Make the most out of your wedding expenses with credit

wedding-on-credit

A wedding is a major life milestone and a day of celebration. It can also be quite costly.

The average wedding costs US$29,000 - excluding engagement ring and honeymoon, according to WeddingWire.com. If you're planning to take a honeymoon - or, as some may call it, a "money-moon" - it will set you back even more. In all, the average wedding costs about US$37,000.

A wedding may be a one-time event, but it's not a singular cost. With months or years of planning, you're looking at a ton of separate expenses. After you pop the question (or say "yes"), consider using credit to fund the celebration and reap some of the following benefits:

1. Earn cash back.
Some of the major expenses couples face leading up to their wedding include rings, an engagement party, and bride and groom wardrobe. Then there's the ceremony and reception, which could include a band, catering, décor and other sundry expenses. A cash back credit card is a great way to manage your cash flow leading up to the big day and recoup some of your costs.

Ideally, you should apply for a low interest cash back credit card, preferably with a long introductory interest-free purchase period. And don't forget to look for a good sign-up bonus, even if it requires a high spending minimum to reap the reward. You'll likely be charging big-ticket items, so it's a perfect opportunity to take advantage of this type of bonus.

Just be sure to pay attention to the cash back categories of your particular card.

Most cash back credit cards let you earn more on specific purchases, such as gas or groceries. While such cash back categories come in handy for everyday spending, they don't help much when it comes to wedding purchases. However, some card issuers allow you to choose which spending category gives you the most cash back, or with a card that offers decent cash back on all purchases. You'll get the most bang for your buck by choosing one of these cards, but they might not be an option for all.

"If you aren't going to accumulate much cash back, you may want to consider a no-fee card, or if carrying a balance, a low-interest card," Brenda Hiscock, certified financial planner at Objective Financial Partners, said in an emailed response to questions.

2. Save on your destination wedding.
Many couples get married in a foreign country, whether it's in the neighboring U.S. or somewhere abroad. If you'll be spending a significant amount of money in a foreign country, you'll want to be careful how much you charge, as you may face costly foreign transaction fees for doing so.

Here's how to save on those fees:

  • Get a card that doesn't charge foreign transaction fees. Most standard credit cards charge 2.5 per cent in foreign transaction (or foreign exchange) fees. Some cards are foreign fee-free, but there are few such cards in Canada, and they often come with high annual fees.
  • Use your cash back card. You still can save a lot of money and still earn cash back or rewards. If you're using a cash back card for your wedding expenses anyway, the money you earn can offset the foreign fees, making it easier for you to swipe (or dip) away while you're out of Canada.
  • Get a U.S. dollar card. If your nuptials are going to take place in the States, you might be well suited for U.S. dollar credit card. You can apply for one of these cards at most major Canadian banks.

There's another reason to charge your trip on your credit card: peace of mind.

"Some cards offer a great deal on travel insurance, which is something everyone should consider when they travel outside the country," Judith Cane, money coach, said in an emailed response to questions.

3. Protect your purchases - and yourself.
Your credit card may also offer purchase protection, extended warranties and other travel-related protections.

"Not only will a credit card help you track your expenses, but if you have a problem with your venue or suppliers, the credit card company may be able to help you recover your money," Cane said.

If you're putting your honeymoon on the card, you may even have trip protection, as Cane said, which can include trip cancellation, lost luggage or travel health insurance.

4. Pay for the honeymoon.
Honeymoons can be so costly that some couples decide to forgo the honeymoon altogether, or decide to take one on a later date.

But what if you didn't have to pay for your honeymoon? With travel rewards credit cards, you may not have to. If you've been squirreling away reward points for years, what better way to use them than on a honeymoon with the love of your life?

Find out how many travel reward points you've earned to-date. It might be enough to pay for flights or spa treatments while you celebrate your new marriage.

"If you have enough points, you might be able to fly first class, like my husband and I did," said Cane. "You may even have enough to pay for your hotel and car rental."

If you have a long engagement, or take advantage of a hefty, new cardholder sign-up bonus, you may even be able to pay for the honeymoon with points earned on wedding expenses.

Be sure to plan ahead, though. Some travel reward cards come with restrictions, such as "blackout dates" for flights, which are common around the winter holidays. You still may have to pay fees and taxes, though, so budget accordingly.

Use credit wisely
A wedding is a fun, special occasion and you may want to splurge, which is fine - if you've budgeted for it. Using credit to fund your wedding or honeymoon can be advantageous, but it can also leave you starting your marriage with a good chunk of debt if you're not careful.

"Setting up a very specific wedding budget, and checking in regularly to ensure you are on track, keeps the costs from getting out of hand," said Hiscock.

Be sure you pay off your credit card balances monthly, or that you at least have a plan to pay them off within a certain time frame once the wedding is over. Make sure you aren't going over your limits or bypassing introductory 0 per cent interest offers, either.

Otherwise, you might have to put other milestones, such as starting a family or buying a home, on hold while you tackle debt incurred from a wedding that's already in the past.

See related: How to prevent debt from spoiling your wedding, Debt, income disparities take toll on marriage
Published April 7, 2017

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