While most couples have moved on from the idea that an engagement ring should cost three months' salary, it's still a fairly significant purchase. In 2024, the average amount spent on a ring was $5,200, according to The Knot.
As with any big-ticket item, do your research before laying any money down or applying for financing. Proper planning can make the process less stressful and more affordable.
Financing an engagement ring
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1. Saving up the cash
Depending on your income and expenses, you may need several months (or even a few years) to save up for an engagement ring. The best strategy is to start by deciding how much you want to spend and when you want to propose.
Then divide the total dollar amount by the number of months you have to reach that goal. If you want to spend $5,500 on a ring and propose in a year, you'd need to put aside $458 per month. Setting up automatic monthly transfers into a special savings account can help. Don't forget about sales tax and insurance, however, which could add to your timeline.
If you want to speed things up, a Western Alliance Bank High-Yield Savings Account can supercharge your ring fund with a much higher return than a traditional savings account. There's only a $1 minimum deposit required and no monthly fees.
Western Alliance Bank High-Yield Savings Account
Annual Percentage Yield (APY)
3.80% APY
Minimum balance
$1 minimum deposit
Monthly fee
None
Maximum transactions
Up to 6 transactions each month
Excessive transactions fee
The bank may charge fees for non-sufficient funds
Overdraft fee
No overdraft fee
Offer checking account?
No
Offer ATM card?
No
Terms apply.
2. Credit cards
A jeweler may offer a store credit card with a special introductory interest period or a discount at checkout, but watch out for deferred interest. You could face hefty charges if you're unable to pay off your purchase during the introductory APR period.
A cash back credit card with a welcome bonus and intro APR on purchases, like the Chase Freedom Unlimited® (see rates and fees), could be a better option. There's no annual fee and you can use your large purchase to meet the minimum spend requirement.
The Chase Freedom Unlimited® is a no-annual-fee card that earns generous cash-back on everyday purchases and a lucrative welcome bonus.
Highlights
Highlights shown here are provided by the issuer and have not been reviewed by CNBC Select's editorial staff.
- Earn a $200 Bonus after you spend $500 on purchases in your first 3 months from account opening
- Enjoy 5% cash back on travel purchased through Chase TravelSM, our premier rewards program that lets you redeem rewards for cash back, travel, gift cards and more; 3% cash back on drugstore purchases and dining at restaurants, including takeout and eligible delivery service, and 1.5% on all other purchases.
- No minimum to redeem for cash back. You can use points to redeem for cash through an account statement credit or an electronic deposit into an eligible Chase account located in the United States!
- Enjoy 0% Intro APR for 15 months from account opening on purchases and balance transfers, then a variable APR of 18.24% - 27.74%.
- No annual fee – You won't have to pay an annual fee for all the great features that come with your Freedom Unlimited® card
- Keep tabs on your credit health, Chase Credit Journey helps you monitor your credit with free access to your latest score, alerts, and more.
- Member FDIC
Balance transfer fee
Intro fee of either $5 or 3% of the amount of each transfer, whichever is greater, in the first 60 days. After that, either $5 or 5% of the amount of each transfer, whichever is greater.
Foreign transaction fee
3% of each transaction in U.S. dollars
3. Buy now, pay later
Buy now, pay later (BNPL) and other point-of-sale (POS) financing options are basically one-time installment loans that give you a flexible, pay-over-time option. These loans, from companies like Affirm and Afterpay, often come with 0% interest periods.
One of the few BNPL providers with long-term financing at 0% APR, Affirm offers loans of up to $20,000 with terms ranging from on month to five years. There are no late fees, but if you don't make on-time payments, it could impact your credit score.
Affirm gets high marks for its widespread availability: In addition to the hundreds of thousands of merchants who accept it, consumers can use it with any retailers that aren't partners through Affirm's website or mobile app.
Affirm
Interest rates
0% to 36%
Loan terms
30 days to 5 years
Fees
There are no late fees, but making late payments can affect your ability to get a loan in the future and may also impact your credit score.
Return policy
Customers are only refunded the principal amount, so if you don't have a 0% loan, you won't be refunded for the interest you paid before making the return.
Available merchants
Affirm has more than 358,000 merchants, including Amazon, Peloton, Adidas and Target.
Loan amounts
From $50 to $30,000
Afterpay offers a financing option with four installment payments due every two weeks over a six-week term. Customers make a down payment at the time of purchase (typically 25% of the total cost) and then pay the remaining balance over six weeks.
Afterpay
Interest rates
0%
Loan terms
Afterpay only offers 1 loan option: Customers can make 4 installment payments over 6 weeks. You have to make one down payment (typically 25% of the order), and then a payment once every two weeks.
Fees
Afterpay does charge late fees: $8 or 25% of the transaction, whichever is less.
Return policy
In order to return items, you'll have to go through the merchant first. Since you don't pay interest on your Afterpay loan, you don't have to worry about not being refunded for interest. Afterpay also offers partial refunds on orders. However, you will still be on the hook for payments until the merchant has accepted and processed the return.
Available merchants
Approximately 100,000 merchants globally. Consumers can also use the Afterpay Card to pay for purchases in store. However, this is only available for some customers to use at select retailers such as Amazon, CVS, Target, Nordstrom and Macy's.
Loan amount
The amount of credit you can access depends on how long you've been an Afterpay customer and on whether you're making your payments on time and in full. A new user will be able to spend less than someone with a longer history. The more you use Afterpay, the more you can spend with it.
With any POS program, be sure you're clear on the terms and conditions with any kind of promotional deal. If you're offered low or 0% interest, make sure you can pay it off within the allotted timeframe and that you know the regular interest rate you would have to pay if you couldn't.
4. Personal loans
While generally more expensive than using 0% financing or paying in cash, personal loans are becoming a more common way to finance large purchases.
LightStream Personal Loans
Annual Percentage Rate (APR)
6.49% - 24.89%* APR with AutoPay
Loan purpose
Debt consolidation, home improvement, auto financing, medical expenses, and others
Loan amounts
$5,000 to $100,000
Terms
24 to 144 months* dependent on loan purpose
Credit needed
Good
Origination fee
None
Early payoff penalty
None
Late fee
None
Terms apply. *AutoPay discount is only available prior to loan funding. Rates without AutoPay are 0.50% points higher. Excellent credit required for lowest rate. Rates vary by loan purpose.
A personal loan can give you a lower interest rate and more time to pay than a credit card. Just keep an eye out for sign-up fees.
LightStream offers low-interest loans with flexible terms for people with good credit. There are no sign-up or late fees and few restrictions on how you can use the money.
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