0 Percent Balance Transfer Credit Card News Valentines Day Loans And Credit Cards Could Break The Bank
10 February 2010 / by Rachael Stiles
Money can’t buy you love, but romantics who are thinking of popping the question this Valentine’s Day might find that the engagement ring costs more than they expect if they choose the wrong finance.
Moneynet.co.uk has compared the cost of borrowing to buy an engagement ring in preparation for this weekend, and urges shoppers not to pay over the odds for their finance, whether they go for a loan or credit card.
If those doing the proposing choose the wrong type of finance, they could be paying for the ring longer than some marriages last, and with the average ring costing £1,412, as found by Sheilas’ Wheels, then seeking out the best finance deal could keep the cost down.
“If you’re looking to buy a decent engagement ring for your partner it can easily set you back a four figure sum, so unless you’ve got the cash put buy, it’s worth investigating the cheapest way to make your purchase,” said Andrew Hagger, spokesperson for Moneynet.co.uk.
He believes that the best way of financing the engagement ring is with a credit card, and then switching to an interest-free balance transfer credit card before the first payment is due.
“Ideally you don’t want to be paying for the ring for ever more, so probably best to try and get it all paid up over the next 12 months.”
Another option is using a personal loan, but these rates vary significantly from one lender to another, so Mr Hagger urges consumers to compare loans first.
To illustrate the importance of choosing the cheapest deal, Moneynet compares some of the different options available.
For a £1,500 ring bought with a credit card and transferred to an interest-free deal, the payments spread of 12 months would be £125, and only additional cost would be the usual three per cent balance transfer fee, in this case £45.
However, the best buy personal loan, with a rate of 14.90 per cent, would require monthly payments of £134.66 and would add £115.92 to the total cost of the engagement ring.
Without shopping around, the cost of the most expensive loan, at 22.9 per cent, would amount to £232.80 on top of the cost of the ring.
Mr Hagger explained that tighter credit conditions are making it more difficult to get a competitive deal, and a bad credit rating could further add to a shopper’s woes, even resulting in having an application declined.
“Once you’ve got engaged you’ll no doubt be saving for your wedding and possibly a deposit on your first home,” he added, “so don’t get off on the wrong foot and end up shelling out on finance costs that you can easily avoid.”
© Fair Investment Company Ltd
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