Wedding Loans vs. Credit Cards: Which is the better choice for financing your dream wedding? | Mint

Weddings are a big affair in India. It includes extravagant celebrations, multiple events, grand locations etc. While weddings across India may differ in terms of rituals, traditions, and culture, one thing remains the same for most weddings across the country: huge expenses.

People mostly spend their entire life savings on their big day, which sometimes might not be enough; hence, they borrow money to conduct the wedding of their dreams. With wedding season kicking in, it becomes important to explore various options for funding your big day. Some of the most common ways are credit cards and wedding loans.

What is a wedding loan?

A wedding loan is a type of personal loan that can be used to fund various wedding-related expenses, such as venue, catering, celebrations, and hotel stays.

What is a credit card?

A credit card is a financial tool that allows you to buy products and services or withdraw cash on credit. It comes with a credit limit according to your finances.

Choosing a wedding loan or credit depends on various factors, such as budget for the wedding, repayment capacity, and expenses. Check out the reasons why you could choose either a credit card or a wedding loan or both to fund your big day.

1. Interest rates

Wedding loans have lower interest rates compared to credit cards which could be used for borrowing higher sums of money.

“The repayment capacity determines how much one can spend on the wedding and what kind of financing options can be opted for. In most cases that involve larger amounts, a wedding loan may be opted for, according to Saif Ahmad Khan, founder, LEDSAK.AI.

“This is due to fixed EMIs that allow for structured repayments and as such, these loans ensure some form of financial discipline. Most times, wedding loans will have lower rates than credit card interest and so when applied over time, will be less costly. They allow a one time lump sum for all high cost items that will need to be paid for up-front like the hall, food and decoration costs,” Khan added.

2. Access to funds

Compared to wedding loans, credit cards give easy access to funds with less documentation.

According to Rohan Bhargava, co-founder of CashKaro and EarnKaro, “If you opt for a credit card as your financing option, you gain instant access to funds without the need for approval or paperwork. Many credit cards also offer rewards and cashback, which can help offset wedding costs.”

3. Mix of both

Depending on the type and scale of expenses, it is advised to use both a wedding loan and a credit card to fund wedding costs. “Both wedding loans and credit cards can be viable options for financing a wedding. To make the most of their benefits, consider using a mix of both. Use a credit card for smaller, last-minute expenses and a wedding loan for larger, planned costs,” Bhargav said.

4. Last minute expenses

If you plan to use a credit card to fund last-minute expenses, make sure to keep track of expenses and pay the bills on time. 

“Many people on credit cards can end up making little or no payments, and this may lead to smaller items or last minute items that need to be bought when the card is swiped becoming too expensive. The only danger that lies with credit card users is buying on impulse and forgetting the balance in a hurry. This, however, can be avoided by ensuring that payments for the balance on credit cards are made in full against the due date,” Khan said.

Before opting for a credit card or a wedding loan, plan your expenses diligently according to your financial situation, make a budget, and spend money according to your needs. Keep in mind that the expenses made through both credit cards and personal loans will have to be repaid in the future.

(Note: Using a credit card carries its own set of risks)