Q&A: The Pros and Cons of Using a Rewards Credit Card to Pay for a Wedding

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Q&A: I'm getting married next spring. I've got an excellent travel rewards credit card and I'm thinking about putting all of the wedding expenses on the card. Is this a good or a bad idea?

Answer: As with most things related to credit, the answer is "it depends." According to TheKnot.com, their 2013 Real Weddings Study showed that the national average cost of a wedding is $29,858. That's astounding. Hopefully, you won't be spending that much, but the amount shows that weddings are very expensive. So using the right card could certainly net you a lot of rewards.

The best way to decide is to review the pros and cons and see where you stand. Make a list of each item, including the honeymoon, and write down an estimated amount that you intend to spend. Then review the rewards program for your particular rewards card and see if there are any items that are excluded from the rewards program, or purchases that will earn you extras.

Advantages of using a rewards card for wedding expenses

If you have your account linked to a money management tool, such as Mint, using a credit card can help you keep track of your expenses. You can set up a wedding budget and get notifications when you're approaching your pre-set limits. Aside from tracking your expenses, here are two more big benefits.

You earn rewards that will help pay for the wedding. It's satisfying to think about earning rewards while you're paying for your wedding, isn't it? This is a big advantage, but there's a caveat. It won't matter if you've earned several thousand miles with your card if you carry a balance. So make sure you can pay the bill in full when it shows up.

With a travel rewards card, you'll probably have some good redemption options to offset some of your honeymoon expenses.

You get consumer protections. When you pay cash, if something goes wrong, it's hard to get your money back. With a credit card, you can tell your credit card issuer not to pay the amount because you have a dispute with the item or the service delivered by the vendor.

When you're buying items or paying for services online, it's much better to use a credit card than a debit card. Federal law protects from you from losing more than $50 if someone steals your account numbers and goes on a spending spree. And many of the top credit cards even offer zero liability.

With a debit card connected to a bank account, someone can drain your account before you catch it. If this happens, you might get all or most of your money back, depending on the circumstances, but it could take a week or two. This can be a problem if you're having cash flow issues. You could end up making late payments, for instance, which can impact your credit score.

Disadvantages of using a rewards card for wedding expenses

With credit card use, there's always a dark side. Let's take a look at the biggest one first.

You could end up in debt. Okay, it's already been mentioned that you have to pay your bill in full when the statement arrives. If you carry a balance, you'll wipe out the rewards you've earned because of the interest on the card.

In this case, though, the amount of debt could be staggering due to the cost of a wedding. So make a vow that you will not put the expenses on a credit card if you're making purchases that you can't pay off when the bill arrives. If you can't afford the wedding of your dreams, take a step back and ask yourself if you really want to start a marriage in debt.

You could pay convenience fees. Before you agree to hire someone or make a purchase for your wedding, find out if you'll be charged a convenience fee for using credit cards. The fees usually range from 1 percent to 3 percent and the merchant charges this to help cover the cost of accepting credit cards.

If you find out that your pick for the caterer or the venue charges this, you must include this amount in your budget. The other option, of course, is to find a vendor who doesn't charge this fee.

Bottom line

If you're considering taking out a wedding loan versus using a rewards card, it can a great idea to earn rewards while paying for your own wedding, but not if it means you'll be in debt for a few years with a high interest rate. If you're determined to have your dream wedding and just need a few extra months to pay it off, then consider getting a credit card with a zero percent introductory APR. The introductory periods last, in general, between six months and 21 months, depending on the card.

You do have to make regular payments every month on the balance, but if you pay your wedding off before the introductory rate ends, then you're basically financing your wedding for free. But if there's a balance when the introductory rate ends, you'll be charged interest at the ongoing purchase rate.

Overall, this is a good idea if you have excellent credit and you're sure you can pay it off within a year or so. Consider setting up automatic payments so you always pay your bill on time. With an introductory rate, you could lose the interest-free period if you make a late payment. That means you'd be paying full interest for the remainder of the balance. If this happens, you'll be paying much more for your wedding than you ever intended.

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