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Help a Reader: Cash or Credit for Engagement Ring?

by J. Money on Monday, April 23, 2012

ring pop candy ring

I gotta great question for y’all today!  One of our fellow readers is about to propose to his girlfriend (woohoo!) but he needs our help first in determining the best strategy to pay off the engagement ring.  Should he use cash or credit, or some combination of both?  How did YOU guys pick up the ring?

Here’s his question in more detail, along w/ my own opinions below.  Let’s hook him up!

“I will be making an engagement ring purchase in the near future and expect to spend $10-15k on it (not looking for opinions on “How Much I Should Spend on a Ring,” but the amount spent does play a factor in my question).

I believe the best strategy is to save up the total cost in CASH, but make the purchase on a rewards or cash-back credit card and pay it off immediately. However, another point to consider is that many stores offer a discount (e.g. $500) if the purchase is made in cash.

So what do you think? Should I go with cash, or would I be able to utilize a rewards card to achieve maximum benefit (and if so, which one)? I’d like to get the most out of this giant one-time purchase so your help is greatly appreciated.”

Good one!  And funny that you mention that you’re not looking for opinions on the price tag of that ring, haha… I’m sure you’ll get some at that range! ;)  But keeping that part out of it, I think you’re smart in researching the options for sure.

I think it’s going to depend on *where* you get the ring, but for me I know that I didn’t want to drop a lot of cash all at once like that. My wife’s ring cost around $7,000 if I recall correctly, and I did something similar to what you mentioned up there.  The store I picked it up at (Helzberg Diamonds), had a deal where you could plop it on their card and they’d give you 12 months of 0% interest.  And since I knew I wanted to pay it all off within the year anyways, I jumped on it and just paid off the $500+ every month to keep my cash reserves nice and high still.

So my vote is to find a card that can float you for a while (or get the cash back rewards like you said), and use the cash you already have to slowly pay it off.  While you make more over the year to keep it topped off :)  I’m a big fan of having a lot of money on hand, even if you *could* pay it all off at once.  Wherever you pick up the ring too, you’d be able to do this pretty easily.

Or, as you mentioned, you can see if any of theses stores offer a discount if you pay with cash up front.  I’ve never heard of that myself, but I’m sure it’s out there.  And you know what? You could STILL do the c/c method too, if you sign up for one on the side and then cut yourself a check to pay the diamond store.  You’d get your $500 cash discount or whatever, and then have it all on your 0% card to pay off throughout the terms.  Best of both worlds!

So that’s my opinion on it all.  How about you guys? All my beautiful readers?!  What would YOU do if you were in this position?  However it works out in the end, my friend, I wish you nothing but happiness!  Getting married is all kinds of exciting – be sure to soak it all up :)

12k engagement ring
***UPDATE*** Our reader friend is now engaged! Woohoo! The picture of his ring is above…. and here’s what he just emailed me:

“Total cost (of ring): $12,679….This comes out to exactly 1.5 months salary (well below the 3 month guideline!!!). AND it was appraised for $14,500. Now, obviously this isn’t an “investment” in the traditional sense but is nice to know I got more than what I paid for. No regrets – I proposed in Napa at an incredible winery and she said yes : D”

Next up is their wedding which he approximates will cost around $23,000 – Good luck!

———–
PS: Here’s a couple other posts we’ve done in the past too, maybe it’ll help:

Cute Leather Box Containing Financial Heart Attack
3 Tips to Putting BLING on That Finger of Hers.

(Ring pop photo by Alyssa L. Miller)


We recommend:

{ 37 comments… read them below or add one }

1 MikeTheRed April 23, 2012 at 6:24 am

I had the cash on-hand to pay for all of my wedding expenses, but paid for everything on my frequent flyer credit card. Of course, the very next day I paid that off. This way I avoided interest, and got a pile of FF miles. Because all wedding (and honeymoon) expenses went on that card, my wife and I are now just a bit shy of having enough miles to fly to Europe for free.

If you can use the credit card and pay it off immediately with cash, I highly recommend that option.

