What to do with a student credit card when you graduate
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After you graduate and start the transition from student life to the rest of your life, what happens to your student credit card? Ultimately, it’s up to you. When you graduate from college, your student credit card won’t change—at least not on its own.
You can continue using it or trade it in for a card with better rewards and benefits. Whatever you do, it’s important to prioritize building your credit score, so you’ll have more financial opportunities as you build a life on your own. Whether your dreams involve getting a loan for a house or car or exploring the world using travel rewards, what you do with your credit card matters.
Here are your best options for what to do with that student card:
Keep using the student card for a while
If you like the rewards and benefits your student credit card offers, you can simply keep using it. While student credit cards generally don’t stack up well against top rewards credit cards, there are some, such as the Discover it® Student Cash Back card, that offer solid value.
This approach can also be a good option if you want to avoid the credit implications of opening a new credit card — the hard inquiry on your credit report and the creation of a new account can temporarily hurt your credit score. You may even consider it while you figure out which credit card is best for you.
But sticking with your student credit card for too long can do more harm than good. Student cards typically have lower credit limits than standard credit cards. Depending on how you use the card, you could have a high credit utilization ratio, which can damage your credit score. Now that you’ve started establishing your credit history, you may qualify for a card with a higher limit.
Also, while some student credit cards can offer good rewards, you may be leaving value on the table if you’re not using a card that aligns with your spending and goals. Many rewards cards offer bonus cash back, points or miles on certain purchases, and you may be able to find one that aligns better with your budget.
Apply for a new credit card
A student credit card can be a great way to build credit, but if you’re looking for better rewards and benefits or a big sign-up bonus, there are plenty of options from which to choose. And because you’ve taken the time to establish your credit history with your student card, you’ve probably improved your chances of getting approved for a better credit card.
If you’re thinking about applying for a new credit card after graduation, think carefully about your spending habits and preferences regarding rewards and perks. While there’s no best credit card out there for everyone, some are better than others for your needs and goals.
You’ll also want to check your credit score before you apply to see where you stand and what your odds are of getting approved. Many of the best rewards credit cards require good or excellent credit, which generally starts at a FICO score of 670. The higher your credit score, the better your chances of getting the card you want.
Avoid canceling your student credit card
If you’re thinking about getting another credit card to use after graduation, you may be tempted to get rid of your student credit card account, so you don’t have to worry about it.
But keeping your oldest credit card account open is a good thing for your credit history, even if you don’t use it anymore. Your student card is likely your oldest form of credit. The available credit on the account can also help keep your credit utilization rate lower, and the account’s age will continue to boost your length of credit history over time.
The only caveat is that you may need to use the card periodically to keep it active. Some card issuers will close inactive accounts after a certain period, which can vary by issuer. You’ll also want to keep an eye on your online account now and then to make sure someone isn’t using it without your permission.
Upgrade your existing card
Some credit card issuers may allow you to upgrade your student credit card to a different card that the bank offers. This process is referred to as a product change. One advantage of upgrading is you’ll avoid the hard inquiry of applying for a new card, which can lower your credit score. Keep in mind that card issuers may have rules about which cards you can upgrade to, including limiting you to cards within the same “family” as the one you have.
Upgrading your card offers the benefit of getting a better credit card without needing to apply for it or open a new account. The age of your account and its history will remain intact.
Note, however, that you may still need to undergo a credit check if the card you want to switch to has a minimum credit limit that exceeds yours. (Ask your issuer before you apply.) If it doesn’t, you may still want a second credit card to increase your buying power and keep your credit utilization rate from getting too high.
What if you have a secured credit card?
Student credit cards are designed specifically for college students, but there’s no guarantee you’ll get approved for one. As a result, some students get a secured credit card to build their credit while in school. These cards require an upfront security deposit, which is often equal to the account’s credit limit.
Some secured credit cards, including the Capital One Quicksilver Secured Cash Rewards Credit Card and the Discover it® Secured Credit Card, will return your security deposit without requiring you to close your account. You just need to make sure that you use the account responsibly and pay on time every month.
But with certain secured credit cards, you have no choice but to cancel if you want your money back. Having that cash in hand may be more valuable than the potential long-term credit benefits of keeping the account open.
If your secured credit card does upgrade to an unsecured version, your options remain the same as with a student credit card. You can choose to keep using the card, request a product change or apply for a new card and keep the old one open.
What’s the best move for you?
There’s no one-size-fits-all answer to the question of what you should do with your student credit card after you graduate, so take some time to research your options.
Continuing to use your student credit card can be a good short-term strategy while you’re figuring out your finances. If you missed a few payments and damaged your credit score, you may want to take some time to repair that damage before trading up.
If you decide you’re ready for a better credit card, take a look at the other cards your card issuer offers first to see if there’s one you’d like to upgrade to. Then, compare the best credit cards overall to see if a card from a different issuer is a better fit for you.
The bottom line
Figuring out what to do with your student credit card after graduation can feel daunting, especially if you’re already overwhelmed with other changes in your financial situation, including student loans, a new salary and more. But upgrading to a better credit card comes with its own rewards — literally.
Take some time to research your options and figure out what works best for you. But don’t wait too long, especially if your credit is good enough to get you a better card. While a student or secured credit card can be a great way to start building credit, there are better options for the long run.