4 Ways To Use Credit Card Rewards To Help Pay For A Wedding

Your wedding can be one of your biggest life expenses, depending on what you include in your ceremony and reception. The average expense for a wedding has consistently risen over time, to a point that now the average wedding costs in the range of $30,000. If you’re looking to get married soon, Mint can actually help you create a separate wedding budget to help you manage those costs. 

In this article, we’ll talk about how you can use credit card rewards to help pay for a wedding. And while you’re unlikely to be able to pay for your entire wedding with credit card rewards, every little bit saved helps.

Planning a wedding

If you have a wedding coming up, the first thing that you’ll want to do is create a budget. Just like with your regular expenses, having a budget is an important step in keeping your costs down. Without a written budget, your costs have a tendency to go up and up without end. 

One important thing to keep in mind is that a budget can be as strict or as loose as you want it. Some people prefer to handle cost overruns by reducing the budget in other categories to compensate. Others choose to just increase the budget if costs are higher than expected. No matter how you decide to handle it, having a written budget means that you’ll make a conscious decision about it rather than just having expenses rise without you realizing it.

Paying for your wedding with credit cards

One way that you can help offset some of the costs of a wedding is via credit cards and credit card rewards. If you average a 2% return in credit card rewards on a $30,000 wedding, that’s $600 back. Of course, the easiest way to save money paying for your wedding is to have a smaller wedding, but that may not be an option for you, depending on your specific situation.

There are a few things that you’ll want to consider if you are talking about paying for your wedding with credit cards. The first is that paying for everything with credit cards does make it much easier to lose control of your spending. Just like with anything else, you should only spend money on credit cards that you have in the bank. That way you can always make your credit card payment in full, each and every month.

The other thing to consider when paying for a wedding with credit cards is that not every vendor might accept credit cards as a form of payment. This is especially true for individuals or smaller businesses. And those that do take credit cards may charge a processing fee. Of course, it doesn’t make sense to pay a 2.9% credit card processing fee to get 2% back in rewards. In those cases, it’s better to pay with cash, a check, or a payment service. You might also ask if there would be a discount for paying in cash — again, that could be more lucrative than any rewards you get from paying with a credit card.

Getting signup bonuses with all that spending

One option for making the most out of your credit card rewards that you might want to take advantage of is signing up for new credit cards that offer attractive welcome offers. Many credit cards offer signup bonuses for new applicants with a value of hundreds of dollars or more. These offers usually have a spending requirement associated with them, which isn’t a problem if you’ve got all those wedding expenses. Just remember to watch out for the many overpriced wedding items that you might want to avoid.

Using credit card rewards to pay for your honeymoon

Another way that you can use credit card rewards is to help pay for your honeymoon. Many credit cards offer rewards such as airline miles, hotel points or other types of travel rewards and benefits. Signing up for a few key credit cards can be a great way to splurge on a honeymoon to remember at a fraction of the cost. Flying in first class or staying in luxury resorts is something that may be much more in reach by using miles and points than if you were to try to pay for it with cash.

The Bottom Line

Smart usage of credit card rewards can be a great way to help pay for a wedding or, at the very least, get a rebate on all of the spending you’re doing. Make sure to set a budget to help stay out of wedding debt and use credit cards as part of your spending strategy. Following these simple steps can help you maximize your credit card rewards without hurting your overall credit score. Watch out for vendors that charge credit card processing fees and don’t use your credit card as an excuse to spend money that you don’t have.

The post 4 Ways To Use Credit Card Rewards To Help Pay For A Wedding appeared first on MintLife Blog.

Source: mint.intuit.com

All About Credit Card Processing Fees

All About Credit Card Processing Fees

When you make a payment with a credit card not all of that money goes to the merchant. Your payment has to be authorized by multiple companies or banks along the way and some of them will deduct fees for their services. A portion of your payment goes to your card issuer’s bank, the merchant’s bank, the big payment networks such as Visa and Mastercard as well as payment processing companies. Here’s what you need to know about credit card processing fees.

What Happens When You Make a Credit Card Transaction

Before we break down the individual credit card processing fees, it’s helpful to give a quick rundown of what happens when you make a payment with your credit card.

When you try to make a purchase with your card, whichever credit card processor the merchant uses will need to receive authorization to complete the transaction. To do that, the first step is to send your information and the transaction details to the appropriate payment network, Visa, Mastercard, American Express or Discover.

