We all know that weddings cost a lot of money, and many people use credit cards to pay for wedding costs. But is using a credit card a good idea? This KreditWala News talks about pros and cons of using a credit card for wedding costs.
Earning Rewards for Your Big Day: The Pros and Cons of Using Credit Cards for Your Wedding
Credit cards can help pay some wedding bills and let you pay later without a loan, but credit card interest rates are very high. This means you pay more if you do not pay full quickly, and it will also hurt credit scores. Do avoid all these, read this Kredit wala article till the end to get a better idea on how to use credit cards efficiently for your wedding.
Pros of Using a Credit Card for Wedding Expenses
1. Rewards and Sign-Up Bonuses
It is always beneficial to sign up for a credit card that has a satisfying rewards program or introductory bonuses when purchasing items to use for a wedding. If you can afford to spend the cash, the points that you get can be used to pay for honeymoons or anything that may be needed for the wedding.
2. Short-Term Financing Option
Credit cards can be useful to the couples who are sure that they will be in a position to clear the balance within the next few months. Credit cards offer a funding instrument that is different from the loan and does not have to come out of the savings. Just ensure that you don’t carry forward the balance for too long, since this would mean paying a lot of interest.
3. Purchase Protection
Kreditwala owner said Purchase protection is a common feature for many credit cards and that can be very useful when facing wedding costs. For example, if a vendor closes down, or it becomes necessary for you to return an item, then this will be possible.
Cons of Using a Credit Card for Wedding Expenses
1. High Interest Rates
Credit card interest rates currently stand at 16% on average, and this is without factoring other hidden costs. If the balance is not paid in the short term, the interest bears can really spiral your debt to astronomical levels.
2. Credit Score Impact
Using credit cards and charging high balances on them are also bad because they affect your credit utilization rate, which is used in credit score determination. This might complicate the attempts at obtaining loans in the future or the best interest rates.
3. Overspending Temptation
One disadvantage of credit cards is that they allow you to spend more than you would intend due to impulse buying. Being in a situation where couples are immediately in a huge financial hole due to the wedding expenses makes it difficult for you to start your newly wedded life without difficulties.
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Tips for Using Credit Cards for Wedding Expenses Responsibly:
Make a budget first. Decide how much money you can spend on a wedding. Stick to this budget. No overspend.
Track all expenses. Use an app or write in a book. Keep receipts. This helps you stay on budget.
Pay full credit card bill each month if possible. This way, you do not pay extra interest charges. Interest is very high on credit cards.
If you cannot pay full, pay as much as possible. Minimum payment is not good. It means you are going to pay for a long time.
Use a credit card with zero percent intro APR if available. But plan to pay full before the intro period ends. If not, you pay high interest later.
Get a credit card with rewards matching your wedding spend. Example - bonus points for hotels, flights, restaurants. Use rewards to reduce costs.
Check credit utilization ratio. This ratio of credit used to be the total credit limit. High ratios can hurt credit scores. Kredit Wala Owner suggests you to keep utilisation below 30%.
Consider a personal loan for some wedding costs instead of credit cards. Loan interest is usually lower than credit card APR.
Have a payment plan ready before the wedding day. Decide how to pay credit card bills after a big event.
Conclusion:
While credit cards can provide some benefits like rewards and short-term financing for wedding expenses, the potential downsides like high interest costs and credit score impacts make it important to use them responsibly.
Set a strict budget, have a payment plan, and prioritize rewards to maximise any advantages while minimizing risks. For many couples, limiting credit card usage and exploring other options like loans or payment plans may be the safer approach.
Read More: 8 Tips For Maximizing Your Approval For A Credit Card - Kreditwala Reviews