If you’re ready to pop the question to your partner, you might be in the market to buy an engagement ring. A ring can range from a few hundred dollars to thousands, depending on your significant other’s preferences and your budget.
Couples spent an average of $5,500 on engagement rings in 2023, according to The Knot, though you might have a different price point in mind. If you don’t have the cash to pay for the ring upfront, you can find several engagement ring financing options. Here’s what to know about them.
[Read: Best Personal Loans.]
How Much Should You Spend on an Engagement Ring?
One rule of thumb says a person should spend three months’ salary on an engagement ring, but jewelry experts say that’s an outdated guideline. Instead, “Spend what you can afford,” says Robin Williams, jewelry expert and vice president of H Tim Williams Jewelers in San Diego.
Couples who choose not to splurge on the engagement ring may have different financial goals, says Kristy Cullinane, co-founder of Plum Diamonds, which specializes in lab-grown diamonds.
“Most couples are prioritizing investments in their future,” says Cullinane, such as homes, travel, children and education. “Whether they have a lot of money to spend or not on an engagement ring is often irrelevant; they’ve simply decided not to spend more than necessary on a ring.”
Inflation has also driven the trend toward lower budgets, Cullinane says. As prices on day-to-day necessities have risen, people have less room in their budgets for nonessentials such as jewelry. Inflation has also driven up the costs baked into the price of each ring, including shipping, packaging, labor and the jewel itself.
At the same price point, “You will get a smaller diamond now than you would a year ago,” Williams says.
How to Finance an Engagement Ring
You will find many ways to pay for an engagement ring, and each comes with pros and cons.
Credit Card
Most shoppers use a credit card to buy an engagement ring, report Williams and Cullinane. It’s an easy way to pay while earning rewards, and you can clear the balance over time. But with an average annual percentage rate of more than 21% for credit cards, according to the most recent Federal Reserve data, interest will increase the cost of the ring.
If you want to save on interest, consider a credit card with an introductory 0% APR. This type of card doesn’t charge interest on purchases, balance transfers or both within a certain time frame, usually 12 to 21 months. Pay the balance within that period, and you can avoid interest.
Plan how you will pay off the balance before the rate expires, says Alesha Isaacs, certified financial planner and financial coach at Financial Finesse, a provider of workplace financial education programs. Take the cost of the ring and divide it by the number of months in the introductory period to see how much you need to pay each month to clear the balance. For example, if you charge a $5,500 ring and nothing else to a card with a 15-month 0% APR, you will need to make monthly payments of at least $366.67.
Alert your issuer, though, if you plan to use a credit card for the transaction, Cullinane says. “Give your credit card’s customer service department a call to let them know that you intend to make a larger purchase,” she says. “Big jewelry purchases are uncommon for many of us, and card companies may block the transaction as a fraud protection measure.”
Buy Now, Pay Later
BNPL services, also known as point-of-sale loans, are offered by some retailers either online or in-store. Popular BNPL providers include Affirm, Klarna and Afterpay.
Depending on what the jeweler provides, you may be able to use one of these short-term financing options to buy an engagement ring and spread payments over several installments. You’ll usually complete a short application with a soft credit check, meaning it won’t hurt your credit to apply.
If you’re approved, you may need to make the first payment when you check out. The remaining balance is split into equal installments that are typically due two weeks or a month apart.
BNPL services can be convenient, but “You might be lured into spending more than you can really afford,” says Sam Swenson, senior financial planner at Range. “Be sure that you’ll have the cash flow available later on to actually pay later.”
Note that you may owe late fees and interest charges if you can’t stick to the payment schedule. And because the payments are usually split into a small number of installments — usually four — they may be higher than minimum payments on a 0% APR credit card, personal loan or jeweler’s financing plan.
Jewelry Store Financing
Many jewelry stores offer in-house financing with flexible repayment options to help shoppers pay for their engagement rings. For example, you may have six to 12 months to pay off a ring with no down payment, no interest and no fees, as long as you follow the terms of the agreement. You may need to make a minimum purchase, such as $300, and pass a credit check.
If you don’t qualify for these repayment plans, you still may be able to finance the ring — but at a higher cost. “For those with poor credit, in-house financing often has extremely high interest rates,” Isaacs says. Additionally, “You may feel pressured by in-person sales to open an account or spend more than you were planning to.”
Engagement Ring Loan
These are basically personal loans you take out to finance wedding costs, which can include the engagement ring. Personal loans provide a lump sum of money that you pay back in fixed installments, with interest, over time. A personal loan is typically unsecured, meaning it is supported not by collateral but by your creditworthiness.
Unlike jeweler financing, an engagement ring loan requires navigating the loan application, approval and funding process before heading to the jeweler. The trade-off is that you’ll be able to compare lenders and get quotes for interest rates, fees, loan terms and amounts beforehand. This could give you an advantage over financing through the jewelry store.
[Read: Best Low-Interest Personal Loans]
Choosing the Right Engagement Ring Financing Option
When you’re comparing financing options for an engagement ring, consider not only your eligibility but also your budget, monthly payment affordability and payoff timeline.
If you’re sharing finances with your soon-to-be spouse, include your partner in the conversation, Isaacs says. “Open communication and clear expectations will go a long way toward establishing how you handle personal finances as a couple,” she says.
Here’s a quick guide to choosing the right financing option:
— Credit cards. A card could be a good fit if you can either pay off the balance by the next billing cycle or qualify for a 0% APR.
— Buy now, pay later services. BNPL can be a good option if you can afford the installments and pay them on time.
— Jewelry store financing. It is convenient, or it may be your only option if you don’t have strong credit.
— Engagement ring loans. A personal loan may be a good fit for people who want to shop around for a competitive interest rate.
If none of these financing options seem right for you, think about paying for the engagement ring upfront. “The jeweler may offer a cash price that’s typically discounted by about 2%,” Cullinane says, “which is what the merchant might save by avoiding credit card processing.”
[Read: Best 0% APR Credit Cards.]
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Engagement Ring Financing: Know Your Options originally appeared on usnews.com
Update 03/26/24: This story was previously published at an earlier date and has been updated with new information.
