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Credit Cards vs. Loans: How to Pay for Your Wedding

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Congrats, you’re getting married! Before the whirlwind of wedding planning begins, there’s still one big question that remains…how to pay for it all?

According to the industry publication, The Wedding Report, Americans now spend an average of $27,000 on a wedding. Saving up for your wedding is always the best option, but there are other ways to help finance the festivities if you’re eager to exchange vows. The key to making the most of your day without ruining your credit involves setting priorities, determining a budget and establishing a repayment plan.

Wedding Loans

Determining how to pay for your wedding —credit cards versus loans — is a crucial decision that can have a long-term effect on your finances. Although an actual “wedding loan” is not generally offered by financial institutions, you may be able to take out a personal loan to help pay for expenses on your special day.

Personal loans are unsecured, which means that you don’t have to put up collateral like a house or car to ensure that you’ll pay the money back. Your credit history and credit scores will largely determine your loan rate. Traditional and online lending institutions offer personal loans upon approval.

Personal loans are paid back through monthly installments and usually carry lower interest rates than credit cards or cash advances. The loan must be paid back within a certain period of time, so only borrow as much as you can fit into your monthly budget. Consider using the loan to pay for one or two important aspects of your wedding, such as the venue or the caterer, rather than to finance the entire event.

Paying With Credit Cards

Although credit cards carry higher interest rates than personal loans, they provide protection against billing errors and unsatisfactory goods or services. If something goes wrong on or before your big day — like the caterer gets sick or your dress is altered incorrectly — you can dispute the charge with your credit card company. If you pay in cash, there’s always a chance that the company providing the service will not issue a refund.

Avoid charging more than you can afford. Pick a specific amount of time to pay the debt in full, such as three or six months, and only charge an amount that you’re comfortable paying off in that time. Limit the use of your cards to something specific like deposits, which are usually required for the venue, florist, photographer and caterer months before the wedding.

If you do choose to use a credit card, try to look for a credit card that offers a longterm (18-21 month) interest free period. This will help you avoid heavy interest charges.

The Big Day on a Budget

Although an over-the-top extravagant wedding may sound like a dream come true, paying for all that luxury can quickly turn into a nightmare. Sit down with your partner and make a list of what elements are important to you in order of priority.

Maybe one of you cares more about photos and the other wants to splurge on food? Figure out what extra costs you don’t need. Not everyone needs printed wedding programs or a month-of coordinator. The important thing is not to get caught up in the pressure of the industry. There are countless blogs, magazines and pushy vendors who want to tell you what you “need,” but only you and your partner know what you want.

Establish a Repayment Plan

Finances are a common cause of conflict in marriages so the last thing you want to do is start your new life together under a cloud of money stress. Whether you choose to take out a personal loan or use credit cards for wedding costs, establish a repayment plan before you spend the money. Always keep the health of your credit in mind — your payment history is an important consideration to your credit scores.

There’s nothing wrong with asking your guests to help out in lieu of giving wedding gifts. Create a bridal registry that allows guests to put money toward specific wedding expenses, such as the flowers, cake, photographer or even your honeymoon. Also, put any cash you receive as gifts toward the incurred debt.

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