Paying for the Diamond 

There are three main ways you can pay for the diamond ring:

• Cash/Cheque/Debit Card/Bank Transfer
• Credit Card
• Bank Loan

Cash/Cheque/Debit Card/Bank Transfer 

Paying by cash, cheque, debit card or bank transfer will probably mean that you have saved up the necessary amount for the engagement ring over time. Personally I am not particularly comfortable about carrying a large amount of cash around on my person so I did a bank transfer (direct credit) to the diamond dealer who I bought Lou’s ring from.

Saving up for this purchase is a good idea, as you will be able to do it without arousing any suspicion from your girlfriend and it won’t be a massive blitz on your bank account as it is if you take it direct from your regular savings.

Open an ING account www.ingdirect.co.uk if you haven’t already and dedicate it to the engagement ring purchase. You can open up to 10 different individual accounts with them so if your girl asks why you have come over all sensible tell her you are saving for your next holiday or something together. Put a regular amount into it each month.

Credit Card

This is not an attractive proposition because credit card interest rates are very high.

The main advantage with paying by credit card is that if anything goes wrong with the purchase then you are covered by the Consumer Credit Act 1974. The credit card company may then also be liable to the purchase to the same amount as the merchant and you can withhold payment of your credit card to the amount of the
purchase until the purchase dispute is resolved. For more information about this visit

http://www.bbc.co.uk/watchdog/guides_to/credit/index4.shtml

Ideally if you are using this option, you already have enough savings t o cover the entire purchase of the ring and I would therefore not recommend purchasing the ring on credit. Put your savings onto the credit card before making the purchase. Buying solely on credit will be a big mistake as the interest rates on credit cards are so high and it could be a long time before it is fully paid back.

In practise this will mean either having a large credit limit or actually crediting the purchase price onto your credit card account so as to cover the shortfall in your credit limit.

Some merchants may want to charge a little extra for the transaction but like everything else, you should be able to negotiate this down to negligible or nil. After all, they want your business don’t they?

Bank Loan 

This is also not a very attractive proposition since the borrowing rate on unsecured personal loans tends to be quite high, although it might be less than a credit card. It also doesn’t lend itself to r esponsible saving because you don’t budget the purchase into your expenses and therefore take a big debt all at once. If you are going to go down this route then make sure you get a very competitive loan by searching through a site like www.moneysupermarket.com or www.fool.com

The obvious advantage is that if you are pressed for time and really want to give your girl the ring she deserves then this option can immediately get you the amount you need to do just that. It could also be mixed with the cash option whereby you top up your savings for the ring with a small personal loan.

With this option you could also credit the loan amount onto a credit card so as to benefit from the Consumer Credit Act 1974.