When you’re about to pop the question, your finances may not be the first thing on your mind — but they might be the second. Engagement rings and the weddings that follow are among life’s priciest purchases, so starting on the right foot is key.
The average cost for an engagement ring in 2020 was $5,500, according to wedding website The Knot. The cheapest way to pay for a ring is with savings, but if you haven’t saved up or you’re reserving your savings for the big day, here are engagement ring financing options to help cover the cost.
Get matched with a zero-interest credit card
You could finance the ring with no interest using a 0% introductory credit card. These cards have promotional periods of 15 to 18 months during which you pay no interest on purchases you make. What’s more, choosing a card that also grants travel rewards can mean cash for a honeymoon.
Keep in mind the credit limit on the card; if the ring purchase exceeds 30% of your overall available credit, your credit score may take a hit.
When it’s best: Zero-interest cards are best if you qualify for one with a high credit limit and you can pay off the balance within a year or so, avoiding any high interest rates that kick in after the promotional period.
Qualifications: You typically need good to excellent credit (690 or higher FICO) to qualify.
Something new: Buy-now-pay-later
Increasingly popular buy-now-pay-later services like Affirm, Klarna and Afterpay can break your purchase into smaller installments, sometimes with low or no added interest. These companies partner with all types of vendors, including jewelers Brilliant Earth and Best Brilliance.
The lender may review your credit to qualify you for financing, but they often don’t report payments to the credit bureaus, so using one likely won’t help or hurt your credit. This financing option is also a good alternative if you’re worried about using too much of your credit limit on a credit card.
When it’s best: These point-of-sale loans are best for large, one-time purchases when you can qualify for a low rate and you want a minimal impact to your credit.
Qualifications: Affirm and Klarna offer pre-qualification, which lets you see what interest rate and payment plan you may qualify for without affecting your credit. Afterpay says it reviews available funds on your debit or credit card and any history you have with the company.
Take financing with your jeweler
Some jewelers offer payment plans that include low-or no-interest promotional periods, but high interest rates — 28% or higher — after the period ends.
Promotional periods on jeweler cards tend to be long, but if you still have a balance once the promotion ends, the jeweler may retroactively charge interest accrued since your purchase. This is different from no-interest credit cards, which charge interest only on any balance remaining after the promotion ends.
When it’s best: A jeweler payment plan may be the right choice if you qualify for a low- or no-interest plan and can pay the ring off in full before the promotion ends.
Qualifications: You need good or excellent credit (690 or higher FICO) to qualify for many store credit cards.
Something borrowed: Engagement ring loan
Well-qualified borrowers may get a low interest rate on a personal loan that can be used to purchase an engagement ring. These loans provide a lump sum of money that you repay in monthly installments.
Annual percentage rates on personal loans start around 6%, and repayment terms are usually two to seven years. The fixed monthly payments can be easier to budget for than revolving payments on credit cards.
Use a personal loan calculator to see estimated rates and payments on engagement ring loans, based on your credit score. Pre-qualifying will allow you to see personalized rates and terms without affecting your credit score.
When it’s best: A personal loan is a good engagement ring financing option if you qualify for a low rate and need two or more years to pay off the ring.
Qualifications: Borrowers with excellent or good credit, little existing debt and high incomes are more likely to be approved for the lowest personal loan rates. Those with low credit scores may still qualify, but will pay more interest.