So you’re getting married. Congrats! A wedding is an exciting milestone, one that many couples want to celebrate with family and friends at a big event.
But dream weddings often come at a big price. In fact, the average wedding costs $33,391, according to a 2017 survey from The Knot. Since coming up with all that money can be challenging, many couples are left with a big question: Is it better to pay for your wedding with a credit card or get a personal loan?
If you’re trying to answer this question, we’ve got some advice.
Should you borrow for a wedding?
Before deciding whether to fund your wedding with credit cards or a personal loan, there’s a more important question to ask: Is going into debt necessary?
There are a few reasons borrowing for a wedding is a bad idea:
- Your wedding will cost more: If you used a personal loan with a 12.00% interest rate to fund your wedding and paid it back over five years, the average $33,391 wedding would cost you $44,566 in total. You’d pay $11,175 in interest. As you could qualify for a lower or higher interest rate, use our personal loan calculator to figure out how much a loan could cost you.
- You might have trouble qualifying for loans later: If you want to buy a house or borrow for something else, lenders will compare your debt to your income to decide whether to lend to you and how much interest to charge. If you’ve borrowed for a wedding and have high monthly payments, it’ll be harder to get approved for other loans.
- You’ll be stuck with monthly payments: The lower your monthly payments, the longer you’ll be stuck paying for your wedding, and the more total interest you’ll pay. But paying a lot each month means you may not have money left over for other financial goals. In the example above, your monthly payments would be $743. That’s $8,916 per year you could’ve used to save for a down payment on a home or invested for retirement.
The less you need to borrow, the less these disadvantages impact you. But having a cheaper wedding is possible. In fact, our survey of 1,000 adults found that almost one-half planned to spend less than $20,000. To keep costs down, consider creative ways to save, such as getting married on an off day and making some of your own decorations.
Is it better to pay for your wedding with a personal loan or credit card?
If you decide to borrow funds to help make your wedding day special, are you better off using a credit card or getting a personal loan?
There’s no one right answer. Different situations call for different kinds of financing. To decide what’s right for you, consider key differences between personal loans and credit cards, including the following:
- The amount you can borrow: With credit cards, you can borrow as much or as little as you like, up to the balance limit. Personal loans usually involve borrowing a fixed amount, and many lenders have minimum loan limits. If you only need a few hundred dollars, you may not be able to find a lender wiling to give you such a small loan at a reasonable interest rate. But, if you need to borrow a lot, you may hit your credit card limit. If your credit card balance exceeds 30% of your available credit, it could hurt your credit score. Take this into account when charging wedding expenses.
- Interest rates: Credit cards often have higher interest rates than personal loans. However, some credit cards offer 0% interest on purchases during an introductory period. If you can qualify for an introductory rate and pay back what you’ve borrowed within the promotional period, you could avoid paying interest.
- The repayment process: With credit cards, you must make monthly minimum payments equal to a set percentage of your total balance plus interest. Credit card monthly payments might be lower than personal loan payments if you pay the minimum, but you’d pay much more over time. It could take years to become debt-free, too. With a personal loan, you usually need to repay the loan within a set number of years. Payments can be fixed through the life of the loan or, if you have a variable rate, could go up and down.
- Rewards: Many credit cards offer rewards for purchases, such as cash back or miles. Personal loans don’t offer this type of incentive.
- Application process: While you can typically apply for both credit cards and personal loans online, the application process for personal loans might be more in-depth. You might need to provide proof of income or employment, for example. If you already have a credit card, you can charge what you need instead of waiting several days or weeks before receiving your funds.
Deciding what’s right for you
When you’re deciding between funding your wedding with a personal loan or credit card, consider these questions:
- How much do you need to borrow?
- How much interest will you pay? Take the repayment timeline and rate into account.
- Will the monthly payments be affordable?
- What are the terms of the personal loan or credit card agreement?
A rewards credit card might be the better choice if you only need to borrow a little bit, can pay off the debt quickly, and qualify for a promotional rate. But if you want to take on more debt and pay it off on a set schedule over several years, a personal loan might offer a lower interest rate and be the better choice.
Interested in a personal loan?Here are the top personal loan lenders of 2018!
|Lender||APR Range||Loan Amount|
|1 Includes AutoPay discount. Important Disclosures for SoFi.
2 Includes AutoPay discount. Important Disclosures for Payoff.
3 Important Disclosures for FreedomPlus.
4 Important Disclosures for Citizens Bank.
Citizens Bank Disclosures
5 Important Disclosures for LendingPoint.
6 Important Disclosures for LendingClub.
All loans made by WebBank, Member FDIC. Your actual rate depends upon credit score, loan amount, loan term, and credit usage & history. The APR ranges from 6.16% to 35.89%. For example, you could receive a loan of $6,000 with an interest rate of 7.99% and a 5.00% origination fee of $300 for an APR of 11.51%. In this example, you will receive $5,700 and will make 36 monthly payments of $187.99. The total amount repayable will be $6,767.64. Your APR will be determined based on your credit at time of application. The origination fee ranges from 1% to 6% and the average origination fee is 5.49% as of Q1 2017. There is no down payment and there is never a prepayment penalty. Closing of your loan is contingent upon your agreement of all the required agreements and disclosures on the www.lendingclub.com website. All loans via LendingClub have a minimum repayment term of 36 months or longer.
7 Important Disclosures for Earnest.
8 Important Disclosures for Avant.
* The actual rate and loan amount that a customer qualifies for may vary based on credit determination and other factors. Funds are generally deposited via ACH for delivery next business day if approved by 4:30pm CT Monday-Friday. Avant branded credit products are issued by WebBank, member FDIC.
** Example: A $5,700 loan with an administration fee of 4.75% and an amount financed of $5,429.25, repayable in 36 monthly installments, would have an APR of 29.95% and monthly payments of $230.33
* Important Disclosures for Upgrade Bank.
Upgrade Bank Disclosures
** Accept your loan offer and your funds will be sent to your bank via ACH within one (1) business day of clearing necessary verifications. Availability of the funds is dependent on how quickly your bank processes this transaction. From the time of approval, funds should be available within four (4) business days.
|7.73% – 29.99%||$1,000 - $50,000||Visit Upstart|
|6.26% – 14.87%1||$5,000 - $100,000||Visit SoFi|
|6.99% – 35.97%*||$1,000 - $50,000||Visit Upgrade|
|8.00% – 25.00%2||$5,000 - $35,000||Visit Payoff|
|4.99% – 29.99%3||$10,000 - $35,000||Visit FreedomPlus|
|5.99% – 18.99%4||$5,000 - $50,000||Visit Citizens|
|15.49% – 34.49%5||$2,000 - $25,000||Visit LendingPoint|
|6.16% – 35.89%6||$1,000 - $40,000||Visit LendingClub|
|6.99% – 18.24%7||$5,000 - $75,000||Visit Earnest|
|9.95% – 35.99%8||$2,000 - $35,000||Visit Avant|