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Planning a wedding? Why a personal loan is better than putting it on plastic

Weddings in our generation are like a second chance – when you’ve finally found the one to spend your life with, it can be a real blessing. What can bring us back to reality is the cost. According to Bride To Be magazine, the average cost of a wedding ceremony and reception is a whopping $36,000 – with some estimates tipping the scales at $65,000: that’s almost a house deposit or a large new car!

Much of a wedding is disposable and fleeting – food, alcohol, flowers, etc. – many of us put the incremental expenses on a credit card. Paying for flowers here, entertainment there, a deposit on the venue a week later – it can all add up. However, this can bite us way down the line in added interest and fees.

Paying for your wedding using a personal loan makes more financial sense than using plastic. It can have more than the obvious benefit of saving you interest – it can also force you to make some wise decisions.

Comparing personal loans vs credit cards

A credit card and personal loan are similar in that both are types of credit provided by a bank or financial institution. When you spend with a credit card, your bank pays for the purchase which you then promise to pay back with interest later on. A personal loan is cash transferred to you by a bank, which you also must pay off with interest. A credit card can be used on the spot – a personal loan is like any other type of major loan, which must be approved by your bank.

A credit card may have a credit limit, but these limits can range from as little as $500 to over $100,000, depending on what credit card you’re issued. The upshot is you can use a credit card as much or as little as you wish – but you will have to pay the piper. Average credit card interest rates hover around 17%p.a. and can be paid back within an indefinite period, which adds more and more interest if you only pay off the minimum amount. You’ll also be slugged with fees and charges, such as an annual fee.

Personal loans give you a definite budget

A personal loan is taken out for a specific purpose and must be paid back within a set time frame (the term of the loan.) This restricts the amount of interest you may pay, and if your loan allows for additional repayments, can reduce your interest payments even more. You may have to pay an establishment fee. However, if you take out a personal loan for wedding, it means you will have to budget around the amount. Credit cards tempt us to splash out because you can kick the can down the line. “A personal loan makes more financial sense because it restricts you from spending from beyond your means,” says Savvy CEO Bill Tsouvalas. “You know that every dollar counts. It makes a more frugal, but no less fun, ceremony. You will thank yourself when paying for the honeymoon!”

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Life Begins At

Life Begins At Magazine is the ultimate lifestyle publication for those who are retired, semi-retired or approaching retirement. But most importantly, those who believe that life really does begin at 50! Life Begins At has loads of features from celebrity interviews, domestic and international travel, home improvements and gardening, health and well-being, as well as financial tips and advice. The magazine is designed to meet the needs of a whole new generation of informed, healthy and active retirees.

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