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2 Yardwork April 23, 2012 at 7:44 am

Here’s what i’m thinking:

If you have the cash to pay for it, in full, AND a card that will hold the full balance of the ring, then put the money for the ring in a savings account temporarily and charge it. If your partner accepts, then take the money and pay off the charge on the card. If they don’t, then you can simply return the ring and not worry about having all that cash tied up in the returns process.

One other piece of advice: If He/She says: “I need some time to think about”, YOU hold onto the ring until they’ve made their decision. “Marriage” is a type of contract with an engagement ring serving as a “down payment”. Your partner should not be entitled to walk around with it unless they’ve actually accepted your offer and plan to go through with the proceedings.

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3 Amanda April 23, 2012 at 7:46 am

This doesn’t answer the question you asked, but my advice is to buy the diamond wholesale rather than retail. Many diamond wholesalers also sell direct to the public, and since the diamond you’re buying will hopefully be certified, you don’t have to worry. When my now husband and I were looking at rings, we found the wholesale prices to be around half of the retail prices.

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4 Michelle April 23, 2012 at 8:16 am

I would say buy it in cash, unless you can get some sort of awesome reward from your credit card that would mean a bigger discount than paying for it with cash. Then of course pay your ring balance on your credit card completely off before the balance is carried over.

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5 Christopher @ This That and The MBA April 23, 2012 at 8:45 am

If you are very dedicated at paying your credit cards I would say put it on a card. I dont know if you bills are combined but you do not really want your soon to be wife footing the bill as well for your ring purchase or potentially hurting her credit if you are heavily in cc debt. Make sure you do not over spend on a ring or get pressured into a purchase you are not comfortable with. Best of luck to you on whatever you decide and make sure you come back and let us know what you finally end up doing!!!

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6 Stephanie April 23, 2012 at 9:06 am

My approach to any major purchase is to put it on a card to get the rewards, then pay it off in full right away. Unless, of course, the incentive offered for paying cash is more than what you’d get back in rewards. ;-)

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7 callmewhatyouwantevencheap April 23, 2012 at 9:10 am

I say buy it with cash if you have the money, if you don’t have all of the money, how about saving the rest and proposing when you have all the money.

To me cash is better especially if you loose your job while trying to pay it back on a credit card, or if you’re self employed and have a bad month or two. You may have an emergency fund, but often times that is used to cover mortgage payments, food and other necessities in a job loss or a bad month if self employed.

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8 David Hunter April 23, 2012 at 9:35 am

Damn………….

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9 Tim Lindsay April 23, 2012 at 10:00 am

For starters congratulations on finding your other half. If you have the cash pay with a credit card to earn the rewards. But make sure you pay the credit card off in full to avoid any interest charges. Depending on the card and the points that you can earn 10-15k is about half of an airline ticket or about $100.00 bucks if you are earning 1% cash back which is pretty standard. If the store will offer you more than 1% discount, pay cash. The next piece of advice is the most important. Most stores will allow you to ship the ring out of the state to avoid sales tax. If you live in a state that has 8% sales tax, 8% of $12,500 is a whopping grand you will save by just having the ring shipped. Your only thought there is can you trust someone with this ring if you do not have it shipped to yourself? Also check with the store to make sure you can avoid the sales tax.

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10 Kathryn C April 23, 2012 at 10:35 am

Damn Gina. You better post a pic of the ring after he buys it. 10 – 15 k? Does he have any brothers?
Congrats to your reader.
PS I’m with callmewhatyouwantevencheap.

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11 Mrs. Money Mustache April 23, 2012 at 10:39 am

I would shop around and see if you could get the same ring at a better price. Then, do the math and see what works out better. Would you consider a different stone to save some money? (say a ruby instead of a diamond — that’s what I have and I get a lot of compliments on it)

Do you get rewards points on your credit card that would surpass the $500 Cash savings? With a purchase that big, you might want to even look at getting a new credit card with rewards. But, the big question is: will you pay off your credit card in full right away? Also, can you get a bigger discount by paying cash — not sure if these things are negotiable. The biggest thing is just to make sure you have the money to pay for it in full…

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12 Crystal April 23, 2012 at 10:49 am

I’d see how much off they would give me if I paid in cash. Then compare that to the rewards you could get if you paid the best price you could using a credit card. Then go with whichever option saves you more. Great problem to have. Congrats on the engagement!

