Engagement Ring Financing and Why To Avoid It

Olivia Clifford |

Proposing to your significant other can be one of the most exciting and invigorating times in your life. When it comes down to choosing the right ring at the right price it can be more then frustrating. Many people live in fear of the well-known phrase, “Bigger is better”, and future fiancés are no exception. Most American’s are willing to jump into debt to get the right ring through financing their purchase. The average price of an engagement ring within the United States in 2011 according to the XO Group Inc. and their Engagement and Jewelry Survey was around $5,200. It was then found that around 12 percent of those American’s purchasing the rings were spending over $8,000 a ring. 

Most well established and branded jewelry stores offer interest free financing on their pieces for an average of six to 12 months. This financing was then limited changed after the 2009 CARD Act that was signed into legislation by President Obama. The problems that many uninformed buyers then run into after financing their ring purchase are the hidden fees that come about with missing a payment or failing to pay of the balance. Most, if not all well-known jewelry store brands will charge their customers who chose to finance an interest that begins on the day they purchased the ring versus the end of the promotional deal.  With interest rates averaging around 25 percent, this could mean hefty added charges. 

Top 4 Engagement Ring Stores and Their Interest Charges 

  1. Zales: Their promotion states that a buyer can purchase an engagement ring for 0 percent interest for 6 months and then the interest charges will jump to anywhere between 23.73 percent and 28.99 percent. 
  2. Kay Jewelers: Their 2013 financing promotions was 0 percent financing for the first 12 months if paid in full at the end and an added 24.99 percent interest added at the end of the 12 months. 
  3. Shane and Company: Their promotion was 0 percent financing for the first 6 months and then a jump to 27.99 percent interest if the balance hadn’t been paid in full.
  4. Jared: In 2013 their promotion for engagement ring financing was 0 percent interest for the first year and then if the balance had not been paid in full by the end of the promotion the interest jumped to 24.99 percent. 

In order to avoid paying the large interest rates and subsequent large sums of money on an engagement ring, there are many other options that a person can choose. It is never recommended that one finance an engagement ring unless they are entirely certain that they will be able to pay off the total balance by the end of the promotional deal. Other avenues include buying a ring that is within your immediate means while saving for an upgrade, searching the Internet to find better deals on diamonds and ring setting and well as not being afraid to negotiate with the sellers.  

DISCLOSURE: The views and opinions expressed in this article are those of the authors, and do not represent the views of equities.com. Readers should not consider statements made by the author as formal recommendations and should consult their financial advisor before making any investment decisions. To read our full disclosure, please go to: http://www.equities.com/disclaimer

Companies

Symbol Name Price Change % Volume
EFRMF East Africa Metals 0.19 -0.02 -9.61 24,000
XOXO XO Group Inc. 19.33 0.13 0.68 47,601

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