Although the pandemic has reduced the average price of a wedding in 2020 to $ 19,000, an annual survey by the wedding website The Knot shows the industry is set to rebound. This year’s newlyweds could see a final bill closer to $ 28,000, the average cost of a wedding in 2019, according to The Knot.

And after a year of detention, the temptation to go further could push prices even higher.

Pulling out your savings is the cheapest way to pay for your wedding, but for cash-strapped couples determined to say “yes,” there are some financing options that are smarter than others. Key to this option: Look for low interest rates and affordable monthly payments that you can make on time until the debt is fully paid off.

Should you finance your marriage?

Most financial experts agree that it’s best to avoid starting your marriage in debt.

This is especially true for couples facing other generational challenges, like buying their first home at record prices or tackling large student loan debt, says Natalie Slagle, Minnesota-based certified financial planner at Fyooz Financial Planning. , who specializes in counseling couples and millennials. families.

“Adding unsecured debt with a high interest rate to this situation will add stress to an already stressed financial generation,” she says.

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Slagle recommends that its clients take a different approach. Instead of planning the wedding of their dreams and then going after the money, they reverse their thinking.

“Our framework is to make sure our couples start with their resources, rather than their wedding budget,” she says. “We don’t want the wedding budget to be created and then we tailor the resources one way or another. “

Ways to pay for your wedding

If you can’t afford a wedding with the savings you have on hand and have room in your budget to take on debt, there are a few options to consider.

0% APR credit card

A 0% APR credit card does not charge any interest on any purchase you make during the promotional period, which typically lasts 15-18 months. As long as you pay off the card within this time, you will borrow the money for free. Once the introductory period is over, interest will be charged at the current APR, which can reach 25%.

You need good to excellent credit (a 690 FICO FICO score,
+1.68%
or more) to benefit from a 0% APR rate credit card.

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When to consider: A 0% APR card may be suitable for couples who wish to finance a small part of their marriage. It will be more difficult to qualify for high credit limits, and overcharging a credit card can push your credit usage over 30%, which could lower your credit score.

Rewards credit card

A similar option is to pay for some wedding expenses with a rewards credit card and then use the points or cash back to save money elsewhere. For couples looking to go on their honeymoon, a travel rewards card may make the most sense, as the points or miles you earn can pay for flights and hotels.

When to consider: A rewards credit card is only suitable if you are confident that you can make your payment each month. If you fall behind, you could keep a balance at a high interest rate, wiping out all the money you saved with rewards.

401 (k) loan

For clients determined to finance their marriage, Slagle recommends a 401 (k) loan. This loan allows you to borrow money from yourself – in this case, your retirement savings – and comes with one of the lowest interest rates available, even if your credit is fair or bad. . Plus, all the interest you pay goes to your retirement account.

But by borrowing on your 401 (k), the money no longer accumulates in a tax-efficient account, putting your future nest egg at risk. In today’s strong financial market, this could be a big compromise.

“You have to recognize the resources you are using and what that means for the longevity of your financial plan,” says Slagle.

When to consider: Consider a 401 (k) loan only if you plan to keep your current job. If you leave your workplace, you may need to quickly repay the loan, and if you default, you could incur a penalty of 10%, plus tax.

Wedding loan

A marriage loan is an unsecured personal loan that you borrow from a bank, credit union, or online lender to help pay for your marriage. Loan amounts range from $ 1,000 to $ 100,000.

The rate you receive on a wedding loan will depend on your credit profile but can range from 6% to 36%; the higher your credit score, the lower your rate is likely to be.

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It’s best to pre-qualify with multiple lenders to make sure you get the most affordable loan possible. The prequalification will show you potential rates, loan amounts and monthly payments and will not hurt your credit score.

When to consider: Since you will receive the funds in a lump sum, a wedding loan can be a good option for budget-conscious couples who want to limit their spending and can afford the monthly payments.

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Jackie Veling writes for NerdWallet. Email: [email protected]