The United States and Canada are navigating an uncertain economic environment. With inflation increasing prices for goods and services, banks are raising interest rates in an effort to combat the problem. While this will affect all industries, rising interest rates may impact the wedding industry in particular.
The United States and Canada are currently in the midst of a wedding boom. Following two years of pandemic restrictions, millions of couples are eager to tie the knot this year. As a result, many vendors are struggling to meet the demands of the market. Naturally, many of these vendors are charging more for the services that they provide. In turn, many couples are turning to debt in order to finance the wedding of their dreams.
The Rise of Wedding-Specific Loans
Weddings can be notoriously expensive. Wedding celebrations that carry five-figure price tags are not unheard of. Historically, many couples have chosen credit cards in order to finance their weddings. However, recent years have given rise to platforms like Upstart and Earnest, which offer loans specifically designed for couples looking to tie the knot.
Loans of this sort are marketed to young adults and are relatively easy to access. While convenient, such loans often carry high interest rates. The Federal Reserve's intention to raise interest rates will likely serve to push the cost of these loans higher. While personal loans for weddings certainly provide couples with funds for their big day, financial experts say that there are reasons to be wary.
The Influence of Social Media
Social media plays a unique part in setting expectations for the wedding ceremony. Specifically, it has steered young couples toward more expensive options for their weddings. While venue spaces and catering drive a significant portion of a wedding's price tag, many couples are interested in things like custom attire, photo booths, and other luxuries. While there is nothing wrong with high expectations for a wedding ceremony, experts say that couples should be wise when it comes to allocating expenses.
Do We Really Need This?
While the temptation to splurge on extravagant weddings can be high, it is important for couples to have discipline. A recent online poll indicated that couples who take on unnecessary debt for weddings oftentimes regret their decision.
Weddings should be a source of joyful memories rather than buyers’ remorse. To avoid stress and frustration in the future, couples should assess their wedding expenditures to determine what is truly necessary. When couples are conscious about operating within their means, they are significantly less likely to seek out financing. In instances where financing cannot be avoided, it is important to be conscious of interest rates. Borrowing only what is appropriate can be equally helpful.
Rising Interest Rates
While many companies are encouraging couples to finance their weddings with personal loans, ongoing economic conditions may cause people to think twice. As the banking system seeks to fight inflation, it will likely make it more expensive to borrow money.
The effect of rising interest rates on the wedding industry remains to be seen. However, a decline in loan applications could be a reasonable assumption. The wedding industry has been hit hard over the past two years. As it works to regain its footing and meet the demand for wedding services, less financing could help balance supply and demand in the market.
Most importantly, though, financial responsibility on the part of couples will contribute to happier marriages in the long term. When it comes to today's wedding industry, higher interest rates may prove to be a blessing in disguise.
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