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“Reader Questions” are answered three days a week — Mondays, Wednesdays and Fridays — by TPG Senior Writer Julian Mark Kheel.

An engagement ring is one of the most expensive retail purchases many people will make in their lifetimes. So TPG reader Joseph wants to know how he can maximize both credit card rewards and interest payments on the investment…

I’m buying an engagement ring for about $26,000. Is there a card I could sign up for that would give me 0% interest but some rewards that would outweigh the 2% difference I have to pay for using a card instead of cash?

TPG Reader Joseph

Well, that’s a tall order, Joseph, but maybe we can help you out. But before we do, we want to emphasize as we always do here at TPG to be sure you’re not buying beyond your means. We certainly understand the importance of this once-in-a-lifetime purchase, but it’s vital to be certain you don’t get in over your head with debt. So just make sure you know exactly how you’re going to pay off the $26,000 in a reasonable amount of time before you proceed.

With that said, let’s take a look at the actual options here. The issue is that while there are credit cards that offer 0% interest rates on purchases for a period of time, and there are also credit cards that offer rewards worth more than 2%, it’s not easy to find a single card that has both.

But there are two no-annual-fee possibilities that might work for you, and those are the Amex EveryDay® Credit Card from American Express and the Chase Freedom Unlimited. If you’re applying for either card for the first time, you can get a 0% introductory interest rate on all purchases, for the first 15 months on the Amex (then a variable APR of 14.99%-25.99% applies) and on the Chase card (then a variable APR of 16.99% – 25.74% applies). But it’s extremely important that you pay the entire amount off in that time, because after the intro period, any balance remaining on either card jumps to an obscene double-digit interest rate of at least 13% and potentially more than 23%!

As for rewards, the Amex EveryDay will earn you 1 Membership Rewards point per dollar spent, plus you’ll get a welcome bonus of 10,000 points for making at least $1,000 in purchases in the first three months. TPG currently values Membership Rewards points at 2 cents apiece, so the 36,000 points you’ll earn for your $26,000 purchase and from the bonus are worth $720, which is $200 more than the $520 fee for paying for the ring with a credit card.

IMG-chase-freedom-csr
Cash-back points from the Chase Freedom Unlimited can be transferred to travel partners when used in conjunction with cards like the Chase Sapphire Reserve.

With the Chase Freedom Unlimited, it’s a little more complicated but also potentially more lucrative. The card offers 1.5% cash back on all purchases, which in and of itself doesn’t offset the 2% fee you mentioned for buying with a credit card. However, remember that cash back on the Freedom Unlimited comes in the form of 1.5 Ultimate Rewards points per dollar spent. That means if you also have another Chase card with the ability to transfer points to travel partners — such as the Chase Sapphire Preferred Card or the Chase Ink Business Preferred Credit Card — you can get more than just 1 cent apiece for those points.

In fact, based on TPG’s most recent point valuations, Ultimate Rewards are worth 2.2 cents each, so if you spend $26,000 on the ring and earn 39,000 points from the purchase, plus the 15,000-point bonus points for spending $500 in purchases in the first three months, you can end up getting $1,188 in value from those points.

There’s one other hiccup: You’ll need to have a credit limit of at least $26,000 in order to pull this off, and you’ll likely be using up a large portion of your credit limit for an extended time, which can hurt your credit score. So if the ring vendor allows you to pay for a portion of the purchase with a card and the rest with cash, that might be a better option.

In any case, Joseph, good luck with the engagement and let’s hope your significant other says yes, though at least if they say no you’ll have at least $720 worth of points to fly somewhere and drown your sorrows. Thanks for the question, and if you’re a TPG reader who’d like us to answer a question of your own, tweet us at @thepointsguy, message us on Facebook or email us at info@thepointsguy.com.

Featured image courtesy of Tetra Images via Getty Images.

The Platinum Card® from American Express

The American Express Platinum card has some of the best perks out there: cardholders enjoy the best domestic lounge access (Delta SkyClubs, Centurion Lounges, and Priority Pass), a $200 annual airline fee credit as well as up to $200 in Uber credits, and mid-tier elite status at SPG, Marriott, and Hilton. Combined with the 60,000 point welcome offer -- worth $1,140 based on TPG's valuations -- this card is a no-brainer for frequent travelers. Here are 5 reasons you should consider this card, as well as how you can figure out if the $550 annual fee makes sense for you.

Apply Now
More Things to Know
  • Earn 60,000 Membership Rewards® points after you use your new Card to make $5,000 in purchases in your first 3 months.
  • Enjoy Uber VIP status and free rides in the U.S. up to $15 each month, plus a bonus $20 in December. That can be up to $200 in annual Uber savings.
  • 5X Membership Rewards® points on flights booked directly with airlines or with American Express Travel.
  • 5X Membership Rewards points on prepaid hotels booked on amextravel.com.
  • Enjoy access to the Global Lounge Collection, the only credit card airport lounge access program that includes proprietary lounge locations around the world.
  • Receive complimentary benefits with an average total value of $550 with Fine Hotels & Resorts. Learn More.
  • $200 Airline Fee Credit, up to $200 per calendar year in baggage fees and more at one qualifying airline.
  • Get up to $100 in statement credits annually for purchases at Saks Fifth Avenue on your Platinum Card®. Enrollment required.
  • $550 annual fee.
  • Terms Apply.
  • See Rates & Fees
Intro APR on Purchases
N/A
Regular APR
N/A
Annual Fee
$550
Balance Transfer Fee
See Terms
Recommended Credit
Excellent/Good
Terms and restrictions apply. See rates & fees.

Editorial Disclaimer: Opinions expressed here are the author’s alone, not those of any bank, credit card issuer, airlines or hotel chain, and have not been reviewed, approved or otherwise endorsed by any of these entities.

Disclaimer: The responses below are not provided or commissioned by the bank advertiser. Responses have not been reviewed, approved or otherwise endorsed by the bank advertiser. It is not the bank advertiser’s responsibility to ensure all posts and/or questions are answered.