at a promotional APR that Capital One may offer you at any other time), then a 19.49% – 29.49% Variable (rates and fees)
• Capital One Savor Cash Rewards Credit Card: 0% intro APR on purchases and balance transfers for 15 months (3% fee for the first 15 months, then 4% at a promotional APR that Capital One may offer you at any other time), then a 19.49% – 29.49% Variable (rates and fees)
• Citi Simplicity® Card : 0% intro APR on balance transfers for 21 months (transfers must be completed within four months of account opening) and on purchases for 12 months ($5 or 3% of the amount of the transfer, whichever is greater for balance transfers completed within 4 months of account opening), then a rate of 19.24% – 29.99% Variable

Pros and cons of financing an engagement ring

Benefits of financing and engagement ring

Financing allows you to buy an engagement ring sooner since you don’t need all of the cash right now. You have plenty of financing options, such as an intro 0% APR from a balance transfer card or a personal loan.

You can opt for a longer loan term to reduce monthly payments so the engagement ring takes up a smaller percentage of your monthly budget. Buyers can also take out a shorter loan to minimize interest if they can keep up with the higher monthly payments.

Risks and costs to consider

Most financing options will cost you money. Personal loans generally charge origination fees and interest, and you will have to pay balance transfer fees if you decide to open a new credit card. You’re also likely to trigger a hard credit check, which can make it more difficult and expensive to borrow additional money for the next 6-12 months.

While balance transfer cards don’t accrue interest right away, you can end up paying a high interest rate if you don’t pay off the balance in time. It’s not easy to keep up with your other expenses while trimming down the debt incurred for engagement ring financing. You should review your financial situation before deciding how much to finance and which option is right for you.

Understanding hidden fees and penalties

You can incur penalty fees if you make late payments on your engagement ring debt. Credit cards tend to have lower minimum monthly payments than personal loans. It’s also good to check and compare fees for each financing option.