Whether to Pay with Cash, Credit or Loan

Between the venue, catering, flowers, dresses, rings and all the different equipment – weddings are notoriously expensive.

Even though wedding costs have dropped in 2020, in large part because more people hold smaller ceremonies during the pandemic, couples still make $19,000 on average. In 2019, the average cost of a wedding was $28,000, according to The Knot, and only time will tell whether the average cost of a wedding will return to pre-pandemic levels.

There are ways to fund this very expensive event, even if you don’t have all that cash on hand. There’s point-of-sale funding through companies like Affirm and Afterpay, you can apply for a new cash-back bonus card or consider taking out a personal loan if you need a substantial amount of cash to cover part of your wedding .

It can be a lot to keep up with, and if you don’t carefully monitor how you’re paying, you can suffer credit abuse without a clear sense of where all that money is going. Before you start taking on debt to pay for your big day, take a few minutes to make a clear plan.

Select spoke to several financial planners for their best tips on how to pay for a wedding. Their advice varies, but just as every couple has a unique wedding style, there’s no one universal approach to funding your upcoming wedding.

Here is their expert advice.

Alicia R. Hudnett Reiss, CFP

Washington DC
Cash, credit or personal loan? Cash, or plan to borrow in advance

In an ideal world, you should have enough savings to pay for your wedding, argues Alicia R. Hudnett Reiss, founder of Business of Your Life.

“But usually, that’s not done,” she admits.

It takes most people years to save enough money out of pocket for a wedding, so it’s not uncommon for people to use credit cards to make up the difference between their cash savings and expenses. Realistic wedding.

But if you want to avoid debt, start saving ahead of time. Whether you’re newly engaged or know you want to pay for your child’s wedding someday, start working out the numbers now to see how long it will take you to save.

Hudnett Reiss says: “Be realistic. Estimate the total cost, then break it down into smaller monthly amounts that you can set aside until you reach that goal.

Then, if you know you’re running short, find ways to borrow strategically.

“Sometimes you can get a 0% interest promotion,” says Hudnett Reiss, on a credit card you already have or a new card you sign up for. For example, Discover it® Cash Back offers a competitive 0% referral APR for the first 15 months on purchases and balance transfers (later, 13.49% – 24.49% variable APR). Future balance transfer fee is 3% with up to 5% fee on future balance transfer (see terms). Sign up for the Amex EveryDay® Credit Card and you can benefit from a 0% introductory APR on purchases for 15 months from account opening, (after which APR can vary from 14.49% to 25, 49%, see rates and fees).

Just make sure you pay off the balance in full within the introductory period so you can avoid being charged interest.

Another option is personal loans, which may charge a lower interest rate than your credit card. But be cautious, as not every personal loan is cheaper, and once you agree to borrow, you will have to pay monthly payments sometimes up to seven years.

“If you can’t pay back that loan, the lender can’t get the property back, like a car loan,” says Hudnett Reiss. You certainly don’t want to get stuck with a pay cut or being sued for non-payment, especially for something non-tangible like a wedding that has no resale value after all the money has been spent.

Before you sign up for and agree to a personal loan, check what interest rates and payment plans you’re eligible for through lenders like LightStream, Marcus, and Discover. Or, use a lending platform like Upstart or LendingTree to view multiple lender offers at once.

Shannon McLay

New York
Cash, credit or personal loan? Credit

Shannon McLay, founder of Financial Gym, says: “I don’t recommend taking out a loan for a wedding. “Of course, I suggest clients definitely save and have a budget. But then be strategic about using credit.”

For example, if a Financial Gym customer loves to travel and has good to excellent credit, McLlay suggests they open the Chase Sapphire Reserve card and reap generous rewards.

“You have to spend $4,000 in the first three months [to earn the bonus], which you probably spent on the wedding,” she said. Other significant people can also get travel cards; that way you can really maximize the bonus. And then you get all these travel rewards that can cover your honeymoon. You ‘hacked’ your honeymoon, just by paying for the wedding. “

A few things to watch out for: Before you swipe your card, double check with the providers to see what their credit card processing fees are. Some may charge an extra 3% to 4%, so you’ll want to pay those vendors in cash when possible.

Also, be extra aware of your budget if you plan on using a credit card. McLay’s strategy works best when you have the cash to pay off your card(s) right away, especially if you plan on opening multiple cards in less than a year. The goal is to earn a free honeymoon, not spend the first year of your marriage drowning in debt.

Finally, McLay also reminds couples that use credit to fund their wedding to keep plenty of cash for the big day.

“You want cash for servers, bartenders, people like that,” says McLay. Also out of habit, tipping hairdressers, photographers, delivery/setup crews, venue attendants, drivers, etc. Some vendors may also require final payment. on your wedding day, this is easiest to do with cash.

Jeanne Fisher, CFP

Nashville, Tennessee
Cash, credit or loan? Cash and credit

Everybody Jeanne Fisher, a financial planner based in Nashville, says they have their own opinions on how to pay for the wedding. While some people don’t believe in borrowing money to finance a celebration, others consider a wedding the most important day of a person’s life, and therefore well worth the financial risk.

“Only you know what you don’t have,” Fisher said. If you don’t have enough cash to pay for your wedding expenses, be honest about how much you can realistically put on your credit card so you don’t go into debt too much.

“I don’t recommend borrowing money to pay for a celebration,” Fisher says. “You have to pay them back, even if the marriage doesn’t last.”

But on the other hand, “the role of a financial planner is not to tell you what your priorities are,” says Fisher.

Therefore, if you know the wedding is a big family affair, then prepare for it. Start saving and research credit cards that will reward you as you spend.

“I’m a big fan of maximizing points and rewards. That’s a great thing to do,” Fisher said.

Worried about overspending? There’s a little trick.

“You can set a maximum for your credit card yourself,” advises Fisher. Call your card issuer and ask them to reduce the limit to what you think is reasonable. That way, you’re not tempted to add in extras in all the excitement.

As for the budget, Fisher has a tip for keeping wedding costs low: “I would also say that the longer you’re engaged, the more expensive the wedding.”

Keep the interaction short, definitive about which purchases are really important to you, and avoid placing too much weight on other people’s opinions.