Loan or Credit Cards

Personal loans typically have very high interest rates so even if you’re making huge payments you’re still paying a lot of interest. I’d do everything you can to pay all of it in cash, with a credit card as a last resort.

Of course we are doing everything we can to put the LEAST amount on credit as possible. But, we have a credit union bank and even on our two vehicles the interest rate is little to nothing. So I figured it might be the same?

Pay with the money that you have allotted. Save additional if needed. But no need to still pay for a wedding months after it’s over. Stick with a budget that you can handle.

Why do you have to take the whole loan out then make a huge payment? Can’t you just get a loan for the $3000 then pay that off as you would with the credit cards. I don’t take loans out for things so I don’t know what an interest rate for this kind of load would be but I would think that you would be able to get a lower interest rate from a bank than from credit cards

Host the wedding that you can afford now, don't start your marriage off with debt for a 5 hour party.

Well I don't advise going into debt over a party....but I feel like the less times a creditor needs to check your credit for availability the better. The more credit cards you apply for, the more your credit will get hit and start to go down.

Are you planning on buying any huge purchases in the near future? Like in the next two years? Any credit that is less than 2 years old is still considered new and home mortgages don't like "new" credit. This might not apply to you, but was also just putting it out there for others who want to walk the same path.

Also consider debt to income ratio with these as well if you are trying to make a big purchase any time soon after the wedding.

View Quoted Comment My credit union offers a 1.5% rate on car loans but the lowest personal loan rate they offer is 9.5% so I wouldn’t count on that.

So we already bought a house and two cars. Using a loan and or credit cards have never been an issue for us because we always pay back. So this is our biggest purchase that we have at the moment. To me the way I am thinking is getting a loan for remainder of what we need would be smarter/easier than using different credit cards. Of course, I would LOVE to not have to use credit cards or loans but, we really don't mind. We treat our credit like we do our money. We take care of it.

I was just wondering anyone thinks credit card would be smarter than a loan?

Personal loan rates are really high, up to 24% because there is no collateral like a car loan. They can always repo your car if you don't pay. Maybe look into getting a new credit card that has 0% interest for the first 6-18 months. That way you can pay it off overtime without the interest. Check out CreditKarma to compare cards or loans and check your credit.

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While I don't think either of those options is "smart", you could consider applying for a new credit card that offers a period of 0%APR and good cash back incentives. I just had to do this for my business. I got 0% APR for 12 months and 1.5% cash back as well as $500 cash back if I spend $3000 within the first 3 months, which I know I will. I'm also responsible when it comes to credit cards and have 0 debt.

Thank you Allie. We don’t think using our credit is smart but, to me it’s not much and we will pay it off within a couple months after the wedding. Thank you for info

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I second this. Take whatever money you get for wedding gifts and put it toward the credit card balance to pay it off. While right now you may think you will be able to easily pay it off, once that 20%+ interest rate kicks in, the balance starts to multiply.

You sound like you know what you are doing and are not going crazy so I would not pay attention to the naysayers. It is not like you are going crazy in debt over this and you budgeted accordingly. For myself, I am paying everything I can with credit cards to get the points/cash back and then paying it off right away. It is not like I do not have the cash, but I might as well use this to my advantage. I would do exactly as Allie suggested and put it on a card where you benefit from it as well. I would not suggest a loan since you do not gain anything from that.

View Quoted Comment I think PP made a good point about looking into opening a credit card that has a 0% intro apr for the first year or so. Then you could pay it off quickly and hopefully incur no interest.

View Quoted Comment Yes! I know what I am doing lol it may not make sense I just wanted to know if credit cards or loans were better lol

We are doing the same thing paying majority with cash but will have a little left over that will need to be financed. For financing we are doing a PLC. So the interest rate isn't as high as a credit card or personal loan. I would look into that. It's also good so if any expenses come up that you weren't prepared for you can pull from the PLC.

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What is a PLC if you don't mind me asking?

The way my fiance and I do it, is we pay for things using our airline credit card. We have the money in our account and then wait one or two days once the transaction goes through and then pay it off (or as much as we can). That way it helps build your credit and gives you airline miles at the same time (helps when planning for trips!). It's tricky because it's so easy to just say "Put it on the card and we'll pay it off later" but if you do use a credit card make sure you don't get yourself stuck with minimum payments that are too steep. It's happened to me and can be hard to get out from under.

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Samantha- Oh yes! Trust me I know. We have dealt with credit cards before. & even if we say :put it on credit card: it's usually just to boost our credit. My FH is really good with finances. & making sure everything especially that has to do with credit is payed... As am I.

That's a good idea tho for the trips thank you!

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Other PPs have voiced their opinion on the debt and etc. So I will answer your actual question - is a credit card smarter than a loan?

Depends on the interest rate, if you are having a 'hard check' done on your credit, and the limit.

- Opening a new credit card will be a hard check on your credit, as will a personal loan. So about the same there. But if you already have a card, you won't need a credit check.

- Disadvantage of using current credit card is the interest rate. Same with a personal loan. You could check out a local credit union which usually has lower rates. Or you could try lendingclub.com that usually has lower rates than other marketplaces.

- In regards to how one impacts your credit over the other... a credit card with a $3K limit and $3K balance will be the same as a $3K loan with a $3K original line of credit. A $10K credit card limit with a $3K balance will help your score a little b/c your balance % will be lower than your revolving line of credit.

Best option? Which probably isn't possible, get a 0% interest rate on an existing card. You can always call your credit card companies and ask them for this. They'll probably all say no.

Long story short, since you already have a house and two cars, and aren't worried about your credit, (if I read that right) I would go with the lowest interest rate. If that's a 0% card do that.

**personal opinion, not investment professional advice, informational purposes only