The Pros and Cons of Buying an Engagement Ring With a Credit Card

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When I bought my wife’s engagement ring eight years ago, I paid for it in cash. I was a college student at the time, but I saved up enough money from my full-time job to get a $2,800 ring custom made.

Nowadays, the average engagement ring costs $5,764, according to The Knot. It’s not easy to save that much money, especially if you’re planning for a wedding and other big purchases as you start your life together.

As a result, buying an engagement ring with a credit card might sound like a good idea. Before you do so, though, it’s important to understand the pros and cons of using a credit card for such a large purchase.

When buying an engagement ring with a credit card is a good idea

The average credit card interest rate is 15.32%, according to the Federal Reserve. So, on the surface, paying for an engagement ring with a credit card might sound like a terrible idea. But if you do it right, it could be worthwhile. Here’s why.

You could avoid paying interest

When Lucas Horton proposed to his wife in 2006, he bought the engagement ring with a credit card. The owner and artisan jeweler at Valeria Fine Jewelry in Dallas used a card with a 0% introductory APR. He then paid off the balance before the promotional period ended to avoid interest on the purchase.

“With some cards, you have a year and a half to pay off the ring with no interest,” Horton said. “That should be doable.”

Let’s say you get the Citi Simplicity Card, which offers a 0% APR on purchases and balance transfers for 18 months. An engagement ring that costs $5,764 would require monthly payments of roughly $320 to pay off the balance before the promotional period ends.

If you can manage that monthly payment, getting an engagement ring with a credit card could be a good idea.

You could earn rewards on the purchase

Some other 0% APR credit cards offer rewards on your purchases. For example, the Chase Freedom offers a 0% APR on purchases and balance transfers for 15 months. Additionally, you’ll earn a $150 cash bonus after you spend $500 in your first three months and up to 5% cash back on your purchases.

If your engagement ring is more than $500, that’s effectively a $150 discount off the bat. Plus, you can pay it off interest-free.

It could help you maintain good credit

The most important factor in your FICO credit score is your payment history; it makes up 35% of your score. So, putting any large purchase on a credit card and paying it off over time can boost your credit score.

The pitfalls of buying an engagement ring with a credit card

While the idea of paying for your engagement ring with no interest sounds smart, it’s easier said than done. Here are some potential downsides to consider.

Your repayment plan could go awry

Even if you have plans to pay off the card before the promotional period ends, something unexpected could derail your strategy. If you have a robust emergency fund, that might not be a problem. But if you don’t, an emergency expense or a job loss could throw you off.

If you don’t pay off the balance before the promotion ends, your interest-free debt could turn into toxic high-interest debt overnight.

Minimum payments are tempting

In the example above, you’d have to make monthly payments of about $320 to pay off the ring in 18 months. But the card’s minimum monthly payment won’t be anywhere near that amount. In fact, minimum payments are typically just 1% of your balance plus interest.

As you pay down your debt, that low minimum payment could be tempting, especially if there are other ways you’d rather spend your money. If you’re not sure you can stick to your repayment plan, avoid the risk.

You might not get approved

You typically need good or excellent credit to qualify for a 0% APR credit card — which generally means a credit score of 670 or higher. If your score isn’t quite there yet, applying for a 0% APR credit card could result in rejection, and you’d take the negative hit to your credit score from the hard credit inquiry for no reason.

3 other ways to pay for an engagement ring

If you can’t get approved for a credit card or you’re not sure you want to risk using one, there are other options available. Here are a few ways to pay for an engagement ring other than with a credit card.

1. Income and savings

Cash is the best way to pay for an engagement ring and most other large purchases. If you’re not planning to propose anytime soon, start saving as much money as possible to avoid having to finance the ring at all. That way, you don’t have to bring more debt into your new relationship.

2. Jeweler financing

Some big-box jewelry stores offer promotional financing that’s similar to what you might get with a 0% APR credit card.

“Some of those places are probably a little bit more liberal with who they approve,” said Horton. “So, if you don’t have good enough credit for [0% APR] credit cards, your next best bet might be to go to one of those places that are offering that kind of special financing.”

But these plans are typically deferred-interest promotions. If you don’t pay off the bill in full before the promotion ends, the creditor will apply interest from the original purchase date instead of charging you interest on the leftover amount.

As a result, this type of financing could be even more dangerous than a 0% APR credit card if you don’t pay off the balance in time.

