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How to pay for an engagement ring

Don’t let buying that engagement ring bankrupt you. (iStock)

An engagement proposal is certainly a reason to celebrate. But buying the ring to propose with? Well, that’s another story.

According to a study from Brides magazine, the price tag of an average engagement ring was around $3,756 in 2020. In 2018, when the economy wasn’t as uncertain as it is today, the average was more than double that ($7,829).

For most people, both numbers amount to a pretty penny. As you compare carat sizes and clarity to find the perfect engagement ring for your significant other, you'll likely need a gameplan when it comes to financing an engagement ring.

How to pay for an engagement ring

Are you planning on popping the question to a special someone this year? Everyone has a unique financial situation, but it's still important to ensure you afford to pay for the diamond of your dreams.

Here are your options to pay for the ring — without putting too much strain on your finances.

  1. Open a high-yield savings account
  2. Use a credit card
  3. Take out a personal loan
  4. Set up a payment plan
  5. Take on a side gig

1. Open a high-yield savings account

If your proposal is still a ways down the road, then consider opening a high-yield savings account to stow away funds until the big purchase. These allow you to earn interest at higher rates than traditional savings accounts and the more you save, the more you earn. Those extra earnings could put a big dent in your ring’s purchase price — or help you buy a bigger ring if that’s what you’re looking for.

Before you go this route, make sure you shop around, as annual percentage yields (APRs) can vary on these accounts. Visit Credible ​to explore high-yield savings options that could help you grow your savings faster.

OPEN A HIGH-YIELD SAVINGS ACCOUNT TO EARN MORE INTEREST ON YOUR MONEY

2. Use a credit card

You can also use a credit card to cover the costs of your ring — but choose the card carefully. Your best bet is a card with a 0% APR promotional period. As long as you pay off the balance before the promo period ends, you won’t face any interest costs for financing the ring.

Again, if you choose this option, an ​online marketplace like Credible​ can help if you’re on the hunt for 0% interest credit cards.

EVERYTHING TO KNOW ABOUT ZERO PERCENT INTEREST CREDIT CARDS

3. Take out a personal loan

Personal loans can be another option for financing an engagement ring — especially if your credit isn't great or you need money fast. These loans typically come with high interest rates though, so make sure you have a plan to pay off your balance quickly. Otherwise, that ring will end up much more expensive than you likely planned.

If you’re unable to get a 0% interest credit card, a personal loan can be a good choice. Though their rates are higher than other types of loans — like mortgages and car loans — they’re usually more affordable than your average credit card (which often have interest rates as high as 21% or more).

Before choosing this option, use a personal loan calculator to be sure it’s within budget (monthly and in the long-term). Then, visit Credible to find the ​best personal loan rates possible​.

HOW TO PREQUALIFY FOR A PERSONAL LOAN

4. Set up a payment plan

Most jewelers offer some sort of in-house financing or installment plan if you can’t afford to buy a ring outright. In some cases, these plans are offered through other businesses — local banks, credit unions, credit card providers, etc.

However they’re provided, you’ll usually pay some sort of fee or interest rate to set these up, so make sure to get all the details and consider every option. You should also compare the plan to other financing routes you have available to you (credit cards, personal loans, etc.) to be sure it’s the most economical option in the long run.

Use a marketplace like Credible to save some time comparing rates from top lenders.

DON'T FALL FOR THESE 5 PERSONAL LOAN MYTHS

5. Take on a side gig

If you have some free time on your hands — or even just a few hours a week — taking on a side hustle can help you raise the funds you need. This could mean driving for Uber, running errands for apps like Shipt or Favor, delivering food for DoorDash or GrubHub or starting your own freelancing business on the side.

Once you do start ramping up those earnings, make sure to put them in a high-yield savings account. This will allow you to grow those savings even faster.

If you're looking to save more money — for emergencies, last-minute expenses or long-term personal finance goals — then head to online marketplace Credible to compare high-yield savings accounts and shop around in one location based on your needs.

The bottom line

Buying an engagement ring shouldn’t bankrupt you — at least if you plan ahead, shop around and compare all your options.

Keep in mind: Interest rates vary widely across financial products, so if you opt for a high-yield savings account, personal loan or credit card, make sure to get quotes from several companies before moving forward. Ready to get the ball rolling? Head over to Credible to start comparing your options today.