Q: There is a ring at Kay Jewelers I would like to buy for my significant other and was wondering what the least expensive method would be to finance it. The Kay Jewelers credit card application listed some 0% for 12 month offers. Is that the way I should go?
A: Whether you are buying diamond engagement rings, watches, tennis bracelets, or any other piece of fine jewelry… it’s going to cost you a pretty penny (especially with the price of gold these days). Most jewelry stores offer their own in-house credit cards to help finance these high ticket items, but unfortunately, they’re rarely a good deal. Here are the pros and cons for the Kay Jewelers card…
The deferred interest gimmick
When you hear an offer like “No interest if paid in full within 12 months” it sounds like something you can’t go wrong with. Most people don’t understand what this means exactly.
With offers like these (not just on the Kay Jewelers card, but all deferred interest promos) you are going to be facing some mighty high interest charges if you don’t pay off every single dollar before the promotional period is up. Why? Because if the amount isn’t paid off in full beforehand, you will be charged interest going back to the date of purchase on the entire amount financed. That’s the main reason you will be better off going with regular bank credit card that doesn’t do that.
The high (and confusing) interest rates
At the time of writing this Kay Jewelers credit card review, they listed the APR for regular purchases at 24.99%. So if you don’t pay off the entire amount financed before the deferred interest period is up, you would be charged 24.99% on the entire purchase price going back all the way to the date of purchase. Obviously this can be a lot of money if you’re buying a high ticket item like a diamond ring.
But on the bright side, the fine print on the Kay Jewelers credit card applications said that some states have lower interest rates:
AL – 18% on purchases over $750, for purchases below that amount 21%.
AR – 5%
NE – 18% for $500 and over, 24.99% for lower amounts
CO, GA, IN, MS, OK, TN, TX, VT, WV and WY – 21%
Washington D.C. & MD – 24%
HI, MA, MN and NC – 18%
*Make sure you confirm the above state rates before applying
Why does the APR vary by state? Well the Kay Jewelers card doesn’t exactly specify why, but my guess would be that in those states there are laws on how much interest can be charged by a credit card company operating there (that’s why credit card companies setup shop in places like Delaware and South Dakota, where they can charge almost whatever they want).
If you live in Arkansas, a credit card from Kay Jewelers definitely makes sense (because of the 5% APR in that state). But everyone else should avoid it like the plague… the interest rates are just way to high!
What are the best credit cards for buying jewelry?
Regular credit cards (like a Visa or Discover) won’t charge you back interest after a promotional period is up and they usually charge lower interest than the Kay Jewelers credit card. Your best bet is to simply get a normal credit card that has a 0% promo offer on purchases.