3. Personal loan

Personal loans don’t offer promotional financing, but you might be able to qualify for a low interest rate. The Federal Reserve pegs the average interest rate for a personal loan with a 24-month term at 10.22%. That’s well below the average credit card interest rate.

What’s more, personal loans have set monthly payments and repayment terms, which could be good if you’re worried about falling into the trap of making minimum payments on a credit card.

Take the time to compare top personal loan companies to see if their offers fit your needs.

Take your time and shop wisely

As you consider whether to buy an engagement ring with a credit card or some other way, make sure you get a good deal on the ring itself. Horton recommends working with a small jeweler instead of a big-box retailer.

“If you have just one guy doing almost all the work, their overhead is going to be lower,” he said. And lower costs for the jeweler mean lower prices for you.

Be sure to shop around for your financing as well. For example, if you go the credit card route, look at several 0% APR credit cards before you choose one. And before you apply for a personal loan, research multiple options before settling on one.

Note: Student Loan Hero has independently collected the above information related to the Citi Simplicity Card and Chase Freedom. Citi and Chase have neither provided nor reviewed the information shared in this article.

Interested in a personal loan?

Here are the top personal loan lenders of 2018!
LenderAPR RangeLoan Amount 
1 Includes AutoPay discount. Important Disclosures for SoFi.

SoFi Disclosures

  1. Personal Loans: Fixed rates from 6.990% APR to 14.865% APR (with AutoPay). Variable rates from 6.255% APR to 12.555% APR (with AutoPay). SoFi rate ranges are current as of September 1, 2018 and are subject to change without notice. Not all rates and amounts available in all states. See Personal Loan eligibility details. Not all applicants qualify for the lowest rate. If approved for a loan, to qualify for the lowest rate, you must have a responsible financial history and meet other conditions. Your actual rate will be within the range of rates listed above and will depend on a variety of factors, including evaluation of your credit worthiness, years of professional experience, income and other factors. See APR examples and terms. Interest rates on variable rate loans are capped at 14.95%. Lowest variable rate of 6.255% APR assumes current index rate derived from the 1-month LIBOR of 2.08% plus 4.425% margin minus 0.25% AutoPay discount. For the SoFi variable rate loan, the 1-month LIBOR index will adjust monthly and the loan payment will be re-amortized and may change monthly. APRs for variable rate loans may increase after origination if the LIBOR index increases. The SoFi 0.25% AutoPay interest rate reduction requires you to agree to make monthly principal and interest payments by an automatic monthly deduction from a savings or checking account. The benefit will discontinue and be lost for periods in which you do not pay by automatic deduction from a savings or checking account.

    To check the rates and terms you qualify for, SoFi conducts a soft credit pull that will not affect your credit score. However, if you choose a product and continue your application, we will request your full credit report from one or more consumer reporting agencies, which is considered a hard credit pull.See Consumer Licenses.
  2. Minimum Credit Score: Not all applicants who meet SoFi’s minimum credit score requirements are approved for a personal loan. In addition to meeting SoFi’s minimum eligibility criteria, applicants must also meet other credit and underwriting requirements to qualify.
  3. SoFi Personal Loans are not available to residents of MS. Maximum interest rate on loans for residents of AK and WY is 9.99% APR, for residents of IL with loans over $40,000 is 8.99% APR, for residents of TX is 9.99% APR on terms greater than 5 years, for residents of CO, CT, HI, VA, SC is 11.99% APR, and for residents of ME is 12.24% APR. Personal loans not available to residents of MI who already have a student loan with SoFi. Personal Loans minimum loan amount is $5,000. Residents of AZ, MA, and NH have a minimum loan amount of $10,001. Residents of KY have a minimum loan amount of $15,001. Residents of PA have a minimum loan amount of $25,001. Variable rates not available to residents of AK, TX, VA, WY, or for residents of IL for loans greater than $40,000.
  4. Terms and Conditions Apply: SOFI RESERVES THE RIGHT TO MODIFY OR DISCONTINUE PRODUCTS AND BENEFITS AT ANY TIME WITHOUT NOTICE. To qualify, a borrower must be a U.S. citizen or permanent resident in an eligible state and meet SoFi’s underwriting requirements. Not all borrowers receive the lowest rate. To qualify for the lowest rate, you must have a responsible financial history and meet other conditions. If approved, your actual rate will be within the range of rates listed above and will depend on a variety of factors, including term of loan, a responsible financial history, years of experience, income and other factors. Rates and Terms are subject to change at anytime without notice and are subject to state restrictions. SoFi refinance loans are private loans and do not have the same repayment options that the federal loan program offers such as Income Based Repayment or Income Contingent Repayment or PAYE. Licensed by the Department of Business Oversight under the California Financing Law License No. 6054612. SoFi loans are originated by SoFi Lending Corp., NMLS # 1121636. (www.nmlsconsumeraccess.org)

