How to finance an engagement ring
Bending the knee? Popping the question? Great, but don't break the bank
You, sir. You with the love-struck
look. I know you've found the perfect occasion to spring that diamond ring and
pop the big question.
About 2 million Americans get married each year, according to the
National Center for Health Statistics -- and Valentine's Day alone spurs an
estimated 6 million couples to take their relationships to the next level. Regardless of when you plan on getting down on one knee, you've no doubt seen the diamond ring promotions aimed like Cupid's arrow at your highly
emotional state of mind. "Hey buddy, this platinum solitaire here will
only set you back six months' pay and we're currently offering 0 percent
financing for a year! Here's where you sign ..."
Not so fast, Romeo. If you want her
to marry you for richer and not poorer, you'll study the fine print first to
make sure that bauble on her finger doesn't turn into a ball and chain on your
newlywed finances. Couples say spending an average of $2,311 on an engagement
ring is an appropriate amount, with some aiming as high as nearly $5,000 and
others less than $1,000, American
Before you buy an engagement ring, let's take a closer
look at jewelry store credit terms, return policies and some creative
alternatives for cash-poor romantics.
Few favorable terms from jewelers
Chances are, you'll shop locally for an engagement or wedding ring, but if
shopping from the comfort of your couch is more your style, that can work, too.
Shopping for jewelry online is becoming increasing popular, thanks to websites such
as Blue Nile and Ice.com. The online jewelry sales market in the United
States has seen 2.9 percent annual growth since
2008 according to a 2013 IBISWorld industry report and online transactions accounted for 9.8 percent of overall
jewelry sales in 2013.
In addition to taking most major
plastic, both brick-and-mortar and online jewelers offer dedicated
private-label revolving credit cards. Unfortunately, their terms tend to make
the majors look like a bargain. Although jewelry sales abound as Valentine's
Day approaches, regardless of when you buy it, you'll generally realize savings
through a jeweler's card only if you pay off the ring before any 0 percent promotional
For example, as of February 2014, the
Kay Jewelers card offers one year
interest-free with 20 percent down on a $500 minimum purchase. Once the
promotional period expires, the APR rises to 18-24.99 percent (17
percent in Arkansas) and no annual fee. The Zales
credit card features four interest-free payment plans, depending on
how much you want to finance and the amount of your minimum purchase. For
example, interest is waived for 12 months if you spend at least $1,000 and put
15 percent down. Once that interest-free period is over, the APR range jumps from
23.73 percent to 28.99 percent.
And note the Zales promotional deals'
fine print: If you don't pay up by the end of whichever interest-free
promotional period you choose (or if you make a late payment), interest will be retroactively charged from the date of purchase.
If you are looking to shop from the
comfort of your home, comparable offers are available with online jewelers, but
again, read the fine print. Blue Nile
offers a credit card with three financing options: standard minimum monthly
payments with an APR of 26.99 percent, no interest if paid in full within a
selected six or 12 month window and a 9.99 percent APR option if the purchase
is paid off by the end of the selected term. However, to get that low 9.99
percent interest rate, your minimum spend has to be $2,000.
I would be shocked today if a merchant did not take back a piece of jewelry.
|-- Regina Leadem
GE Money Luxury Card
offer financing, but works with PayPal's Bill Me Later option to offer no
payment and no interest if paid in full in six months through the online
What if she says no?
A jeweler's return policy is another
important factor to consider before buying a ring.
The Federal Trade Commission recommends
you read the jeweler's return and refund policies carefully before you buy; ask
for one if it's not provided. When ordering online, keep printouts of the
site's return policy as well as details of the transaction in the event you're
not satisfied with your purchase.
Most major jewelers will refund or
exchange a ring in unused condition for 30 days, and some refund or exchange as
far out as 90 days. They may deduct shipping and handling from your refund and
charge a restocking fee. Exceptions are usually made if you received the wrong
item or it was damaged in shipment.
Regina Leadem, industry vice
president of sales for GE Money Luxury Card,
one of the major private-label credit card processors in the jewelry sector,
says jewelry returns are rare and usually hassle-free.
"I would be shocked today if a
merchant did not take back a piece of jewelry," she says. "They're in
it for the long haul; their lifeblood is in these small customers. I really
don't know any merchant that would do that."
But should you happen upon an
uncooperative jeweler, don't abandon hope: Your major credit card companies have
your back, sort of.
Help with diamond refund
If you're unhappy with the results
trying to return your purchase, there is an additional line of defense you can
turn to. Discover: MasterCard, American Express and Visa all have return
If you make your purchase with a MasterCard, you'll have 60
days to request a refund of up to $250. Visa
cardholders may also be eligible for a $250 refund, but will have 90 days to make
a refund request. Discover
cardholders may be eligible for a refund up to $500 of the purchase price, per
the specific card's policy.
However, keep in mind that refund assistance
policies are limited and vary, so check with your card issuer for more specific
If you are hesitant about your big
purchase, avoid charging it to an American
Express card if you can because there will be no turning to them if you do.
AmEx's return policy specifically states that jewelry is not eligible.
Share the love -- try social financing
Can't make the math work with traditional financing? You might want to consider
looking into the world of peer-to-peer lending.
Sites such as Prosper.com and
Zopa.com directly connect individual borrowers and investors without using a
middleman. Those looking for a loan complete a profile using their basic
information and loan desires, which are then posted for review by potential
investors. Through Prosper, investors set the interest rates they would like
lenders to pay, typically starting at 6.73 percent for the best borrowers but
can reach up to 35.36 percent.
Peer-to-peer lending has the
potential to be fairly user-friendly, just keep an eye on the interest rates
offered by the assortment of lenders. This method can also help you avoid the
awkwardness of borrowing from family and friends.
Make the move
Once you have the financing secured
and the ring in hand, it's time to figure out how to pop the question. Yes,
more planning is required.
However, your proposal doesn't have
to be as elaborate (or expensive) as you may think. While many men (31 percent)
are more inclined to propose while on vacation, American Express found that
women (27 percent) may actually prefer a romantic at-home proposal. Use the
money saved from staying in and pay off a little more of that ring right away
See related: Know your credit card purchase protection plan, How to win a credit card charge-back dispute
Updated: February 11, 2014