The payment network then contacts the bank that issues your credit card. Your card issuer has to confirm that you have enough available credit to cover the purchase you are trying to make. If you have enough available credit, it will approve the transaction. If you don’t have enough, it will deny the transaction. That approval or denial goes back to the payment network, who sends its approval (or denial) of the transaction back to the merchant’s bank.

This entire process only takes a few seconds but it happens every time you make a purchase with your card. It doesn’t matter whether you swipe, insert a card with an EVM chip or manually enter your credit card number.

Average Credit Card Processing Fees Average Credit Card Processing Fees Visa 1.40% – 2.50% Mastercard 1.60% – 2.90% Discover 1.56% – 2.30% American Express 1.60% – 3.00%

The table above lists an an average range for credit card processing fees from each major credit card provider. These ranges are meant only to give you an idea of how it works. There are a number of things that go into the final processing fees for any individual merchant (more on that later). Credit card issuers also are not always transparent with their fees and how they change over time. This is particularly true of Discover and American Express. However, credit card processing fees generally average around 2%. Another key trend is that American Express regularly charges higher fees.

Credit Card Processing Fees: Interchange Fees

All About Credit Card Processing Fees

An interchange fee is money that merchants pay every time they make a credit or debit card transaction. It’s typically a percentage of the transaction plus a flat rate for each transaction. For example, an interchange fee might be 1% of the transaction plus a flat fee of $0.25 per transaction.

This fee goes to the credit (or debit) card’s issuing bank so that it can cover its own fees. In general, a credit card issuer will charge higher fees for cards that offer more perks of benefits. However, the biggest fee that your card issuer has to pay is an assessment fee. This goes to the credit card network (e.g. Visa or Mastercard) and all networks charge the same assessment fee.

Interchange fees make up the majority of credit card processing costs for a merchant. There is a base part of the interchange fee that is non-negotiable because it is the same no matter what credit card companies a merchant works with. There is also a markup fee, which is an additional cost on top of the base fee. The markup goes to credit card processing companies (learn more about them in the next section) and they vary between processors. These fees are negotiable so a merchant should always compare these fees before choosing a company to process their transactions.

Credit Card Processing Fees: 
Merchant Service Providers

Even though merchants have to contact card-issuing banks to approve every transaction, they do not directly contact those banks. Instead, the transaction goes through a middle man that allows merchants and banks to communicate. This middle man is a merchant service provider (MSP). Common MSPs are Square and Payline.

MSPs charge merchants a certain fee for every transaction, whether it’s a sale, declined transaction or return. They may also charge the merchant a setup fee, a monthly usage fee and a cancellation fee.

Some merchants may have a bank that provides these services, but the majority of merchants have to use a third party MSP.

Online Versus In-Store Transactions

Credit card processing fees are cheaper if you pay in-person versus online. That’s because there is a greater risk of fraud with online payments. If you buy something in a store, the merchant has the ability to confirm that someone if using a real card and that they are the cardholder. This is harder to do with an online payment. The result is higher fees as companies try to protect themselves from fraudulent payments.

MSPs also charge additional fees for providing the software that makes an online payment transaction possible for a merchant.

The Bottom Line

All About Credit Card Processing Fees

It only takes a few seconds for a credit card transaction to go through, but there is a lot going on behind the scenes. Multiple banks and companies help facilitate transactions and they all want their cut of the profit. This is where credit card processing fees come in. A merchant has to pay an interchange fee every time a transaction is made, some of which is non-negotiable and some of which varies depending on the merchant service provider that a merchant uses.

A merchant bears the brunt of credit card processing fees and some merchants cannot afford to pay all the fees. This is a common reason why smaller merchants do not accept credit cards. These fees are also the reason that some merchants will require a minimum transaction amount in order to use a credit card.

Common Credit Card Fees to Avoid

  • Some credit cards charge an annual fee. This is a fee the cardholder pays each year simply for the privilege of having the card. Annual fees are particularly common for credit cards that offer valuable rewards. Shop around though because you can avoid an annual fee with some of this year’s best rewards credit card.
  • If you plan to travel, using your card outside of the U.S. could leave you paying a foreign transaction fee. Luckily, we have some cards with no foreign transaction fee in our list of the best travel credit cards.
  • One fee that you can avoid with responsible credit card usage is a late payment fee. This is a fee that your card issuer will charge if you do not pay your bill by the due date. You should always pay on time because paying late will not only result in a fee but your credit score could also be negatively impacted.

Photo credits: ©iStock.com/Juanmonino, Â©iStock.com/NoDerog, Â©iStock.com/andresr

The post All About Credit Card Processing Fees appeared first on SmartAsset Blog.

Source: smartasset.com