Engagement Ring Financing

[Greg34]

Good evening everyone.

The time has come for me to purchase an engagement ring for my girlfriend of 3+ years. The center stone plus the setting is going to come out to around $8,300+ Tax. I hate that she has expensive taste but hey, I want to make her happy.

I have the cash to pay for it all upfront, but it would leave me with little leftover. A year ago I would have said "yeah I'm buying it with cash" but living by yourself, in a big city and $4.00/ gallon gas= not saving as much as I would have hoped. Oh well.

So I start thinking to myself, what if I pay $2000 or so upfront then put the rest ($6000+) on an interest free credit card and pay it off in 12-14 months? Is this the worlds worst Idea? Obviously I would have to get approved for a Credit Card with  a zero percent intro rate and have a high credit limit.

But before we freak out, let me lay down a few facts.

1.) I only make $45,000/ year before tax but my fixed expenses come out to around $1200-$1400/ month so that leaves about $1400 left over.

2.)  I have  an Amex Blue with a $10,000 CL and an Amex Zync Card. The blue has been reporting on my credit for 3 years and I never EVER carry a balance on either

3.) I have a car note with wells fargo that has $4,600 balance (car is worth $15k+) and my payments are $100/ month ( I pay $150)

4.) Last time I checked my fico equifax score it was something like 760 (this was when my Amex only had a $5k limit)

5.) In October of this year (2011) I have a $33,000 annuity check coming from my fathers life insurance.

Anyway, I was thinking about applying for the capital one Platinum Prestige or Cash Rewards card. A few questions:

1. Could I get a CL of 8k+?

2. If I got the card and ran up the utilization to 60%+ shortly after getting it, would this wreck my credit short term? Remember I still have  the Amex with a $10K limit and the Zync card that never have balances.

Anyway, I appreciate the feedback. I am very responsible with my credit and if I got the card and put the ring on it, I wouldn't use it for anything else. I'm just wondering what Capital One would think because it would be obvious that I bought a fixed asset on it and am just paying it down.

Also, remember I could use my cash inflow in October to pay it off if I felt like the $500/ month payments were too much.

Thanks again.

-Greg

[Greg34]

I also wanted to add that the Jewlery Store offers financing through Wells Fargo Jewlery Advantage. My understanding of it is that it is just a credit card... I have also read a few poor reviews on it.

One more thing. I've never had any late payments, etc. Ever.

[hedgeclipper2]

Go check out the Citi Dividend Platinum Select card.  They are offering 0% interest for 15 months on purchases.

Citi is known for high credit lines.  PLUS, they have a 2% on all purchases for 6 months as a bonus, which at $8,000 would net you $160!

Give it a look see, I did and I love mine.

[stan_the_man]

One concern I'd have regarding Wells Fargo Jewelry Advantage, or any other credit program similar, is that it might report was a Consumer Finance Account -- which may adversely affect your Fico score for as long as the account reports (10 years from the close date).

Whatever you do, don't revolve any kind of balance on the Amex Blue for any period of time -- that's kind of the consensus here on the boards.

[ferrari]

CITI is ok but Chase AARP is better. 5% unlimited cashback for the first 6 months then 3% on travel and 1% on everything else. also unlimited. 0% intro APR for 12 months. Getting 5% back on that ring is sweet. Will add up to like $400.

[DI]

The thread that I'm posting may be helpful.

http://ficoforums.myfico.com/t5/Credit-Cards/How-to-Pay-for-my-Engagement-Ring/m-p/839020/highlight/...

[Greg34]

Thank you for all of the responses...

I will definitely look at the citi card, hopefully I don't have a problem getting approved.

I guess my main question is, how much of a hit will my credit score take when I temporarily run my utilization up to 60%+?

I'm not going to buying a house for another few years and other then this Ring and My car I have Zero debt (thank you Mom for paying for my college). So Even if my score took a hit, as long as I could build it back up I feel like I could be okay.

[stan_the_man]

The score hits you'd take from the new account are:

1) Inquiry -- generally small but any score impact with last no longer than 1 year

2) New account -- diminishes after 6-12 months.

3) Potentially lower AAoA -- Average Age of Accounts is measured in years, if a new account lowers it you could see a score loss

4) High utilization -- as you pay down the balance the score impact decreases (Fico has no memory, so once the card is paid down/off your score should increase)

The exact score hit you will take will depend on your score now, how many inquiries you already have in the past year, how your AAoA will be affected and what you overall utilization will be.

[daytrade5]

Just a few questions for you Greg34… I’m currently engaged & have purchased the engagement ring. Who’s paying for the engagement party (optional), wedding, reception, & honeymoon?  Are you a home owner? Do you have any other loans besides your auto loan?

At the end of the day, if you choose to put this purchase on a credit card for 12-14 months then it’s just another payment. If you have the cash available then use it! Trust me, this would be one less bill you would have to worry about. You’re getting that annuity in October which could give you the financial backing that you need to purchase a home & do some other good things (pay your auto loan off). The goal is to enter marriage in the best financial condition as possible. You mentioned that you would like to save more than you’re currently saving at the moment which is a great idea! Paying off your auto loan with the $33,000 will do just that & you’ll still have some cash left over for a down payment on a home!

Now, don’t get me wrong here, I’m not opposed to you applying for credit card to pay the ring off. Especially if you obtain a card with a low APR & cash back option (Niiceeee). But, this is credit that you don’t necessarily need at the moment. I saved up just enough cash to purchase the ring on my credit card & PIF before the statement dropped (also giving me time to add the additional $350 I needed to purchase the ring in full & I got cash back). If you do decide to obtain a credit card for this purchase I would not apply for a Capital One card. I say this because they are known for giving folks starting limits of $750-$1,500, if you’re lucky. I also would not purchase the ring on your Amex Blue as you may make the folks over at Amex a little worried. Try a Citi card or a Chase card. Let us know what you decide!  

[tntexans72]

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@stan_the_man wrote:

The score hits you'd take from the new account are:

1) Inquiry -- generally small but any score impact with last no longer than 1 year

2) New account -- diminishes after 6-12 months.

3) Potentially lower AAoA -- Average Age of Accounts is measured in years, if a new account lowers it you could see a score loss

4) High utilization -- as you pay down the balance the score impact decreases (Fico has no memory, so once the card is paid down/off your score should increase)

The exact score hit you will take will depend on your score now, how many inquiries you already have in the past year, how your AAoA will be affected and what you overall utilization will be.

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+1......but your Fico is as you stated 760 last time you checked. You factor all this in (mentioned above quote), and IMHO, I think you will take anywhere between a 10-20pt hit. Not huge, and you should recover those points back within 6 months - once you pay down the UTIL to less than 15%.

I say go for it......