PS Not that this option would definitely work for you, but my husband’s grandmother gave him her original engagement ring for me. It means a lot to be accepted into the family like that (and saving the $2000 it was appraised at helped us starting out right out of college too).

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13 This Aggie Saves April 23, 2012 at 11:08 am

I’d put it on a credit card with the cash in my bank account, free to pay off the balance at any time and able to take advantage of the credit card rewards. Plus, don’t credit cards give you some sort of protection? I need to read up on that.

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14 Brian April 23, 2012 at 11:20 am

I say put in on CC (with rewards) only if you can pay if off during the next billing cycle, otherwise the rewards value isn’t worth it. If you have to put it on a CC because you don’t have the cash, then you can’t really afford it.

I put my old lady’s engagement ring on a CC for the rewards. I didn’t use a jewelry store since I don’t dress like I have any money so they treated me like I was messing with them. I did get lucky because my mother-in-law works with someone whose husband is the “middle man” so he was able to undercut everyone for me (had to keep it on the down low and never use his name, i felt like some sort of spy!).

Like J-money said, enjoy the ride, marriage is one heck of an adventure!

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15 Sean @ One Smart Dollar April 23, 2012 at 11:22 am

I would say you can put it on the card but make sure that you can have it paid off in a short amount of time. No sense in racking up the interest fees as well.

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16 Good Cents Savings April 23, 2012 at 11:48 am

I think it will be tough to find a credit card offering a reward on $15K in spending that will come close to $500, so if that’s really what the savings would be if you pay cash I would go that route. And take a bodyguard with you to the store. And send one around with your fiance once she’s got that giant rock on her finger!

One other thought – I wonder if any jewelry stores offer a percentage off if you open and use their store card for the purchase (like many clothing/department stores do)? You might be able to get a larger discount and still pay off the balance right away.

Good luck!

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17 ImpulseSave April 23, 2012 at 11:49 am

There is a lot of great advice here, so I don’t have too much else to add. Except that it really comes down to dollars and cents: if you can earn more than $500 in cash back rewards, then you might as well put it on the card. However, you should have the cash lined up, too, so that you can pay it off right away. It will also help your credit score to make a big purchase and pay it off right away!

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18 Cristina @ Tiny Perfect Bites April 23, 2012 at 12:39 pm

I would use a credit card as long as you have the cash to pay it off. Credit cards offer you with a lot of additional protection in the event that something goes wrong.

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19 Sarah April 23, 2012 at 1:01 pm

Dear Reader,

Congratulations on the engagement!!

PS: As I know you will, please please make sure you get the correct ring size. Been on the other end of that, and its not very fun. (We didn’t end up getting married.)

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20 Barb April 23, 2012 at 1:07 pm

I know you don’t want suggestions about the amount you plan to spend but I’d never marry a man who planned to spend that much money on a RING. I consider that conspicuous consumption and it would be a turn off. And yes, my husband could have afforded a ring like that but knows me well enough to know I’d be appalled at the idea.

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21 MrsGreen April 23, 2012 at 1:12 pm

Like most said, credit if you pay it off right away and the rewards are greater than the discount. (but I agree that there are a lot more protections to making a purchase with a credit card than with cash, so I would weight heavily on using the card). Don’t deplete your emergency fund to make this purchase, things will come up! We had our ring shipped from NYC to NJ and avoided a hefty sales tax. Also, get the ring insured ASAP! You can usually add a valuable property rider to your existing renters insurance or home insurance policy (it won’t be covered under your existing policy!). Trust me you’ll sleep better knowing that if something happens to it, you’ll be covered. Congrats!

