Wedding Ring Payment Options: Can I Use Cash?

There are several options for financing a wedding ring, and it is possible to pay in cash. However, it is important to consider your budget and whether you can afford to pay for the ring outright. If not, there are various financing options available, including personal loans, credit cards, and layaway plans. It is generally recommended to avoid financing if possible due to the potential for high-interest rates and fees, which can quickly increase the overall cost. When considering financing, it is essential to understand the terms and conditions, including interest rates, monthly payments, and potential fees. While some retailers offer 0% interest on credit cards or store credit, it is crucial to make at least the minimum monthly payments to avoid paying high interest over an extended period.

Advantages of paying with cash

There are several advantages to paying with cash for a wedding ring. Here are some key benefits:

• Negotiating Power: Paying in cash can give you more negotiating power with the jeweller. You may be able to negotiate a better price or receive discounts when paying in cash. This is because the jeweller avoids processing fees associated with credit card transactions.
• No Debt: Paying with cash means you avoid starting your married life with debt. Large purchases, such as wedding rings, can be a significant financial burden, and paying with cash ensures you don't carry that burden into your marriage.
• Interest Savings: When you pay with cash, you avoid paying interest charges associated with credit cards or loans. This can save you a significant amount of money, especially if you take out a loan with a high interest rate.
• Budgeting: Paying with cash encourages better budgeting. When you pay in cash, you are more likely to stay within your budget and avoid overspending. It also helps you avoid the potential trap of making only minimum payments on a credit card, which can lead to long-term debt.
• Peace of Mind: Paying with cash provides peace of mind, knowing that you own the ring outright and don't owe anyone money. It can be a great feeling to start your marriage debt-free and with a solid financial foundation.
• No Credit Impact: Large purchases on credit cards can negatively impact your credit score, especially if the purchase exceeds 30% of your overall available credit. Paying with cash avoids this issue and keeps your credit score intact.

Disadvantages of paying with cash

While paying with cash can encourage mindful spending and budgeting habits, there are several disadvantages to using cash to pay for a wedding ring. Here are some of the disadvantages of paying with cash:

Security Risks

Carrying large amounts of cash can make you a target for thieves. Cash is also easier to lose than a credit card, and if lost or stolen, it is challenging to recover. In comparison, credit cards offer greater security and protection from unauthorised purchases. You can cancel a lost or stolen credit card, and you are protected from fraudulent charges over a certain amount.

Inconvenience

Cash is less convenient than a credit card as it cannot be used for online purchases or booking travel accommodations. In today's digital world, many businesses may not accept cash, and it can only be used for in-person transactions. Credit cards offer the convenience of making purchases from anywhere and provide a detailed spending record, making it easier to budget and track expenses.

Lack of Rewards

When you pay with cash, you miss out on the rewards that credit cards offer, such as cashback, travel perks, or extended warranties. Credit cards also help build your credit history, which can be beneficial when applying for loans in the future. Using cash does not contribute to building your credit score, which may limit your access to credit in the future.

Germs and Hygiene

With the ongoing COVID-19 pandemic, the use of cash has become less favourable due to hygiene concerns. Money changes hands frequently and can be a carrier of bacteria and viruses. Contactless payments with a smartphone or card are considered safer and more hygienic.

Interest and Emergency Expenses

While cash does not incur interest charges, it may not always be available for emergency or unplanned expenses. Life often presents unexpected costs, such as medical bills or car repairs. Credit cards can provide a safety net in such situations, allowing you to cover these expenses even if you don't have the cash on hand.

In-store financing options

Some jewellers also offer layaway programmes, which allow you to put down a deposit on an item and pay it off in instalments, without having to pay interest. For example, Robbins Brothers offers a 90-day layaway programme with a 20% down payment.

Jewellers may also accept "buy now, pay later" services such as Affirm, Klarna and Afterpay, which allow you to break your purchase into smaller instalments, often with no interest.

Personal loans

To qualify for a personal loan for an engagement ring, you'll generally need good to excellent credit, little existing debt, and a high income. Those with lower credit scores may still qualify, but they may pay more interest.

Another benefit of using a personal loan to finance an engagement ring is that you can work with a loan specialist who can help you get a loan that fits your financial situation. Additionally, you may be able to include the cost of the engagement and wedding rings in the total amount you borrow, as well as other wedding expenses.

Credit cards

Benefits of Using a Credit Card to Buy an Engagement Ring:

• Rewards and Cashback: Some credit cards offer rewards points or cashback for certain purchases. Spending a large amount on an engagement ring could result in earning a significant number of points.
• Liability Coverage: Your credit card may provide additional insurance in case your ring is stolen or if there is a need to dispute with the seller. Ensure your credit card offers theft protection or liability coverage for jewellery purchases.
• Introductory Period: Opening a credit card with a low APR for an introductory period (often 12 to 18 months) allows you to pay off the ring over time instead of all at once.

Downsides of Using a Credit Card to Buy an Engagement Ring:

• Good Credit Required: Qualifying for a credit card with the best rewards and promotions requires good credit. Inconsistent bill payment history may be an obstacle.
• High Credit Utilization: A high balance from your engagement ring purchase may increase your credit utilization ratio and lower your credit score. It is recommended to keep this ratio below 30%.
• Potential Debt: Ensure you can eventually pay off the full amount. Otherwise, you may fall into debt and face higher interest rates.

When choosing a credit card for this purpose, look for cards with low introductory APRs, sign-up bonuses, and rewards for everyday spending rather than specific categories. The Chase Freedom Unlimited®, Blue Nile, Ritani, and Tiffany & Co. are some examples of cards with these features.

Frequently asked questions