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How to finance an engagement ring

Bending the knee? Popping the question? Great, but don't break the bank

By Jay MacDonald and Sienna Kossman

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 Express reports.

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 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 period expires.

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.

Category: Credit

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