2 Includes AutoPay discount. Important Disclosures for Payoff.

Payoff Disclosures

  1. All loans are subject to credit review and approval. Your actual rate depends upon credit score, loan amount, loan term, credit usage and history. Currently loans are not offered in: MA, MS, NE, NV, OH, and WV.

3 Important Disclosures for FreedomPlus.

FreedomPlus Disclosures

  1. All loans available through FreedomPlus.com are made by Cross River Bank, a New Jersey State Chartered Commercial Bank, Member FDIC, Equal Housing Lender. All loan and rate terms are subject to eligibility restrictions, application review, credit score, loan amount, loan term, lender approval, and credit usage and history. Eligibility for a loan is not guaranteed. Loans are not available to residents of all states – please call a FreedomPlus representative for further details. The following limitations, in addition to others, shall apply: FreedomPlus does not arrange loans in: (i) Arizona under $10,500; (ii) Massachusetts under $6,500, (iii) Ohio under $5,500, and (iv) Georgia under $3,500. Repayment periods range from 24 to 60 months. The range of APRs on loans made available through FreedomPlus is 4.99% to a maximum of 29.99%. APR. The APR calculation includes all applicable fees, including the loan origination fee. For Example, a four year $20,000 loan with an interest rate of 15.49% and corresponding APR of 18.34% would have an estimated monthly payment of $561.60 and a total cost payable of $7,948.13. To qualify for a 4.99% APR loan, a borrower will need excellent credit on a loan of $15,000 with a term of 24 months, and qualify for at least two of the following discounts: (1) add a co-borrower who has sufficient income; (2) use at least fifty percent of the loan proceeds to directly pay off existing debt; or (3) show proof of having at least forty-thousand dollars in retirement savings – contact FreedomPlus for further details.

4 Important Disclosures for Citizens Bank.

Citizens Bank Disclosures

  1. Personal Loan Rate DisclosureFixed interest rates from 6.49% – 19.49% (6.49% – 19.49% APR) based on applicable terms. Lowest rates range from 5.99%-18.99% (5.99%-18.99% APR), are for eligible applicants, require a 3-year repayment term, and include our Loyalty and Automatic Payment Discounts of 0.25 percentage points each, as outlined in the Loyalty Discount and Automatic Payment Discount disclosures. Subject to additional terms and conditions, and rates are subject to change at any time without notice. Such changes will only apply to applications taken after the effective date of change.
  2. Loyalty Discount: The borrower will be eligible for a 0.25 percentage point interest rate reduction on their loan if the borrower has a qualifying account in existence with us at the time the borrower has submitted a completed application authorizing us to review their credit request for the loan. The following are qualifying accounts: any checking account, savings account, money market account, certificate of deposit, automobile loan, home equity loan, home equity line of credit, mortgage, credit card account, student loans or other personal loans owned by Citizens Bank, N.A. Please note, our checking and savings account options are only available in the following states: CT, DE, MA, MI, NH, NJ, NY, OH, PA, RI and VT. This discount will be reflected in the interest rate and Annual Percentage Rate (APR) disclosed in the Truth-In-Lending Disclosure that will be provided to the borrower once the loan is approved. Limit of one Loyalty Discount per loan, and discount will not be applied to prior loans. The Loyalty Discount will remain in effect for the life of the loan.
  3. Automatic Payment Discount: Borrowers will be eligible to receive a 0.25 percentage point interest rate reduction on their Citizens Bank Personal Loan during such time as payments are required to be made and our loan servicer is authorized to automatically deduct payments each month from any bank account the borrower designates. If our loan servicer is unable to successfully withdraw the automatic deductions from the designated account two or more times within any 12-month period, the borrower will no longer be eligible for this discount.

