What Happens to Your Student Credit Card After Graduation?
You don’t have to leave your student credit card behind when you graduate from college.
Credit card companies will let you hold on to a student card for as long as you want. Keeping the account open, in fact, is a smart strategy for strengthening your credit score—along with continuing to make payments on time and paying off your balance each month. Your card issuer may even upgrade your account, which would let you benefit from richer rewards or better terms while still preserving your credit history.
Here are three ways to handle your student card after graduation.
Keep Using Your Card
When you graduate, you can keep using your student credit card—especially if you like its rewards program, APR, or fee structure. Besides, your student credit card may be very similar to an equivalent non-student card your credit card issuer offers. That’s the case with the Bank of America Cash Rewards credit card, for instance, and the Bank of America Cash Rewards Credit Card for Students. The two cards currently offer the same cash-back rewards rate and the same ongoing APR.
If you want to stick with your current card, let the issuer know that you’ve graduated from college. Your lender may simply reclassify it so that it’s no longer considered a student card. Once you earn income from a full-time job, you may also qualify for a credit limit increase. Or you can ask the credit card issuer to lower your APR in recognition of your higher income and history of on-time payments.
Alternatively, if you aren’t thrilled by your student card’s benefits but your issuer doesn’t offer anything better, you could hold on to it and use it only occasionally. That will help you maintain a long credit history, which accounts for 15% of your FICO credit score. Lenders value lengthy credit history because it can demonstrate that you have experience using credit responsibly.
If you’re ready to move on from using your student card regularly, and your credit score qualifies you, shop around for a new card—potentially one that will reward you for everyday purchases. In addition to considering the card’s rewards, also look at its APR, fees, and other charges.
Ask Your Issuer for a Different Card
If your student card doesn’t offer appealing rewards or you’re interested in a particular card from the same issuer, ask the company to convert your student card to another one of its products. Some issuers may even offer to upgrade your card without waiting for you to ask. For example, if your student card doesn’t offer a rewards program, your card issuer may be willing to convert it to a cash-back credit card or a travel rewards card.
The advantage to this approach is that you’ll still be able to benefit from your student card’s credit history—without getting stuck with its drawbacks. On your credit report, the account will likely date back to when you first opened your student card, not when you received your new card. But you’ll enjoy a brand-new set of perks.
Consider Closing Your Account
If you’re ready to move on from your college card and apply for a new piece of plastic, you may be tempted to close your account. But often, that’s not the wisest move.
Closing your student credit card account could shorten the average length of your credit history, which could have a negative effect on your credit score. That’s especially true if your student card is the oldest account you have. Credit scoring companies like FICO and VantageScore factor in the amount of time your accounts have been open when calculating your score. In general, the longer your credit history, the more positive the impact on your score—as long as you also regularly make payments on time.
Canceling the card could also ding your score by shrinking the total amount of credit you have available. In addition to looking at the age of your accounts, credit scores factor in how much credit you’re using compared to your limit. This is known as your credit utilization ratio, and it’s worth 30% of your credit score. If you close your card, you’ll have less available credit, and any debt you have will account for a larger share of your credit limit.
Keep your balances as low as possible in order to maintain a low credit utilization ratio. Or, even better, pay off your balance in full each month so you can also avoid paying interest.
You may still want to close your student credit card if you’re having trouble juggling multiple accounts, or if you don’t want to be tempted into taking on additional debt. Or you may need to close your student card if a parent co-signed on the account and wants out, but your lender won’t allow you to keep the card in your own name.
Even if canceling the card does briefly impact your score, know that you have lots of time to strengthen it. Make on-time bill payments on all your accounts and keep other card balances low.
Saying goodbye to college life doesn’t necessarily mean saying goodbye to your first credit card. Opening a card while you’re a student gives you an important head start on building a long and positive credit history. The best way to take advantage of that history is to hold on to your account, even if you upgrade to a new one, long after you leave campus.