Basics of buying a diamond
By Amy Debra Feldman • Bankrate.com

Buying a diamond ring is often an emotional -- not to mention expensive -- experience. But it doesn't have to be stressful and you don't have to go into debt to get a nice ring.

Stones come in different shapes -- round, oval, marquise, pear, radiant, emerald, heart and princess -- and a variety of settings. But before you start reading about carats and color, remember that there's more than one way to do things. For example, you could buy the setting, but not the stone. A friend wears what looks like an expensive three-stone ring: a diamond with a small sapphire on either side. The sapphires are real, the center stone is cubic zirconia. Cost: $800. Their plan is to buy a loose diamond when they can afford it.

Or you could buy the ring from a store that allows you to "trade up" and later on apply the cost of the current ring to a more expensive one (obviously, you pay the difference). You and your beloved might also decide to just get engaged and forego the expense of the engagement ring. Sure, these solutions might not sound romantic. But they're practical ways to approach what can be a financially daunting purchase -- not everyone has the spare cash or desire to take on more debt to buy a diamond ring. If it's an engagement ring, it's important that couples can have honest discussions about money -- and engagement rings are a great way to start.

Cost
If you're contemplating buying an engagement ring, there's probably a burning question in your mind: how much is this going to cost? That depends on the quality of the stone you buy, its size and its setting. A diamond engagement ring -- undoubtedly the most popular stone -- can cost anywhere from a couple hundred dollars to millions of dollars.

When you're looking at price tags, tune out the industry's marketing hype that "it's a gift for a lifetime" for which you should spend at least two month's salary. How much you spend is a personal decision, as is how you finance the ring.

Ideally, you'll have some money in the bank before you buy the ring or loose stone. Most jewelers will accept payment in cash or with a credit card. Opt for the latter -- you'll have a record of the transaction, which gives you leverage if something goes awry and you need to dispute the charge. That said, your best bet is to pay your next credit card bill in full, unless you have a low interest rate and are willing to rack up fees for paying off the ring in installments.

Diamonds: The Four Cs
You can buy a loose diamond or one that's already in a setting. With a loose stone, you can quickly verify its quality with a report from an independent laboratory such as the American Gem Society or the Gemological Institute of America , both of which have established standards for grading a diamond's quality.

A grading report isn't an appraisal. Rather, it gives you a detailed description of the diamond, including carat weight, shape, measurements, color, clarity and cut. Good things to know, particularly if you choose to insure the ring.

If the jeweler hasn't already obtained a grading report for the stone, ask for one. A reputable jeweler shouldn't balk if you request certification for the stone, even though you don't need a lab certificate unless you're buying investment-grade diamonds or you're buying a fancy colored diamond, says Fred Cuellar, author of How to Buy a Diamond: Insider Secrets for Getting Your Money's Worth. "Most often, just the threat or suggestion of certification is enough to keep most jewelers relatively honest," says Cuellar, founder and president of Diamond Cutters International. "But if the dealer tries to weasel out of it, and gives you excuses about long delays and extra fees, you can be pretty sure that the dealer isn't being honest about diamond grades," he adds.

The lab certificate will also indicate if the stone has been artificially treated -- fracture-filled, laser-drilled, or coated, for example -- to hide any imperfections.

In addition, a diamond that has been inspected by a GIA- or AGS-accredited laboratory is assigned a grading-report number that's inscribed on the stone with a laser, effectively serving as its stone's Social Security number. "A jeweler in Bombay would be able to verify that stone," says Alexander Angelle, public relations manager for the GIA. You can see this number by using a loupe, a magnifying glass used by jewelers. Tip: Examine the stone with a 10x loupe for the best view.

Another benefit of buying a loose stone: you can customize the setting, such as having four prongs instead of six. And it's easier to rule out that it isn't a fake -- cubic zirconia weighs 55 percent more than real diamonds, according to Cuellar.

There are four characteristics that are used to determine a diamond's value: color, carat, cut and clarity:

Color
Diamonds become colored when elements such as nitrogen (yellow) and boron (blue) mix with carbon when the diamond is formed. Colorless diamonds are rare, and therefore more expensive. The GIA, which established color grades, considers D colorless and Z the most yellow.

A diamond's reaction to ultraviolet lights is called fluorescence. A diamond with fluorescence will have a blue hue under UV lights and might be cloudy in sunlight, depending on its color grade. Cuellar suggests steering clear of diamonds with fluorescence that's stronger than "faint."

