How to Finance a Micro-Wedding

Beautiful setting for outdoors wedding ceremony waiting for bride and groom and guests. Decoration

As the coronavirus pandemic has ruled out large gatherings for the time being, some couples have gotten married to the notion of having an intimate ceremony that only includes their closest friends and family members. These so-called micro-weddings typically include less than 50 guests, and might be as small as just a handful of well-wishers—a big step down from the 131 guests the average U.S. wedding in 2019 hosted.

But that pared-down guest count doesn't necessarily mean a micro-wedding comes with a micro-budget. By one estimate, the cost of a micro-wedding can be $1,600 to $10,000. While that's cheaper than a typical wedding, which cost $28,000 on average in 2019, according to The Knot, it's still a hefty price tag. Whoever pays for a micro-wedding, its costs can feel heavier than a five-tier wedding cake.

So, how do you pay for a micro-wedding? Paying with cash is the smartest option, but you may not have it available, or you're trying to avoid depleting your savings. If you need to borrow, you've got plenty of options on the table, including paying with a credit card and taking out a personal loan. Each method has its own benefits and drawbacks, so we cordially invite you to explore various financing alternatives with us that might reduce the budgetary burden of your nuptials.

Pay With Cash

Every dollar you don't borrow is a dollar you won't be paying any interest on. For that reason, the first place you should look for wedding funds is your own bank account. If you've got enough savings set aside, you might look at allocating some of that cash for your micro-wedding—as long as it doesn't strain your finances. Be sure you're not siphoning money from your emergency fund, though. A wedding doesn't qualify as an emergency, after all.

When that's not enough, consider doing the following:

  • Set up a wedding savings account. If you've got enough time before you exchange vows, look at setting up a savings account solely for wedding expenses. A joint account you and your partner both contribute to can help you stay clear-eyed on your savings goals and keep you organized when it comes time to pay. Be sure to understand when your vendors expect to be paid so you can adjust your savings goals accordingly. One of the best ways to stay disciplined in making deposits is to set up automatic payments once a month or every pay period.
  • Sell investments. If you hold shares of stock, mutual funds or exchange-traded funds (ETFs), you might sell some of them to cover your micro-wedding expenses. Keep in mind that you may need to pay taxes on your investment gains. Also, resist the temptation to sell investments you hold in tax-deferred retirement accounts.
  • Pursue a side hustle. A side hustle might generate enough money to pay for a micro-wedding. This could include part-time consulting, freelance graphic design or writing, tutoring or Airbnb rentals.

Pay With a Credit Card

Paying for a wedding with a credit card is a convenient option—you probably already have several in your pocket, after all. But just as with any type of big purchase, putting your wedding expenses on a credit card has pluses and minuses.

First, the pluses:

  • You might be able to snag a 0% APR during a credit card's introductory period, typically allowing you 12 to 18 months to pay off the balance without being charged any interest. Check out Experian CreditMatch™ for available 0% intro APR offers.
  • You potentially can rack up cash and rewards points that offset the cost of your micro-wedding—or that help pay for a honeymoon.
  • You might enjoy consumer protections when you cover micro-wedding costs with a credit card. For instance, you might be able to enlist the help of the credit card issuer to be reimbursed if the caterer fails to come through on your wedding day.
  • You might wind up borrowing less money with a credit card. How? Unlike a personal loan that could end up providing more cash than you actually need, a credit card will cover only what you need to spend and nothing more.

Now, the minuses:

  • You'll be hit with interest charges if you don't pay off your card balance before a 0% introductory period ends.
  • If you don't score a 0% intro APR offer, you could be stuck with high interest rates when you carry a balance from month to month.
  • Paying with a credit card might encourage you to overspend.
  • Not every vendor or venue accepts payment via credit card.
  • Your credit scores could go down if your micro-wedding charges bump up your credit utilization ratio. This ratio takes into account how much credit you're using versus how much credit you've got available.

Take Out a Personal Loan

If you'd rather not put wedding expenses on your credit card, a personal loan is another option to explore.

Personal loans typically provide rapid access to funds. You can apply for one online and receive the money within a couple of days. But perhaps more important, personal loans frequently offer lower interest rates than credit cards do.

But there are downsides to a personal loan. They include:

  • Thousands of dollars in interest might pile up before you pay off the loan.
  • You could be tempted to spend more money than you had planned to spend otherwise.
  • In addition to interest charges you'll pay over time, personal loans usually come with origination fees when the loan is issued that can be as high as 8% of the loan amount.

Borrow From Family or Friends

The bank of Mom and Dad could be a good place to borrow money for a micro-wedding. After all, your parents might let you take out a "loan" and repay it interest-free. Also, you might get a more generous repayment period than you would with a traditional lender. A potential downside, though, is that your loan payments won't be reported to the credit bureaus, and therefore won't help you build credit or improve your credit scores.

This also means late payments won't reflect poorly on you either. Beware, though, borrowing money from family or friends can strain relationships, particularly if it takes you too long to repay the money—or, worse yet, don't repay the entire amount.

Take Advantage of Home Equity

If you're a homeowner, you might consider tapping the built-up value of your home with a home equity loan to cover your micro-wedding expenses. These loans often come with interest rates that are lower than those for some other loans, in addition to fixed interest rates.

But is it really worth it? The proceeds from a home equity loan might cover the entire tab of a micro-wedding, but if you fail to pay back the loan, you could jeopardize the ownership of your home.

Check Your Credit Before Borrowing

If you decide to go ahead with financing your micro-wedding, be sure to check your credit reports before applying for credit. Reviewing your free Experian credit report enables you to spot any errors or other issues that might be holding down your credit scores. Lower credit scores can lead to higher interest rates for credit cards, personal loans and home equity loans. If you're looking to open a credit card or borrow a personal loan, Experian CreditMatch™ can pair you with offers suitable for your creditworthiness.