Jewelry Stores - Pitfalls Involved in Making Purchases

Although it may be tempting to finance your engagement ring purchase, it is usually a bad idea. Young people are especially at risk for making this mistake, as they are inexperienced at managing debt and can easily get in over their head. Consider a few things before you sign on the dotted line.

Jewelry stores are located predominately in malls, and they mainly operate as credit jewelers. This means they offer an item at a certain price but do not require you to pay for it all at once. By merely putting a small down payment on it, you can take it home with you immediately and only need to make a minimum payment monthly until it is paid off. Although this may seem like a good arrangement to most young people, it certainly has its pitfalls down the road, at least financially speaking. This is because you are not only paying for a ring, but you are also responsible for an interest charge, which at times can be quite steep.

The payment arrangements that many jewelry stores offer are usually provided by a finance company or bank, since they are more experienced in weeding out customers who are not creditworthy. Jewelers are eager to set up these arrangements with their customers in order to make the sale, especially since the average engagement ring can cost several thousand dollars. However, it is important that you remember your agreement is actually with the bank or finance company, so make sure you read the fine print carefully. After the sale is approved, the store receives its money from the bank, which in turn gets paid by you for however many months it takes to pay it off. Therefore, since your payment arrangement will likely go on for years, you should pay close attention to the terms involved. This includes the interest rate, late payment fees, and any other penalties stated in the contract.

If you decide not to use the in-store financing plan, another payment option is to use a credit card to pay for your purchase. However, this is in essence the same arrangement as the jewelry store uses, including the banks involved. Of course, the terms may be more beneficial to you, especially if you use a card with a low interest rate. Since credit cards rarely come with the interest-free periods offered by the stores, you will only have 30 days or so to pay the bill in full before interest starts accruing.

One important advantage of using a credit card to make your purchase is the built-in protection you receive in case you are a victim of merchant fraud or if you are dissatisfied with the ring after you receive it. Since the credit card companies often charge the jeweler a small processing fee to utilize their services, you should expect that fee to be passed onto you, although it is usually only two to three percent of the purchase price.

Buying an engagement ring is a rite of passage for most young men in this country, but it should not end up being a financial burden to you or your betrothed. By using common sense and some restraint at jewelry stores, you can get a good deal on jewelry so you can start your married life on a good financial footing.