Couples making their big day pay

Published on Saturday 8 May 2010 15:02

AS WE enter the wedding season, austerity is hitting those households which are hitching. Couples are tearing up the traditional wedding list and asking for hard cash instead to pay for a new home or honeymoon.

• Couple's calamity: insurance can provide vital financial relief if your big day doesn't go as smoothly as you had hoped. Picture: TSPl

Half of couples would prefer money as a wedding gift, according to a survey from Wedding magazine, while more than a quarter are asking for vouchers to help pay for the honeymoon. The remainder are sticking with the wedding list.

With money tight, the expectation of what they will spend is also down. Six out of ten plan to spend up to 15,000, substantially below the 20,000-plus pre-credit crunch budgets. Only 16 per cent think their wedding could cost as much as 15,000 to 20,000.

Sadly, they are living in cloud cuckoo land. The average actual spend by those who have been through it was upwards of 20,000; a difference of 5,000.

And most will be footing the bill. Around 55 per cent of couples now pay for their own weddings, with roughly a quarter enjoying parental support.

Seven out of ten will have opened a savings account specifically to meet the wedding budget, according to Wedding magazine.

If you do this, make sure you save in an Isa so that no tax is deducted. The rates are not great. You can earn 3.1 per cent interest a year with Barclays, 2.8 per cent with Nationwide or 2.65 per cent with M&S.

If the wedding is a way off, you could earn 3 per cent with the Post Office or the Dunfermline, provided you leave the money untouched for a year. The Newcastle Building Society has a regular saver Isa which is also tax-free and paying 3.4 per cent.

Regular savers are normally taxed. The Scottish Building Society is paying 4 per cent on monthly minimum deposits of 25.

Alternatively you could consider a first-time home buyer account. Santander has the best, which is again a regular saver paying 5 per cent. There are penalties for missing a payment in any month, when interest is cut to 0.1 per cent. Access is available on closure only and savers must have a mortgage interview with Santander 90 days before the account's closure.

Most couples will be relying on cash gifts to get the wedding bells ringing out financial harmony.

Catherine Westwood, Wedding editor, says: "Couples asking for money instead of a wedding list is a growing trend. In the past they have been too embarrassed to ask, but since the credit crunch their confidence has grown, and many have chosen to abandon tradition for cold hard cash."

But others will get into debt. If you need to borrow, consider asking family first. Parents may not be able to subsidise the ceremony, but they may help out with an interest-free loan.

After that, look at a personal loan. Tesco, the AA, Virgin and M&S are currently charging between 8 and 10 per cent, although you may have to pay more depending on your credit history. A 10,000 loan will cost between 200 and 210 monthly to repay over five years, and you will pay between 2,000 and 2,500 for the cost of credit.

An alternative for more limited short-term borrowing may be your credit card, particularly if you can get zero interest plastic. But the credit limits will be lower, and beware penalty charges for late payment and so forth, which can push up overall costs. If you end up paying interest on a credit card for any length of time, this will be a more expensive option.

If you have preferential overdraft arrangements with your bank, it may be worth asking how much it would cost to raise the funds for your wedding with a traditional overdraft. Compare this with a personal loan, but don't forget to include all the additional charges, particularly bank charges, as you will have been pushed into the red and may no longer qualify for free banking.

Finally, you may have equity in your property. If you have a flexible or offset mortgage, you may be able to draw down cash relatively cheaply.

Six ways to cut costs

1. Keep numbers down or, better still, double up. If any friends are tying the knot, have a joint do and cut reception costs.

2. Marry during the week, rather than on a Saturday when charges are higher. Choose an unpopular date such as Friday the 13th, when venues are desperate for a booking.

3. Negotiate a free corkage deal with your venue, so you supply the wine.

4. Make your own cake, or buy one and make another: a small professionally decorated cake can be used for photos while the homemade one can be cut up for guests. No-one will know the difference.

5. Borrow the car. If any of your friends has a smart motor, dress it with ribbons and hire him or her a driver's uniform for the day.

6. Buy your dress on eBay.