How To Manage Your Music Career Finances (PT3): Credit Card Pitfalls for Indie Musicians

@ac_vinnie budget tere wang Nov 30, 2020

One of the most common concerns our consulting clients bring to us is debt repayment and managing their payments in the midst of growing their music business. This is most commonly caused by irresponsible Credit Card usage early in their lives and careers. Sometimes, this is unavoidable, but for those musicians just getting started, credit cards can be a usefull tool and in some cases, necessary.

In Part 3 of this blog series, "How To Manage Your Music Career Finances" we explore Credit Cards and Indie Musicians. I'll point out three important things to consider when building credit using traditional credit cards. (Much more in-depth information can be found in Tere Wang's course Using A Budget To Build a Full-Time Music Career found in the Artist Collective Membership.)

 NOTE: If you haven't already read Part 1 & Part 2 of this series, be sure to do so before reading on by clicking HERE.

#1 - Building credit is KEY if you don't want to be dependent on private investors (rare) or labels (rarer).

So few musicians TRULY know what a record deal is. In its simplest terms, a 'record deal' is a financial loan based on the projected profitability of the music business. For example, a real contract that I've analyzed consisted of a $100k loan for studio time, mastering, hiring studio musicians, and maintaining their online website. Within that contract, the artist was required to pay back that amount within 3 years, and then they could start collecting profit with a heavy % share going to the label.

Now, unfortunately, the novice artist that signed the contract didn't realize that there was no budget in place for marketing, distribution, or on the road promotion. This was done intentionally by the label to have an artist LIKE another competing artist on their label. This happens more often than folks know with bands, screenplays, songs, etc.

Long, long story short, the $100k was gone almost instantaneously due to the fact that the label got to pick the hyper-expensive studio(s), producers, and musicians on the album. All of which were on their payroll, already... This is super common in record deals. Now, the budgeted financial backing was spent and the band went out of pocket to attempt to market and distribute the album themselves while the label did virtually nothing.

When sales didn't surpass the amount that was required in the record deal, the ARTIST HAD TO PAY THE MONEY BACK OUT OF POCKET! I couldn't believe my ears when I heard the story. The label chewed up the artist and spit them out. The band had to eventually sell their hit song to Melissa Etheridge, who won a Grammy with it. They got no royalties, no payout, and they had to disband the group since the label owned the rights to its name. The artist never quite recovered and switched careers.

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I tell this long-winded story to illustrate the fact that had the artists pooled their money together, building a credit line, they could have avoided that nightmare altogether and retained complete control over their destiny. I urge you to build your credit so that you have the option of staying independent and IF you decide to go with a record deal, you have more negotiating power! If their credit line isn't what you need from them, you can ask for other incentives and budgets where you lack.

#2 - You can UPGRADE GEAR at almost 0% APR in many cases.

Perhaps a more immediate incentive to build your credit using credit cards is that almost every major music outlet offers FANTASTIC financing on music gear. When I started my career, I decided that I had a $1k budget for gig-ready gear that would need to last me at least 3 years. As I working two tips-based jobs, saving that amount of dough would take ages, BUT I researched financing options and found that Guitar Center would allow me to have 0% APR on a credit line up to $1k! I was ecstatic. I got a $400 guitar, $100 worth of microphones and cables, and a $500 PA. I was ready for the road and local gigs and was able to pay the total back easily before the interest kicked in.

Obviously, there's a small risk involved with any financing, but I urge you to look at financing options if GEAR is the only thing holding you back! Companies I've personally used in the past are Synchrony & Affirm.

#3 - Credit cards are required for many necessities on TOUR.

One of the obstacles we've run into before when planning a tour was that no one in the band had a Credit Card with funds available. They were cash-based primarily and had plenty of it, but they didn't have a credit line left anywhere. On tour, this was a nightmare because we couldn't RENT A CAR or GET A HOTEL ROOM.

Many young artists don't realize that if a car rental for tour is going to cost you $300 for the duration that you need an additional holding fee of $250-$500 depending on your credit score as collateral. Beyond that, hotels require a Credit Card on file for incidentals and it's very rare that they'll even allow you to stay without.

Now, you may be saying "We'll just sleep in the van!" And though I agree that should be the majority of your lodging on tour if you're on a budget, a warm shower, some hot tub time, and a comfy bed might be a necessary morale boost for you and the team. It's saved my tours in the past, giving us a chance to reset after a long journey. 

Please note that the credit cards used for hotels and car rentals will need to be someone on site with at least 2 forms of ID that match the card perfectly. This means that your manager, teammate, friends, investors, etc won't be able to make the purchase from another location. Stay independent and have a credit card ready with at least $500 available before your tour.

#4 - Credit cards are NOT all created equal.

Though we're talking about the amazing ways you can use credit cards to build your career and enhance your tour, please note that not all credit cards are the same. Research your Credit Cards heavilyi focusing on the following three categories:

a) Annual FeesThis is typically a recurring % based fee simply for having access to the card. If you use your card very rarely, this fee alone may make the option less affordable and sustainable than simply paying cash. The same goes with checking accounts. Just remember, nothing in life is FREE no matter how good their marketing convinces you.

b) Processing FeesThe average credit card processing fees range from about 1.3% to 3.4%, plus the payment processor's cut, which can vary depending on the processor and plan you choose. To process credit card payments, merchants must pay interchange fees, assessment fees, and processing fees, and this cost is passed on to the user. (

c) APR Percentages - According to Investopedia, the term “annual percentage rate (APR)” refers to the annual rate of interest charged to borrowers and paid to investors. APR is expressed as a percentage that represents the actual yearly cost of funds over the term of a loan or income earned on an investment. This includes any fees or additional costs associated with the transaction, but it does not take compounding into account. (

PLEASE NOTE: Compound interest is the main way that folks spiral into debt. We go into that topic deeply in Module 3 of our AC Budget Course called Using A Budget To Build a Full-Time Music Career. Watch our promotional video for the course here: 

That course and all of our courses are available FREE to Artist Collective Members!

All in all, credit cards aren't inherently evil. Some are amazing credit-building tools and unfortunately in the world of music business, having one is almost a requirement. Whether you're simply building your score to retain independence, upgrade gear, tour with extra financial support, it's important to understand the system and the typical fees and APR. We urge artists to control every aspect of their career that they can and it almost always start with finances.

For a more in-depth look at this topic and many more, claim your membership at and explore our courses.

If you're curious about your options to build your credit using Credit Cards, I highly recommend using as a starting point. You can check your score, see what you're prequalified for, and compare multiple cards from all over the web to make sure you're getting the best rates, lowest fees, and bonuses that suit you and your career.

Happy spending, ya'll! Part 4 Coming SOON!


Connect with the author, Vinnie Hines AKA @ac_vinnie today!

EMAIL: [email protected]


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