Getting a student credit card while you’re in college is a smart move. It can be a great tool to learn how to handle credit cards correctly without accidentally drowning yourself in tens of thousands of dollars’ worth of debt.
Moreover, credit cards allow you to get ahead of the curve by building your credit history before you even graduate. This single factor alone makes up about 15% of your entire credit score. It’s also one of the hardest factors to manipulate, because if you want to increase your credit history, about all you can do is literally sit and wait for your score to improve.
But what happens when you graduate, and you’re no longer a student? You have a few options in this case. You may be able to upgrade your card to its non-student version, keep it open as-is, or close it. We’ll walk you through each of the options to help you decide which is right for you.
Contact your credit card company
Each credit card issuer has different policies with these cards when you graduate. They may hide the language about what happens after you graduate in their terms and conditions, or, more commonly, they don’t even publicize it at all. That’s why the most important thing you can do is to call up your credit card issuer and let them know about how your situation has changed.
Make sure to tell them when you graduated, along with any change of address. If you have a job already lined up with a definite salary, this also may give you more options.
Generally, credit card issuers will give you two choices to continue using the card: You can keep the student credit card as-is, or upgrade the student credit card to its full-fledged, non-student version.
If your credit card is upgraded
If you are already earning a higher salary than you did as a student (even if it does seem small at first) and paid your bills on-time as a student, credit card companies might be more likely to upgrade you to the full-fledged credit card, along with a credit limit increase.
This can be a double-edged sword. On one hand, a credit limit increase may decrease your credit utilization ratio, a measure of what portion of your available credit you’re using. This single factor alone has an even bigger effect on your credit score than credit history. It accounts for 30% of your score. (See also: 5 Factors With the Biggest Impact on Your Credit Score)
But people are often tempted to max out their credit card with their newfound credit line, and this can hurt your score. Don’t let this happen to you; instead, it’s still best to pay off your entire credit balance each month.
You may also be eligible for better rewards or lower interest rates if you’re upgraded to the non-student version. But again, don’t let this tempt you to run up a balance on your credit card. If earning rewards is your goal, it’s best to only put your normal daily spending on your card that you can afford to pay off in full at the end of each month.
If your credit card isn’t upgraded
In this case, the credit card issuer might not close your card, but they may not upgrade it. Basically, you’re stuck with your old college credit card.
If you want a higher credit limit or want to earn better credit card rewards, you always have the option of applying for a full-fledged credit card.
If you decide to go ahead and keep your student credit card open (a wise decision, which we’ll discuss below), remember to make a purchase with it at least a couple of times per year and pay off the charge. Otherwise, your credit card may be closed automatically for inactivity without any input from you.
Another way to automate this is by putting a recurring small charge on your student credit card — say, your Netflix or Spotify subscription — and setting it up on autopay so you don’t even have to think about it.
A word about closing your student credit card
Regardless of what happens to your student credit card after you graduate, you always have the option of closing it. However, in most cases, this isn’t the best option. Doing so will expunge at least part of the credit history you’ve worked so hard to create. Unless you have other credit cards, you’ll basically be starting over from scratch during the exact period of your life when credit is most important to build.
For example, if you plan on renting an apartment, getting an auto loan for a car to get to your new job, or even applying for some jobs, you’ll need the best credit score possible. Lenders, landlords, and some employers check credit reports. Keeping your student credit card open — in whatever form that might be after you graduate — is often the best option unless you truly do want to simplify your life and are prepared to take a likely hit to your credit score.
Graduating from college is one of the most exciting — and terrifying — times in your life. Figuring out what to do with your student credit card after you graduate doesn’t need to add to that stress.
All you have to do is make a quick phone call to your credit card issuer and explain the situation. Then spend a few minutes thinking about your strategy — Do you want to close the card? Keep it? Apply for a new credit card? Make a decision and stick with it so you can move on with your life. After all, you’ve got more important and exciting things to focus on now.