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22 Stephanie April 23, 2012 at 1:13 pm

@Barb – I am the same way! My husband and I got engaged when we were poor college students, so a really expensive ring wasn’t in the cards at the time anyway, but (and I’ve mentioned this in a comment on a previous post here) he knows that my rule of thumb with jewelry is “If I have to insure it, I don’t want to own it.” ;-)

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23 Holly April 23, 2012 at 1:45 pm

My vote find a good card with miles and/or points. Buy the ring on it, put all wedding expenses on it and charge the honeymoon on it. You will always know what you spent on all three. For your 1st anniversary you should end up with enough miles and/or points to have one heck of a trip to celebrate your 1st year together.

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24 Kacie April 23, 2012 at 3:50 pm

With Barb & Stephanie here. Does the girlfriend even like jewelry? Would she WANT a $10k ring?

I don’t wear my engagement ring (which was like $1k). I just wear my wedding band. The ring kept getting in my way when I did simple things like cooking, putting my hand in my pocket, and other basic stuff. Drives me crazy! I wear it on rare occasion and my husband is fine with that, thankfully :)

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25 Dollar D @ The Dollar Disciple April 23, 2012 at 3:53 pm

All I have to say is that that is an excessive amount to spend on a ring. The “standards” as far as how much you are “supposed to spend” exist so that people will buy bigger engagement rings.

If you can’t pay cash for it, i wouldn’t buy it at all. You don’t want to start your life together with debt.

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26 Jenna April 23, 2012 at 5:26 pm

I’m not sure if someone has mentioned this already, but some credit card rewards programs have limits on the amount of rewards you can earn. So, if you go the CC route and already have a rewards card you wanted to use, I would look into whether they have a limit, and if so, how much you’ve already earned towards the limit, so make sure you’ll actually get as many as you think you will!

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27 Jenna, Adaptu Community Manager April 23, 2012 at 5:28 pm

I never knew jewelery stores did discounts for cash either. Interesting. I think I would do credit card for the points, help pay for a honeymoon or something. But then I’m not the one buying the ring…

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28 J. Money April 23, 2012 at 7:14 pm

Thanks for all the opinions everyone – I’m sure it helps! Good good stuff indeed :)

@Kathryn C – You’re funny :)
@Mrs. Money Mustache – A ruby? Cool!! I want a pic! :)
@Crystal – I LOVE THAT!!! Jewels that have been passed down like that are amazingly awesome – I would have loved to given my wife one of those if it were a possibility :) Means so much!
@Sarah – Yikes!! Am I right in assuming he wasn’t good at paying attention to you? Like with details, your likes, dislikes, etc? My wife used to get gold jewelry from her ex-boyfriends and she could never understand it as she always wore silver and told them she doesn’t even LIKE gold! Haha… so I guess they’re chilling with your ex in the club too ;)
@MrsGreen – Good reminder! Insure that bad boy ASAP just in case something crazy happens – that’s a lot of $$ in play!

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29 HP April 23, 2012 at 7:18 pm

All,

I appreciate your candid feedback. It sounds like the majority feel the same way I do – pick whichever option provides the most savings. I’ll take a page out of J’s book and spend some time responding to comments:

@J – I never thought about the option of cutting myself a cash advance check…interesting point! Only downside is that a lot of credit cards would charge an up front advance fee. I’ll do some research.
@Amanda – Agree, I’m avoiding all “designer” brands and buying wholesale to get the best value.
@Christopher/Mrs Money/Sean/others – Not to worry, I won’t be adding any debt to our lives. If I use a cred card I’ll be paying it off immediately.
@Tim Lindsay/MrsGreen – great points about sales tax, definitely something I’ll consider.
@Kathryn C – no brothers, but several friends! :D
@This Aggie Saves/Cristina – Good point on the CC protection, I didn’t think of that
@Sarah – I’ll be sure to check the ring size TWICE
@Barb/Stephanie/Kacie – I’m okay with spending excessively on a once-in-a-lifetime purchase. Personally preference though! I completely understand the argument against it. I will say that my spending habits in other categories are much less excessive (e.g. public transportation to work, max out 401k, save >30% of monthly income).
@Dollar D – I am fully aware that the 2/3 month salary “guideline” is driven by industry…just like Sweetest Day is…yet I still find myself celebrating a made up holiday every year :) Oh well…happy wife happy life?

