Weddings are expensive. Estimates for the average wedding cost in 2017 ranged from $25,764 to $33,391. With expenses so high, it’s no wonder 74% of couples plan to go into debt to pay for their big day.
Unfortunately, that is a terrible idea. You don’t want to start your married life off owing money that it could take you years to pay back. Especially when that $25,000 to $33,000 could be used toward a down payment on a home, repaying student loans, or accomplishing other financial goals to get your married life underway.
Despite the big downsides of going into debt for a wedding, the reality is many brides and grooms are probably going to do it anyway. If you’re one of them – and you can’t be persuaded to cut costs – you’ll have to decide what the best way to borrow is. One of the options you may decide to consider is using a credit card.
Should you charge your wedding?
There are two circumstances – and only two – when you should charge your wedding expenses on a credit card.
The first: when you plan to pay off the balance in full when the statement comes. In fact, that is a great idea, because you can earn tons of credit card rewards and won’t have to pay any interest on what you’ve charged.
The second circumstance: when you have a credit card offering a 0% promotional rate and you can pay back the balance before the 0% rate expires.
There are many cards that offer 0% interest on purchases for a set period of time – often around six months to a year – for new cardholders. If you can qualify for one, you can borrow for your wedding without owing any interest. You may even be able to earn rewards while getting a little bit of extra time to pay off wedding costs.
Outside of these circumstances, it makes no sense to charge your wedding expenses on a credit card. The standard interest rate on credit card debt is simply too high, and the amount you’ll pay in interest means your wedding debt will be hard to pay off. If you charge a fortune and pay only the minimum, you could still be paying back your wedding debt on your silver anniversary.
The pitfalls of using a credit card
If you charge your wedding expenses on a credit card, interest costs are just one of the downsides – albeit the biggest one. You could end up stuck with interest charges even on a card with a 0% APR if you aren’t able to pay off the card before the promotional rate expires. That’s why it’s so important to make a clear plan for debt payoff before you borrow.
Another downside: You could damage your credit score.
If you max out a credit card with wedding expenses, you’ll hurt your credit utilization ratio. This ratio is calculated by dividing the credit you’ve used by total credit you have available. It should be kept as low as possible but should definitely be below 30%. Otherwise, your score will fall because maxing out cards is a red flag that you may be spending beyond your means.
Applying for a new credit card – which you may need to do to get that 0% introductory APR – could also hurt your credit score by reducing the average age of your credit and leaving you with an inquiry on your report that’ll stay there for two years.
The debt you owe on your card will also affect your debt-to-income ratio, which is calculated by dividing monthly debt payments by monthly income. If your DTI is too high, getting a mortgage or other kinds of financing could become impossible, or could be more costly.
You don’t want to start off your married life with a low credit score and a DTI that’s too high to buy a house if you want one, so be mindful of these risks when you charge wedding expenses.
What are your alternatives?
The best alternative to charging wedding expenses on a credit card is to save up and pay cash for your wedding – although you can charge expenses in this case and just pay off the balance right away.
If you must borrow, you may want to consider a personal loan instead. A personal loan usually has a lower interest rate than credit cards (although not if you qualify for a 0% APR card). It will also have a fixed repayment period, so you’ll know exactly when you’ll have your wedding expenses paid off.
Personal loan interest rates and repayment terms vary by lender, so compare options to find a loan that’s right for you.
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Don’t let wedding debt derail your new life
If you decide to borrow for a wedding, be sure to do so responsibly so wedding debt doesn’t derail your future with your new spouse. Borrow the minimum possible, be careful about how you use credit cards, and try to get your loan paid off ASAP so your money can go to the other things you need to build a life together.
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