What to do with your student credit card after graduation

Written by
Maryalene Laponsie
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Plenty of things in life will change after you graduate from college. You might find yourself in a new job, a new home or a new city. But there is one thing you don’t need to find: a new credit card.

Keeping your student credit card can be a smart choice if you’re still trying to build credit, but there may be better options out there. Keep reading to learn how to decide what to do with a student credit card after graduation.

What is a student credit card?

Student credit cards can be used in the same way as regular credit cards – they allow you to make purchases using credit and then pay back the balance later.

Where student credit cards differ is that they may have lower credit limits or charge a higher interest rate than other credit cards. And although some student credit cards offer rewards, they typically don’t have the same benefits and perks as regular rewards credit cards.

All that means it’s a good idea to reevaluate your credit card options after graduation.

Credit card options after graduation

Once you graduate from college, there are three things you can do with your existing credit card:

Continue using your student credit card

If you like your current credit card, there is no reason to stop using it. In fact, if your credit isn’t great, continuing to use a student credit card may be your only option. Focus on making payments on time and reducing your debt in order to boost your credit score. Once you’ve done that, you can move on to one of the following two strategies.

Upgrade to a regular credit card

Assuming you have a good record of paying your bill on-time, you may be able to upgrade your student credit card to a regular account. Doing so may result in a credit limit increase, better interest rate or more perks.

Apply for a new credit card

There are a lot of excellent rewards credit cards out there, and once you have graduated and landed a good job, you may want to start applying for them. Rather than randomly applying, do some research to find the best credit card based on your spending habits.

If you do decide to apply for a new card, be realistic about your chances for approval. If you have fair to average credit, don’t apply for a card that requires an excellent score. Remember that every application results in a hard inquiry on your credit report. That can drop your score by a few points so you only want to apply if the odds are good that you’ll be approved.

How to switch from a student credit card to a regular account

In some cases, if a card issuer knows you have graduated, they may automatically move your card from a student account to a regular one. For instance, if you have the CardName, you may get automatically approved for the regular CardName.

Other times, you may need to call and make this request, which is also known as a product change. Before you do that though, research your options to see what you might be offered. Depending on your credit score, you may find it better to stick with your student credit card.

For instance, using the Capital One Quicksilver as an example, you could receive the Capital One Quicksilver if you have good or excellent credit. However, if your score is lower, you could be offered the CardName instead. That isn’t a bad rewards credit, but it does come with an annual fee.

With a product change, you normally won’t qualify for any new cardmember benefits either. If you want an introductory APR or welcome bonus points, consider applying for a new card rather than requesting a product change.

Should I cancel my student credit card after graduation?

If you do decide to apply for a new credit card, think twice before cancelling your student credit card. Doing so could have a negative effect on your credit score in two ways:

  • Shorten your credit history: According to the credit scoring company FICO, 15% of your score is based on the length of your credit history. By cancelling your student credit card, you could shorten your credit history and drop your credit score.
  • Increase your credit utilization ratio: About a third of your credit score is based on how much you owe, and ideally, the amount you owe – known as a credit utilization ratio – will be less than 30% of your available credit. However, if you cancel your student credit card, that could increase your credit utilization ratio and reduce your credit score.

So long as your student credit card doesn’t have an annual fee, it may be best to leave the account open. That doesn’t mean you have to use it, though. Instead, you can cut up the card and move on to using your new card instead. Eventually, if your student credit card remains inactive long enough, the issuer may close it, but that could be years down the road.

Maryalene Laponsie
Cardratings Contributor

Maryalene is a freelance contributor to CardRatings.com and specializes in personal finance topics such as credit cards, budgeting, saving and investing. She has written professionally for nearly 25 years and is a regular contributor to U.S. News & World Report, Money Talks News,...Read more

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