Thanks again everyone,

HP

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30 Chris P April 23, 2012 at 8:22 pm

You do not have to pay the full retail price-ever-at a jeweler. First, ask if they offer discounts for your employer/industry. Make an offer on a ring. Tell them what you can do. They may meet your offer or tell you what it would take to get there. Smaller rock, different mounting, different metal, different brand of setting without a quality difference. Don’t plan to buy the first trip. Discuss your needs/limits/wants, etc. Will you do a gift registry at the jewelry store? Will you be buying your groomsmen or bridesmaid gifts there? There are lots of discounts available-and lots of jewelers. The discounts on quality diamonds and mountings can be extensive.

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31 Ryan April 23, 2012 at 9:34 pm

10-15K is a LOT to spend on an engagement ring! Good for you that you have the cash to pay for that. If you’re able to get rewards on a credit card I’d do that. But if there’s a cash discount that’s greater than the rewards you’d get, pay cash. Good luck!

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32 Katie April 23, 2012 at 10:32 pm

Just be sure it’s what the future wife wants however you pay for it! My hubby dropped about that much on my ring. It’s gorgeous & I wear it all the time but woul have been thrilled with something much smaller… And maybe a lavish vacation with the $ he saved :)

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33 J. Money April 24, 2012 at 1:25 pm

I’m so glad I don’t have to buy another ring again ;)

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34 Brian April 24, 2012 at 4:11 pm

J-

You are nuts if you don’t think you have to buy another ring… There are always rings for anniversaries and have you thought about the “push” present you are getting the mrs when the baby comes?

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35 J. Money April 25, 2012 at 5:47 pm

Not another ring at $7,000! ;) I’m all about winin’ and dinin’ my lady here and there – with jewelry and whatever, but she’d KILL me if I dropped more than a few hundred on another piece of bling again – it’s not her style. We’re all different though, eh?

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36 Melissa (Miss Lissy) April 27, 2012 at 10:08 am

I think a lot of what I would said has already been said and since you said no comments on spending that amount of money on a ring (even though I definitely have strong opinions on it lol). I’m assuming based on what you’ve said about going with industry driven things that you’re looking for a diamond (which was a marketing campaign after there was an excess of diamonds, FYI, if you look into the history of diamonds) please at least try and find a conflict free diamond, especially since you’re dropping so much money on it. If you’re unaware of what they are, just google conflict diamonds and/or blood diamonds.

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37 Tim May 4, 2012 at 2:24 pm

Having just done this.. Be sure to negotiate the price on whichever ring you decide on, anything you save can go to the wedding and honeymoon. I had been to many stores and always assumed the price on the tag was final, no sales person ever tried to negotiate with me. It took a while till I found the perfect ring, a solitaire with red coral inlay on the band, but it was way beyond my budget and again the sales lady never wavered from the price on the tag. When I started asking about some changes to the design and using different stones she fetched the jeweler/owner from the work shop who makes them all. We discussed what changes I wanted and he drew a sketch with some notes on a pad and ran some numbers on a calculator and immediately threw out a price he could do this for that was $2000 less than the one on the tag. I was pretty shocked at how much he chopped off and the price difference of what it would have cost me had I not talked to the maker himself instead of just a sales person.

Also good advice getting the diamond from a wholesaler instead of through a jeweler who would mark it up. I think in most cases the diamonds are the majority of the cost of the ring and would be a good place to look for savings, in our case most of the cost was in the band. I didn’t save any using a wholesaler but was able to get a better quality and bigger one than I otherwise would have.

I paid cash in full for the engagement ring and thankfully she loves it so much she does not want a wedding band. I did not like taking such a huge hit to my cash reserves to pay that all out at once though and the second time I went to him to have my ring done he offered to split it into 3 payments over 90 days same as cash. I could have paid for my ring up front too but decided to spread it out this time, It takes him four to five weeks to finish a custom ring anyway so why not. :)

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