Taylor Swift fans and other concertgoers should apply for debit cards over credit cards

WITH the rush to sign up for UOB debit and credit cards for Taylor Swift’s concert ticket presale, some may have wondered which card to choose.

In this particular instance, a debit card with a savings account might make more sense for most people.

This is not the first time that a bank has acquired new customers by giving its cardholders exclusive access to presales. In February, Blackpink fans who held Maybank credit and debit cards were made eligible for the band’s presale as well.

There is even a rumoured visit by Beyonce next year. It would not be a surprise if the other banks decided to snag the rights to promote similar events, given the surge in applications that UOB experienced after the presale was announced.

Given the multitude of concerts coming to Singapore, a particularly avid fan of multiple musicians might tank their credit score, just by signing up for a credit card to attend each performance.

A credit score is assigned by Credit Bureau Singapore (CBS), based on the data it receives from its member banks and financial institutions. The score ranges from 1,000 to 2,000, with a score of 2,000 meaning the lowest likelihood of a person defaulting on their loans. Meanwhile, a person with a score of 1,000 to 1,723 and the worst risk grade of HH would have a 3.46 per cent to 100 per cent probability of defaulting.

When customers sign up for new credit cards, banks will check their credit scores with CBS and submit information on their monthly repayments. This contributes to a database that helps other banks evaluate someone’s creditworthiness.

Failure to pay one’s bills on time lowers their score, letting other banks know that they are less creditworthy. However, credit scores can also fall when someone signs up for many credit cards in a short span of time. This is taken as a sign that the individual is looking to take on more debt, even if they’re just trying to snag concert tickets.

In addition, an individual’s credit score can fall due to the high number of open or active accounts of credit that they have.

Credit scores can rise with individuals making prompt repayments over a period of time. But this can easily be undone when they forget to pay their credit card annual fees, especially if they have multiple unused cards that they do not keep track of.

With more concerts on the horizon, how many credit cards can someone realistically keep track of over time?

Instead, debit cards tagged to new savings accounts can have more benefits to users. Such cards do not incur any annual fees for their holders, and have no implications on credit scores.

Still, cardholders will need to remember to maintain a minimum balance in their attached savings accounts. For example, a DBS savings account holder has to maintain a minimum average daily balance of S$1,000 or be levied a service charge of S$2 per month.

With multiple bank accounts, individuals can also shift their savings easily between banks to take advantage of better interest rates, especially if rates stay high in the near term.

Individuals can also dedicate one bank account to receiving their salaries and another to spend from, as a budgeting strategy. Those prone to overspending with cashless payment methods may find this particularly useful.

Perhaps partnerships between banks and concerts could be net positives for concertgoers in more ways than one – if they pick the right cards.