Carat Weight
Technically, this is the stone's weight, though it's used to refer to its size as well. One carat is one-fifth of a gram or 1/142 of an ounce. A carat is divided into 100 points, so a 1/2 carat diamond is 0.5 carats.

Cut
This term refers to the diamond's proportions, symmetry and finish (also referred to as polish). How a diamond is cut affects how much light the stone reflects -- the better the cut, the more light the diamond reflects (thus giving the stone "brilliance" and "fire," as jewelers like to say). In fact, the AGS estimates that a diamond's cut can affect as much as 25 percent to 50 percent of the stone's value. Information about a diamond's cut are listed on its GIA or AGS certificate.

For round brilliant diamonds (any other shape is considered a fancy diamond, and because the proportions vary, fancy diamonds aren't assigned a cut grade), an ideal (AGS 0) cut is the most valuable -- only 5 percent of the round brilliant diamonds in the world are cut to this standard.

Also, the stone's polish -- which enhances its sparkle -- and symmetry -- how well the cuts line up -- should both be rated excellent, very good, or good.

Clarity
This term refers to the presence or absence of flaws (the industry term is "inclusions") in the diamond. The majority of diamonds have some minor flaws, most of which are only visible with a magnifying glass such as a loupe. Both the AGS and GIA reports include a drawing of the stone that shows the size and location of any inclusions. Clarity grades:

Trade-offs
After you choose the shape and setting, the fun begins. Considering your budget, is size or quality more important? Nationwide, retail jewelers say they're selling the diamond engagement rings that are from 0.50 carats to 1.50 carats, color grades of G of I or better, and clarity grades of SI-1 or better, according to Rapaport Diamond Report, an industry publication.

"Go for [color] grades H or I," Cuellar suggests. "Once mounted, they'll look just as good to the average person as the higher grades, without costing a bundle."

Ideal cuts typically command a 15 percent to 20 percent premium in price and increase the stone's brilliance and dispersion of light less than 4 percent, Cuellar says. He recommends going a notch or two down in the cut grade (AGS 1, 2 or 3) and buying a stone with a table diameter between 52.4 percent and 63.5 percent and a total depth or height (the crown height, girdle thickness and pavilion depth) between 56 percent and 61 percent. If these numbers aren't on the lab certificate, ask for a Sarin computerized analysis of the stone's proportions.

Quality control
A reputable jeweler will have a written return policy or a written guarantee policy, in addition to professional experience, such as training from the GIA as a Graduate Gemologist or an Accredited Jewelry Professional or from the AGS as a Certified Gemologist Appraiser or Certified Jeweler.

You should feel comfortable asking questions and taking the time you need to make a decision. When you buy a loose stone, be sure that important details about your stone -- such as its color and clarity ratings, and carat weight -- are included on the receipt.

Should you buy a stone or ring from an online jeweler? Fred Mouawad, chairman, founder and CEO of Mondera, an online jeweler, says the majority of Mondera's customers have been pleased with their purchases. Returns under the site's 30-day policy have been "in the single digits," he says. "All of our diamonds are GIA-certified," and the certificate is available on Mondera's site, Mouawad adds. However, you might have a hard time returning the stone -- the lab certificate turns out to be fake or doesn't match the stone you bought, the site goes out of business, Cuellar cautions. Don't buy from a site that doesn't have a minimum 30-day money-back guarantee, no questions asked, and have the stone or ring appraised immediately.

Finally, negotiate the price. "Most retailers dramatically increase prices. Never pay the sticker price unless you've shopped around and you know that they are giving you the wholesale price," Cuellar says.

Resources
To find out the wholesale price of a stone, have the specifics on hand (including all of the stone's measurements) and call Fred Cuellar's National Diamond Hotline, (800) 275-4047.

The FTC's guide, "All that Glitters: How to Buy Jewelry," is available from its Web site. Other useful books: Diamond Ring Buying Guide, by Renee Newman; Engagement & Wedding Rings: The Definitive Buying Guide for People in Love, by Antoinette L. Matlins and Antonio C. Bonanno and How to Buy a Diamond: Insider Secrets for Getting Your Money's Worth, by Fred Cuellar. The Diamond Ring Buyer's Guide, by Jeff Ostroff, is free.

Amy Debra Feldman has written for The New York Times, the Chicago Tribune, the Chicago Sun-Times and other publications.

-- Updated: May 3, 2005