At K.Hollis Jewelers, Boutique & Wine Bar, we offer special financing options to make your jewelry purchase stress free. We want to be 100% transparent in everything we do at K.Hollis so here’s what we think you should know about financing your jewelry purchases – at our store or anywhere else.
Understanding Retail Credit Cards
Most jewelry stores, including ours, partner with third-party banks to offer retail credit cards. We use Jewelers Reserve from Citibank, but you might also encounter similar options from Wells Fargo, Comenity Bank, GE Capital, and others. Here's how it typically goes:
Application: Applying for a retail credit card is easy, whether in-store or online.
Approval: Your credit score determines whether you're approved, usually within minutes.
Credit Limit: If approved, you'll get a credit limit for your account.
Special Financing: We offer various financing options, for example, 12-months no interest or 24 months with equal payments at a lower interest rate than regular credit cards.
Purchase: Once approved, you can use your new credit card to make your purchase.
Beware of Penalties
Special financing sounds great, but there's a catch. Missing payments or not paying off your purchase on time can lead to hefty penalties. This is super important and something we talk about with customers anytime they are financing their purchase with a retail credit card at our store.
Here's what you need to know:
Credit Impact: Like any credit card, your new credit is reported to credit agencies and can affect your credit score.
Deferred Interest Financing: If you don't pay off the balance by the end of the promotional period, you'll be hit with high-interest charges dating back to the purchase date. If you’re buying an engagement ring, for example, not paying off the balance in full before the end of the promotional APR period can turn into an expensive mistake.
Example: Let's say you’re approved for a $7,500 credit limit and buy a $5,000 ring with a 12-month no-interest option. If you’re unable to pay off the $5,000 before the end of the 12-month period, the typical interest rate is 27% to 36%. So in this example, let’s say your “penalty” interest rate is 34% on a $5,000 purchase. If you don't pay it off in time, you would owe an additional $1,700 in interest plus your remaining balance.
Here’s a sample disclosure that you’ll see with this type of financing:
Annual Percentage Rate (APR) for Purchases | 33.24% This APR will vary with the market based on the Prime Rate. |
How to Avoid Paying Interest | Your due date is at least 25 days after the close of each billing period. We will not charge you interest on purchases if you pay your entire balance by the due date each month. If you do not, you will not get a grace period on purchases again until you pay the entire balance by the due date for two billing periods in a row. |
Minimum Interest Charge | If you are charged interest, the charge will be no less than $3. |
For Credit Card Tips from the Consumer Financial Protection Bureau | To learn more about factors to consider when applying for or using a credit card, visit the website of the Consumer Financial Protection Bureau at http://www.consumerfinance.gov/learnmore. |
Fees | |
Annual Fee | None |
Penalty Fees • Late Payment • Returned Payment | Up to $41.00 Up to $41.00 |
Why special financing?
Retailers offer special financing because they pay the finance company a discount fee when a customer uses one of their offers to make a purchase at their store. The fee is deducted from the purchase price, so they don’t get the full amount upfront
Example:
Purchase: You make a $5,000 purchase and use a 12-month no interest financing option to purchase an engagement ring.
Discount Fee: The fee for the financing offer might be something like 5% of the purchase price.
Payment: The retailer is paid $4,750 from the financing company.
If the retailer is getting less when I use special financing, why do they do it?
We can only speak about why we do it at K.Hollis Jewelers, Boutique & Wine Bar. We do it as a service for customers that need to spread out payments for a purchase over time.
What purchases can I use special financing on?
Financing is an option for nearly any jewelry purchase, but we notice it's particularly popular for buying engagement rings. There are several reasons for this, but often it's because the customer is eager to propose before they've saved up enough for the ring. We totally understand that feeling. Rob Hollis shares his own story: "I financed the engagement ring I gave to Karen over 35 years ago because I didn't have enough money to buy a ring, but I couldn't wait to start my married life with Karen. Best decision I ever made!"
Alternatives to Retail Credit Cards
If you can plan ahead, layaway plans are an option – they allow you to spread payments over time with no interest or fees (at least that’s how we do it at K.Hollis). The downside is that you can only take the jewelry home once the purchase is paid in full. Otherwise, we see customers get help from parents or other family members, use other financing vehicles like home equity loans, or their regular credit card.
Key Takeaways
Retail credit can be a useful tool if used wisely. We recommend you always read the fine print and get familiar with your payment penalties before committing to special financing. If special financing is not right for you, there are other choices. We're here to help you navigate your options and make the best decision for your needs. At K.Hollis Jewelers, Boutique & Wine Bar, transparency is our priority, so feel free to ask us anything about financing your purchase.