Never Pay for a Wedding Ring on Credit – Here’s Why!

by Tamila McDonald
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wedding ring on credit

Many couples envision their wedding rings as one-time expenses. They want to get the perfect set and use it during their ceremony. However, if what they have their eye on comes with a hefty price tag, they might not be able to buy the rings out of pocket. When this happens, it may be tempting to get wedding rings on credit. But that’s rarely a good idea. If you are wondering why you should never pay for a wedding ring on credit, here are some points you need to consider.

The Impact of How Much Should You Spend on a Wedding Ring

Usually, couples are tempted to splurge a bit on their rings because they think they are supposed to spend a ton. If you use a similar approach to answering how much should you pay on a wedding ring as you do for engagement rings, you might believe that you have to shell out several month’s salary. That simply isn’t true.

There’s no requirement regarding the cost of wedding rings. You don’t have to spend a ton as long as the ones you choose are meaningful. So, ditch the antiquated way of thinking as a starting point.

How Financing Makes Overspending Seem Reasonable

In a similar vein, if you explore financing options, it may make overspending seem financially viable. Instead of looking at the price when you are figuring out how much should you spend on a wedding ring, you may focus on the monthly payments instead. That could make a budget-buster of a ring seem affordable.

For example, if you purchased a $5,000 ring and paid it off over five years, your monthly payment would be under $84 a month, suggesting you had 0 percent interest. That might not seem like a big deal. However, in the end, you spent $5,000, and that’s something you shouldn’t ignore.

By concentrating on the total cost instead, you might see things differently. This is especially true if financing means paying interest. Using the same $5,000 ring, if the interest rate came in at 9 percent – which is just below the average for a personal loan – you’d end up paying $1,227.51 in interest, making the total cost $6,227.51.

If you use the average credit card interest rate instead – which comes in at 15.09 percent – the total interest would be $2,151.16. In the end, that ring would run you $7,151.16.

It’s important to consider the big picture before you move forward with any financing. However, there’s another point to examine when it comes to wedding rings.

The Issue with What Wedding Ring Costs vs. Their Actual Value

How much a wedding ring costs and what its value is are two different things. Usually, a significant portion of a ring’s real-world value is based on the materials involved. For example, the price of gold influences what a gold ring is worth as well as the value of any stones, like diamonds, in the design.

However, jewelry stores don’t charge based on these values. Instead, they markup the rings to make a profit. While at least a small markup is necessary to handle a store’s operating costs, many go far beyond that. This causes a big variance, with markups ranging from 20 to 250 percent or more.

If you are considering getting a ring on credit, this markup (or cost vs. value disparity) matters for one key reason; if you get in trouble and need to sell the ring to cover your debt, you might get enough to make that happen. You could end up without a ring and still battling against the rest of the debt, which isn’t ideal.

Essentially, when you buy your rings, you are upside down. They are usually worth far less than what you paid. Plus, since you’re typically dealing with interest when you finance, it takes a long time to get right-side up.

The Best Way to Pay for a Wedding Ring

Ideally, you should never pay for a wedding ring on credit. Instead, examine your budget and find opportunities to save. Set aside as much cash as you reasonably can, then use that money to buy the ring outright.

It’s also important to remember that you can always upgrade your rings in the future. Some couples will set a small amount of money aside every month with the intention of getting new rings on their fifth or tenth wedding anniversary. This may allow them to afford rings that were out of their price range initially, but also ensures they don’t break the bank in the process.

How did you pay for your wedding ring on credit? Do you think you made the right choice? Share your thoughts in the comments below.

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