What Type of Credit Card Is Best for Wedding Expenses?
Weddings can cost couples a pretty penny. The average wedding in 2018 topped $44,000, according to the most recent American Wedding Study conducted by Brides magazine. But credit cards, including rewards and 0% APR cards, could make handling wedding expenses easier.
Putting wedding costs on a credit card can yield rewards in the form of cash back, miles or points. That can translate to savings on your wedding or honeymoon, depending on your redemption choice.
Adam Marlowe, principal experience officer at Georgia’s Own Credit Union, says a credit card can also allow couples to cover wedding expenses without directly affecting their checking accounts. Additionally, credit cards can offer certain protections that couples may find valuable to their wedding planning efforts. Price protection, for instance, can help couples get the best possible price on wedding purchases. This benefit would credit you the difference in price after a price drop on a card purchase.
A credit card can also be useful if an issue arises with a vendor.
“Most credit card companies offer a guarantee of service, meaning if you aren’t happy, you can initiate a dispute with them, and they will negotiate a compromise between you and your wedding vendor,” Marlowe says. This option is available if you’ve tried to work out a resolution with the vendor directly and had no success.
[Read: Best Rewards Credit Cards.]
If you’re planning a wedding or soon will be, these tips can help you choose a card and maximize its potential.
Match Rewards to Pre-Wedding Spending
Numerous costs go into a wedding. A typical wedding budget might include outlays for the reception venue; music and entertainment; photography; catering; flowers; favors and gifts; cake; wedding attire; and, of course, the honeymoon.
You can go two ways when choosing a rewards card to pay for these and other wedding costs: Spread purchases across multiple cards, or stick with one card for everything.
Josh Hastings, financial educator and founder of personal finance blog Money Life Wax, chose the single card route when planning his wedding to wife Lauren. But being strategic with purchases is important, whether you use one card or several, he says.
For example, a cash back card with dining rewards could be a good choice for charging the rehearsal dinner, Hastings says. On a card that earns 4% cash back on dining, a $1,300 rehearsal dinner charge could put a little more than $50 back in your pocket.
Cash back cards can also be a good fit for other pre-wedding expenses, such as buying rings or paying deposits. If you’re looking for a cash back card for wedding purchases, consider one that offers some flexibility in where you can earn the most rewards.
“You can earn rewards across wedding spending categories, from online shopping for wedding invitations and bridal party gifts to dining when you’re booking a restaurant for the rehearsal dinner,” says Bank of America credit card executive Jason Gaughan.
Instead of applying cash back to wedding expenses, you could also use the money to start a newlywed savings fund, Gaughan says. That’s helpful if you don’t have substantial emergency savings to fall back on yet or if you’re hoping to buy a home and want to start building a down payment.
Pair Cash Back With Points or Miles for Honeymoon Expenses
A cash rewards card could help you cover costs before the big day, and a card that offers airline miles or points can provide savings when you’re ready to book your honeymoon.
[Read: Best Travel Rewards Credit Cards.]
“You could further maximize the rewards you earn on wedding expenses by coupling a cash rewards card with a credit card that earns unlimited points,” Gaughan says. “Depending on the cost of your wedding, those points earnings could be enough to cover some — or all — of the cost of your dream honeymoon.”
Besides saving money on your honeymoon, travel rewards could cover expenses for your guests if you’re planning a destination wedding, Hastings says. Just be sure you understand the rules for using rewards to book travel, and always read the fine print to ensure that points or miles can be redeemed for what you need.
Pay Attention to Merchant Codes
As you charge wedding expenses to your rewards card, make sure you’re getting the rewards credit you’re planning to use.
Credit card companies assign merchant category codes to specific types of purchases, such as travel, dining and shopping. And credit cards use these merchant codes to assign rewards.
If you’re using a flat-rate cash back or travel rewards card to pay for your wedding, merchant codes don’t matter as much, as all purchases have the same rewards rate. But understanding code categories for cards that have a tiered rewards structure is important. Tiered rewards are cash back, points or miles a credit card offers at different rates, based on cardholder spending.
With some cards, restaurants are defined as sit-down or eat-in establishments, which covers fast food as well as casual and fine dining. But purchases from bakeries, caterers and food delivery services might not count as restaurant rewards unless the merchant has classified its products in the restaurant category.
If you’re planning to charge catering expenses or the wedding cake to take advantage of a higher rewards rate for dining, check with the merchant beforehand to see whether it can code your purchases properly. Otherwise, those purchases would earn the card’s base rewards rate, which might be one point or 1% cash back, depending on the card.
Redeem Rewards Wisely
When it’s time to redeem rewards earned from wedding spending, make sure you’re getting the most value possible. The card you’re using and how you redeem your rewards ultimately determine what those rewards are worth.
Generally, rewards points are valued at 1 cent each, but you may not get that much for every type of redemption. Ten thousand travel points could be worth $100 as a travel credit but only $60 as a statement credit, for instance. Points may also be worth less when redeeming them for gift cards or merchandise.
Airline miles tend to offer the highest redemption value when they’re used for travel. Miles can lose some of their value if you’re redeeming them for anything other than airfare, hotels, rental cars or other travel expenses. And you may get the least bang for your buck overall when redeeming cash for anything other than cash back.
Bottom line: Getting the best value from your rewards is just as important as earning them.
[Read: Best Cash Back Credit Cards.]
Consider a 0% APR Card for Paying Off Wedding Expenses
Marlowe says the first rule of wedding planning with a credit card is to establish boundaries for spending.
“Set a budget and stick to it,” he says. “It’s very tempting when couples are meeting with the florist or caterer to want that extra option for only a couple hundred dollars more, but the dollars add up quickly.”
The occasional splurge may be OK if you’re balancing out higher cost-expenses by cutting corners on others, Marlowe says. But don’t lose sight of your original budget. “Be careful, as you could end up in much more debt than you had originally planned,” he says.
The second rule is to have a plan in place for paying off wedding-related credit card debt as quickly as possible.
A card with an introductory 0% annual percentage rate for purchases or balance transfers could give you more time to pay without racking up big interest charges. You can find cards with introductory APR periods of 15 to 21 months.
One possible strategy: You could charge your wedding expenses to one card to earn cash back, miles or points, then transfer the balance to a different card with no interest. Just remember to factor in the balance transfer fee, which can add to the total amount you’ll have to pay off, and pay off the balance before the introductory rate ends.
“The last thing you want to worry about when starting your new marriage is the wedding expenses on the credit card bill,” Hastings says.
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What Type of Credit Card Is Best for Wedding Expenses? originally appeared on usnews.com
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