Credit Card Pitfalls for Indie Singers: How to Manage Your Singing Career Finances

One of the most prevalent problems we hear from our advising customers is debt repayment and payment management while building their music business. This is most typically caused by imprudent credit card use early in life and in their jobs. This is sometimes inevitable, but credit cards may be a beneficial tool, and in some situations, a necessity, for musicians just getting started.

Not all credit cards are made equal.

Though we’re talking about how credit cards can help you advance your profession and improve your tour, keep in mind that not all credit cards are created equal. Examine your credit cards thoroughly, concentrating on the three categories below:

  • APR Percentages – The word “annual percentage rate (APR)” refers to the annual rate of interest charged to borrowers and paid to investors. APR is a percentage that represents the real annual cost of money for a loan or investment throughout the loan. This includes any fees or additional costs incurred during the transaction, excluding compounding. 
  • Annual Fees – This is usually a periodic percentage-based cost charged solely for having access to the card. If you only use your card sometimes, the fee may make it less economical and sustainable than spending cash. The same may be said for checking accounts. Remember that nothing in life is free, no matter how convincing their marketing seems.
  • Credit Card Processing Fees – Credit card processing fees typically range from 1.3 percent to 3.4 percent, plus a cut from the payment processor, which varies depending on the processor and plan you choose. Merchants must pay interchange fees, assessment fees, and processing fees to accept credit card payments, and this cost is passed on to the consumer. 

Overall, credit cards aren’t necessarily bad. Some are fantastic credit-building tools, and having one is regrettably nearly a requirement in the music industry. It’s critical to grasp the system and the regular costs and APR, whether you’re merely building your score to maintain independence, upgrade gear, or tour with additional financial help. We encourage artists to take control of as many aspects of their careers as possible, and this nearly always begins with money.

Bankruptcy is filed by musicians

Musicians appear to be overly prone to declaring bankruptcy. It has to be one of the risks that musicians encounter in their careers. Filing for bankruptcy does not always imply that a musician has no assets (see Michael Jackson, who had a plethora of assets ranging from the Neverland Ranch to a lucrative ownership stake in the Beatles’ songs). Usually, BKHQ announced bankruptcy filings by celebrities, especially artists, are followed by significant and well-publicized financial difficulties due to lawsuits, bills, or taxes.

Some suggest that musicians are more likely to declare bankruptcy if they are unhappy with their contracts. The R&B trio TLC was embroiled in a major issue. A comprehensive list is impossible to compile, but here is a sample of musicians who have filed for bankruptcy or have been on the verge of doing so.

Cancellations due to the coronavirus have an impact on classical musicians

The coronavirus pandemic is wreaking havoc on all aspects of life, society, and the economy, and musicians are bearing the brunt of the financial, artistic, and emotional toll.

The coronavirus pandemic has wreaked havoc on many people’s lives around the world. Concert venues have been closed, events have been canceled, and major segments of the economy have been paralyzed. Many classical music fans are isolating themselves or remaining at home. So far, all big classical music events have been canceled owing to the coronavirus.

Everyone we spoke with agreed that at this moment, the public’s health and safety came first. However, freelancing and traveling musicians who rely on performances for a living are suffering greatly as a result of the canceled shows, canceled tours, and subsequent loss of revenue and possibilities.

Many necessities on TOUR require using a credit card.

When we were preparing a tour in the past, one of the challenges we had was that no one in the band had a credit card with funds accessible. They were mostly cash-based and had plenty of it, but no credit lines remained. This was a disaster on tour because we could not RENT A CAR or BOOK A HOTEL ROOM.

Many young artists are unaware that if a car rental for a tour costs $300 for the period, you must also pay a $250-$500 holding fee as collateral, depending on your credit score. Besides, hotels usually require a credit card on file for incidentals, and it’s unlikely that they’ll let you stay without one.

“We’ll just sleep in the vehicle!” you could be thinking now. 

And while I agree that if you’re on a budget, a nice shower, some hot tub time, and a comfortable bed can be a crucial morale boost for you and the team. It has previously saved my tours by allowing us to reboot after a long journey.

Please remember that credit cards used for hotels and auto rentals will require someone on-site to present at least two forms of identification that correctly match the card. This implies that your manager, teammate, friends, investors, and others will be unable to purchase the item from a different location. Maintain your independence by having a credit card handy before your tour with at least $500.

You can UPGRADE GEAR at virtually 0% APR in many circumstances.

Perhaps a more immediate reason to use credit cards to establish credit is that practically every big music retailer offers FANTASTIC financing on musical instruments. When I first started my career, I set aside $1000 for gig-ready gear that would last me at least three years. Because I work two tips-based jobs, saving that much money would take a long time, but I looked into financing possibilities and discovered that Guitar Center would give me a 0% APR credit line up to $1000! 

I was overjoyed. I spent $400 on a guitar, $100 on mics and connections, and $500 on a PA system. I was prepared for the road and local gigs, and I could pay off the entire balance before interest accrued. Any finance has some risk, but if GEAR is the only thing holding you back, I recommend you to look into financing options! Synchrony and Affirm are two companies I’ve utilized in the past.

 If you don’t want to rely on private investors (unusual) or labels, building credit is essential (rarer).

So few musicians have a proper understanding of what a record deal entails. ‘A record deal’ is a financial loan based on the music industry’s expected profitability in its most basic form. For example, a real deal I looked at included a $100,000 loan for studio time, mastering, studio musician hiring, and website maintenance. 

The artist was obligated to repay the money within three years of signing the contract, after which they might begin collecting profits, with a large percentage of the profits going to the label.

Unfortunately, the inexperienced musician who signed the contract was unaware that no funding had been set aside for marketing, distribution, or on-the-road promotion. The label did this on purpose to have an artist who looked like another competitive musician on their roster. This happens more frequently than most people realize with bands, screenplays, songs, and other similar projects.

In short, the $100k was quickly depleted due to the label’s ability to select the album’s ultra-expensive studio(s), producers, and musicians. All of whom were already on their payroll… 

This is a very regular occurrence in record deals. Now that the band’s budgeted financial backup had been depleted, they had to go out on their own to sell and distribute the album, while the label did absolutely nothing.

The ARTIST HAD TO PAY THE MONEY BACK OUT OF POCKET WHEN SALES FAILED TO EXCEED THE AMOUNT REQUIRED IN THE RECORD DEAL! When I first heard the news, I couldn’t believe my ears. The artist used and dumped the label. Melissa Etheridge, who won a Grammy for it, was eventually forced to buy the band’s hit song. They received no royalties or payments, and they were forced to disband the band because the label controlled the rights to the name. The artist was never able to recover and eventually changed careers entirely.


I narrate this long story to demonstrate how, had the artists pooled their funds and built a credit line; they could have avoided the nightmare entirely and preserved complete control over their fate. I strongly advise you to develop your credit to remain independent and have greater negotiating power if you do decide to sign a record deal! If their credit line isn’t what you require, you might request other incentives and budgets in areas where you are short.

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