What to do with a student credit card when you graduate

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.

You can continue using it, cancel it or upgrade it to a card with better rewards and benefits. But whatever you do, it’s important to prioritize building your credit score so that you’ll have more financial opportunities in the future 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 student credit card can have an impact on those dreams.

We break down what you can expect to happen to your card once you graduate, as well as next steps you could take depending on your goals.

What happens to your student card when you graduate?

When you graduate from college, your student credit card won’t change — at least not usually. Some issuers, like Discover, will automatically update your card to a similar non-student card once they’re informed that you’ve graduated, while others will just keep your account as-is. If you like the rewards and benefits your student credit card offers, you can simply keep using it.

What if you have a secured card?

Student credit cards are designed specifically for college students, but there’s no guarantee that every student will 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.

Should you get rid of your student credit card?

You may be tempted to get rid of your student credit card as you look at other financial products, but there’s usually far more advantages to keeping it than there are to canceling it.

Benefits of keeping your credit card open

Keeping your oldest credit card account open is a smart move for a variety of reasons, most of which have to do with your credit score. Doing so is good for:

• Your credit history: Your student card is likely your oldest form of credit. So even if you’re not planning on using it as much as you did in college, it will still continue to boost your length of credit history over time.
• Your credit utilization ratio: This ratio is expressed as a percentage and shows the total revolving credit you’re currently using as compared to the overall mix of credit you have available to you. Because you likely won’t be using this card as often, your credit utilization ratio will be lower, which in turn is good for your credit score.
• Your rewards availability: 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 still offer solid value. You can continue reaping the rewards of your card if you feel like they’re serving you well.

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.

Continuing to use your student credit card can also 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.

Pitfalls of canceling your student credit card

The disadvantages of canceling your student credit card are mainly the exact opposite of the advantages of keeping it open. You’ll shorten your average length of credit, which will negatively impact your credit history, and you’ll be getting rid of a line of credit, which will negatively impact your credit utilization ratio. All of this will bring down your credit score, which isn’t helpful when you’re trying to shop around for new credit cards.

Canceling your student credit card should only really be an option to consider if you’re having difficulty managing your spending with it. If you’ve found that you overspend with a credit card and can’t keep your debt under control, it might be best for your finances to pay off your debt, get rid of the card and stick to a debit card until you feel ready to use a credit card again. Just keep in mind that your credit score will take a hit, which can make it much harder for you to navigate post-college life depending on the range your score lands in.

Should you upgrade your card or get a new one?

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. If you continue to use your student credit card as your main card and your credit limit is too low for your new lifestyle, you could wind up with a high credit utilization ratio, which can damage your credit score. Plus, now that you’ve started establishing your credit history, you may qualify for a card with a higher limit. These factors are part of what makes upgrading or switching to a new card so appealing — but which is the right move for you?

Perks of upgrading your 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. Even if your issuer automatically reclassified your student credit card to a similar non-student card, you can still speak with them about getting a product change.

One advantage of upgrading is that you’ll typically avoid the hard inquiry of applying for a new card, which can lower your credit score. This is because you have an established history with the issuer already, so the company might be more inclined to forego the hard inquiry if you’ve shown responsible credit usage.

Upgrading your card also 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.

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 from your issuer that aligns better with your budget.

When to opt for a new card

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 — and there are plenty out there to choose from. You might benefit more from getting an entirely new card and keeping your old student credit card as is during these situations:

• You’re looking for a different type of rewards card: Maybe your student credit card has rotating rewards categories and you want something with a more standard rewards structure. Maybe you’re thinking of backpacking for a year and want a strong travel rewards card to take with you. If your issuer doesn’t offer the type of rewards card you want, or if the issuer won’t allow you to upgrade your student card to the card you want, then opting for a new card is likely the better move.
• You want to land a big sign-up bonus: Sign-up bonuses, also called welcome bonuses, are typically only available to new cardholders. That means that if you upgrade your card, you might not be eligible to earn the card’s lucrative welcome bonus. In this case, it might be better to just keep your old card and apply for the new one.
• You want to switch issuers: Just because you’ve started your credit journey with an issuer doesn’t mean you have to stay with them forever. A different issuer might have a better card you’re interested in, have better customer service or simply have more in-person availability in your area.
• You want more buying power: Getting a second credit card and keeping your current student card will increase your overall available credit, which will give you more buying power and lower your credit utilization ratio.

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, so make sure you look into which rewards card would be right for you.

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.

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 can come with its own rewards — literally.

There’s no one-size-fits-all answer to the question of what you should do with your student credit card after you graduate, however, so take some time to research your options and figure out what works best for you. But don’t wait too long, especially if you’ve checked your credit score and  it’s 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.

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.