5 Important Disclosures for LendingPoint.

LendingPoint Disclosures

  • Loan approval is not guaranteed. Actual loan offers and loan amounts, terms and annual percentage rates (“APR”) may vary based upon LendingPoint’s proprietary scoring and underwriting system’s review of your credit, financial condition, other factors, and supporting documents or information you provide. Origination or other fees from 0% to 6% may apply depending upon your state of residence. Upon LendingPoint’s final underwriting approval to fund a loan, said funds are often sent via ACH the next non-holiday business day. LendingPoint makes loan offers from $2,000 to $25,000, at rates ranging from a low of 15.49% APR to a high of 34.49% APR, with terms from 24 to 48 months. The loan offer(s) shown reflect a 28 day payment cycle which is being offered as a courtesy as many of our customers are paid on a biweekly schedule and thus this may better align the loan payment dates with your actual income receipt schedule.

6 Important Disclosures for LendingClub.

LendingClub Disclosures

All loans made by WebBank, Member FDIC. Your actual rate depends upon credit score, loan amount, loan term, and credit usage & history. The APR ranges from 6.16% to 35.89%. For example, you could receive a loan of $6,000 with an interest rate of 7.99% and a 5.00% origination fee of $300 for an APR of 11.51%. In this example, you will receive $5,700 and will make 36 monthly payments of $187.99. The total amount repayable will be $6,767.64. Your APR will be determined based on your credit at time of application. The origination fee ranges from 1% to 6% and the average origination fee is 5.49% as of Q1 2017. There is no down payment and there is never a prepayment penalty. Closing of your loan is contingent upon your agreement of all the required agreements and disclosures on the www.lendingclub.com website. All loans via LendingClub have a minimum repayment term of 36 months or longer.


7 Important Disclosures for Earnest.

Earnest Disclosures

  1. Earnest does not lend in Alabama, Delaware, Kentucky, Nevada, or Rhode Island.

8 Important Disclosures for Avant.

Avant Disclosures

* The actual rate and loan amount that a customer qualifies for may vary based on credit determination and other factors. Funds are generally deposited via ACH for delivery next business day if approved by 4:30pm CT Monday-Friday. Avant branded credit products are issued by WebBank, member FDIC.

** Example: A $5,700 loan with an administration fee of 4.75% and an amount financed of $5,429.25, repayable in 36 monthly installments, would have an APR of 29.95% and monthly payments of $230.33


* Important Disclosures for Upgrade Bank.

Upgrade Bank Disclosures

* Your loan terms are not guaranteed and are subject to our verification and review process. You may be asked to provide additional documents to enable us to verify your income and your identity. This rate includes an Autopay APR reduction of 0.5%. By enrolling in Autopay your payments will be automatically deducted from you bank account. Selecting Autopay is optional. Annual Percentage Rate is inclusive of a loan origination fee, which is deducted from the loan proceeds. Late payments or subsequent charges and fees may increase the cost of your fixed rate loan. All loans made by WebBank, member FDIC. Please refer to Upgrade’s Terms of Use and Borrower Agreement for all terms, conditions and requirements.

** Accept your loan offer and your funds will be sent to your bank via ACH within one (1) business day of clearing necessary verifications. Availability of the funds is dependent on how quickly your bank processes this transaction. From the time of approval, funds should be available within four (4) business days.

7.73% – 29.99%$1,000 - $50,000Visit Upstart
6.26% – 14.87%1$5,000 - $100,000Visit SoFi
6.99% – 35.97%*$1,000 - $50,000Visit Upgrade
8.00% – 25.00%2$5,000 - $35,000Visit Payoff
4.99% – 29.99%3$10,000 - $35,000Visit FreedomPlus
5.99% – 18.99%4$5,000 - $50,000Visit Citizens
15.49% – 34.49%5$2,000 - $25,000Visit LendingPoint
6.16% – 35.89%6$1,000 - $40,000Visit LendingClub
6.99% – 18.24%7$5,000 - $75,000Visit Earnest
9.95% – 35.99%8$2,000 - $35,000Visit Avant
Our team at Student Loan Hero works hard to find and recommend products and services that we believe are of high quality and will make a positive impact in your life. We sometimes earn a sales commission or advertising fee when recommending various products and services to you. Similar to when you are being sold any product or service, be sure to read the fine print understand what you are buying, and consult a licensed professional if you have any concerns. Student Loan Hero is not a lender or investment advisor. We are not involved in the loan approval or investment process, nor do we make credit or investment related decisions. The rates and terms listed on our website are estimates and are subject to change at any time. Please do your homework and let us know if you have any questions or concerns.