Should I Put My Wedding On a Credit Card?
For many couples, tying the knot comes with a high price tag. According to one estimate, the typical wedding cost reached an all-time high in 2015, topping out at $32,641. To put things in perspective, you can buy a brand-new, fully-loaded Acura ILX luxury sedan for that amount.
My own nuptials were a bargain basement affair compared to that but if you’re dead set on a dream wedding, you need to be prepared to pay for it. Handing over cash to pay for the dress, rings, flowers and all the other extras is ideal but if you don’t have thousands in the bank, a credit card can save the day. Keep reading to learn why you should (or shouldn’t) use plastic to pay for your wedding.
Why Planning a Wedding on Credit Makes Sense
Credit cards do two things for you: they increase your spending power if you’re able to get a high credit line and they give you more time to pay for things. Both of those things are important if you’re planning a wedding that’s running into the tens of thousands. In terms of how else couples stand to benefit, here’s how using credit can work in your favor:
- You can earn some big rewards. Rewards credit cards are designed to pay you back every time you spend. Depending on the kind of card you’re using, you could get cash back, points, or miles that you can use towards the honeymoon. If you’ve got a card that offers a generous amount of rewards, charging all of your wedding expenses could actually save you quite a bit of money in the long run.
- You can avoid paying interest with the right card. Interest can quickly eat up any money you’re saving with a rewards card but there are plenty of 0% promotional APR deals out there if you’re willing to look for them. Snagging a card that lets you avoid the interest for 12, 15, or 18 months means you have plenty of time to pay off your wedding without having to add on anything extra.
- It frees up cash that you may need for other things. Trying to plan for a wedding while still keeping up with all of your regular bills can be a hassle. When you use a credit card, you don’t have to worry about it’s going to affect your day to day cash flow. The same goes if you’re also working on saving money for something else, like a down payment on a house after you’re hitched.
- You’ve got built-in protections if something goes wrong. When you’re getting married, you want the wedding day to go as smoothly as possible. Putting wedding expenses on a credit card can give you some extra peace of mind if your card is equipped with purchase or fraud protections. For example, let’s say the caterer makes a wreck of the rehearsal dinner. If you charged their fee on a credit card, you’d be able to dispute it with the credit card company. That would save you the trouble of trying to sue them later on.
- It’s easier to keep tabs on spending. A well-thought out budget is essential for making sure your wedding costs don’t go completely off the rails. If you’re constantly writing checks or pulling cash out of the bank, trying to keep a running total for everything can turn into a nightmare. If you’re charging it all to a card, you can see at a glance what you’ve paid for by pulling up your account information online.
Tip: Use a free app like Mint to create your wedding budget. You can link your credit card to the app to make expense tracking a breeze.
How Using a Credit Card for Your Wedding Can Backfire
By now you might be thinking that using a credit card to pick up the tab for your wedding but sounds like a pretty great idea but there are some reasons to think twice. Before you say “I do” to a credit card, you need to know how it can put a damper on the big day.
- You’re creating new debt. Being able to pay over time is nice when your credit card bill is in the four or five-figure range but it doesn’t diminish the fact that you’ve got debt that didn’t exist before. If you’re also up to your eyeballs in student loans or you’re planning to try for a mortgage in the near future, those credit card payments could put an unnecessary strain on your income each month. When you’re paying interest on the balance, it’s going to take that much longer to pay it off.
- It could hurt your credit score. Your FICO credit score is affected by five specific factors, one of which is your credit utilization. That means the amount of debt you’re carrying versus how much your total credit limit is. If you open a new card or two and max them out, that could cause your score to go down. A lower score makes it harder to get approved for new loans or lines of credit and it decreases the odds of landing the best rates.
- You may end up spending more than you planned. Psychologically, spending with a credit card can play tricks on your mind. In one study, researchers found that when you spend with credit versus cash, you’re more likely to be concerned about the benefits of what you’re buying than what it costs. Even if you’re just using your card to pay for small things, you could still end up blowing your wedding budget if you’re not staying focused on the price.
- The card has the wrong kind of rewards structure. Getting a rewards card for your wedding won’t do you any good if it’s not a good match for your spending style. For example, you wouldn’t want to get a card that pays points if what you really want is to rack up travel miles because you’re flying in guests for the ceremony. You’d just be shortchanging yourself by picking the wrong card.
Tips for Choosing a Credit Card for Your Wedding
Now that you’re aware of what the pros and cons are, you can begin comparing credit card offers to see what’s out there. As you’re looking at cards, keep the following in mind:
- Rewards The first thing to check off the list is what kind of rewards structure a card offers. Look at the type of rewards offered, how many rewards you can earn and what restrictions there are, in any, on how you can use them or when they expire.
- Interest rate Next, look at the card’s APR for purchases and balance transfers. If it’s a card that has a 0% promotional rate, check to see when it expires so you know how long you have to pay off what you charge before the interest kicks in.
- Fees Finally, consider what kind of fees the card charges. If there’s a steep annual fee, for example, ask yourself whether the rewards you could earn with the card would cancel it out. Also, look to see if there’s a foreign transaction fee if you’re planning to use the card for international travel at some point.
Top Rewards Cards for Engaged Couples
With so many cards to choose from, pinning down the best one can be time-consuming at best. These are the cards that MyBankTracker recommends for couples who want to use credit to foot their wedding bill.
Chase Sapphire Preferred® Card
Best for: Travel rewards
Chase Sapphire Preferred® Card has a versatile rewards program designed for people who spend on travel and dining. Points can be redeemed for cash back, merchandise, gift cards, travel, and more. They can also be transferred to various airline and hotel loyalty programs. One of the card's best features is the large sign-up bonus.
Tip: Use this card to pay for the rehearsal dinner, book your honeymoon package or cover travel expenses for guests.
Blue Cash Preferred® Card from American Express
Best for: Earning cash back
In many households (young and old), grocery spending is a large expense. The Blue Cash Preferred® Card from American Express card offers a high amount of cash back on supermarket purchases and a decent cash back rate at gas stations and departments stores. For newlyweds, the card can provide plenty of money back on their everyday spending.
Tip: If you need to pick up wedding items from specific retailers, use your card to buy gift cards to your favorite stores at the supermarket to earn 3% back.
Citi Simplicity® Card
Best for: Paying zero interest on purchases
A young married couple may need some time to allow their finances to recover from the wedding, honeymoon, moving in together, and various other expenses. The Citi Simplicity® Card offers the ability to pay for things with plenty of time to repay while avoiding interest charges.
Tip: If you’re worried about busting your budget, set up automatic account alerts to notify you if your balance goes over a certain limit.To see more top credit cards for planning a wedding, check out MyBankTracker’s reviews of the best travel cards and best rewards cards for 2016.