Should I Upgrade My Student Credit Card When I Graduate?

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Updated on Friday, March 30, 2018

Graduating from college is an exciting time filled with the promise of new challenges. Taking control of your finances is one of the more difficult challenges you’ll encounter, especially if you’re looking to build up a solid credit history.

While you were in school, you might have signed up for a student credit card. If you used your card responsibly while working toward your degree, you will likely graduate with a solid credit score and an important choice to make — should you upgrade your student card after graduation?

So long as your credit is strong, you’ll likely have the chance to upgrade to an equally good, if not better, credit card.

In this guide, we’ll help you decide if you should upgrade your student card and what to watch out for, as well as how credit card issuers handle student cards.

Should I upgrade my student card?

First of all, let’s discuss what upgrading your card really entails since you have several options:

Transitioning to a new card with the same issuer. If you like the issuer of your current credit card, you can request to transition your account to a new card they offer. For example, if you have the Discover it® Student Cash Back, you may decide the Discover it® chrome is more suited toward your spending habits. Call the number on the back of your card to request the transition, but keep in mind you’re not guaranteed the new card. Issuers look at various credit factors prior to the transition. If you are moved to the new card, the majority of the time issuers will issue your new card with the same account number.

Pros:

  • By simply transitioning to a new card, you aren’t closing your existing account. That means you won’t lower the average age of your credit, which can sometimes hurt your credit score.
  • Often similar terms and fee structure.
  • Familiarity with the online and mobile interfaces.
  • Typically, the ability to keep the same account number.
  • Don’t need to manage multiple credit card accounts.

Cons:

  • May have an annual fee.
  • May require a higher credit score.
  • Because you are technically applying for a new card in a sense, the credit issuer will have to pull your credit again. That will result in a new credit inquiry, which could lower your score by a few points.

Keeping your student card open and applying for a new card somewhere else. If you want a new credit card, a good option to consider is keeping your student card open and applying for a new card elsewhere, whether it’s a store card like Target or a card from another issuer. By keeping your student card open, you help your credit score in several ways.

Pros:

  • Improves your credit score by increasing your credit utilization rate (the amount of your total credit you use vs. the amount of credit you have available to you).
  • Doesn’t lower your average length of credit as significantly as closing your student card. This is likely your oldest credit account and when lenders calculate your credit score, they consider the average age of your credit accounts in that math. The older your accounts are, the better your score could be.
  • You may be able to find a card that offers rewards or benefits your student card does not

Cons:

  • New terms and fees to keep track of.
  • May have trouble managing two accounts.
  • Results in a new credit inquiry, temporarily lowering your score a few points.

Closing your student card and opening a new card. You may decide that you don’t want to keep your student card open anymore, and instead want to close it and open a new card. However, we don’t recommend closing your student card since it hurts your credit score. Most student credit cards don’t charge fees anyway, so you have nothing to lose by keeping your account open.

Pros:

  • Don’t need to manage multiple credit card accounts.

Cons:

  • Lowers your credit score by decreasing your average length of credit history.
  • Lowers your credit score because it will decrease the total amount of credit you have available to you. When that happens, it’s much easier for you wind up with a higher utilization rate. Your utilization rate is the amount of your total credit you use vs. how much you have access to.
  • Results in a new credit inquiry, temporarily lowering your score a few points

What if I have a poor credit score?

A poor credit score is typically considered to be anything under 669. It’s not impossible to qualify for credit cards, but you won’t have as many options as someone with good credit.

Applying for credit cards dings your credit score slightly, though it will bounce back. So, if your score is already less than perfect, applying for a new card or cards that you may have low approval odds for isn’t the best idea for a number of reasons.

Besides temporarily lowering your score for each application you submit, opening a new card lowers the average length of your credit history — which is an important factor in your credit score.

An alternative is to request a credit limit increase on your student card, which can help your credit score by improving your credit utilization (the amount of your total credit you use). Overall, it can be more beneficial to continue using your student card coupled with responsible credit management in order to improve your credit score. Then, when you’ve established good credit, consider applying for a new credit card.

But, if you’re eager to open a new card, check to see if the issuer offers pre-qualification. This allows you to check if you may be approved for a card without harming your credit score and can give you a good idea of where you stand. However, keep in mind pre-qualification is not a guarantee that you’ll be approved for the actual card.

What if I have good or excellent credit?

If you have good or excellent credit, you can apply for a new card or stick with your student card. Having good or excellent credit when you graduate is great, and opens you to the best credit cards on the market. If you want a different card that suits your spending more than your student card, shop around for different cards like rewards and cashback, then apply for the card of your choosing.

What to watch out for when upgrading to a new card

Annual fees. Your student card most likely doesn’t have an annual fee, but many non-student credit cards come with annual fees that can have lows around $39 but highs of $550. Since you’re still relatively new to credit, it may be a good idea to stick with no-annual fee cards until you can justify an annual fee card. Check out the best no annual fee rewards cards here.

APRs. APR stands for Annual Percentage Rate. This is the fee you may have to pay the bank on any overdue balances. Unless you pay your balance in full with each statement month, you’ll get charged your APR on top of whatever you owe. The majority of credit cards have variable APR ranges, and you won’t know yours until after you apply. That means if a card has a 12.24%-24.24% variable APR, you may get the lowest rate, a rate in between or the highest rate — and it can change at any time. Therefore, you should take note of the APR range before you apply. However, if you always pay your bill on time and in full, the APR you receive won’t be a major factor, though it’s something to note in case of an unexpected emergency.

Overspending. When you open a new card post-graduation, you most likely will have more income to report than during college (due to a full-time job). And, as a result, issuers may grant you a higher credit limit than you had with your student card. This increased line of credit may tempt you to overspend, but don’t fall into common debt traps. Try to spend only what you can afford to pay when your statement is due — or better yet, only spend what you can afford to pay immediately.

What should I do with my student card?

Don’t cancel it! If you decide to open a new card, don’t cancel your student card since that will hurt your credit score. Canceling your card lowers your average length of credit history and your utilization rate — two factors that make up 45% of your FICO® Score.

Continue to use it. Don’t put your student card in a drawer and forget about it. Most issuers will close your account if there is no activity for a while. To keep your card active, set up a small recurring payment for a monthly service, like Netflix or Spotify.

What happens to my student card when I graduate?

Many of the top credit card issuers offer a non-student version of their student card with nearly identical terms. Since the two cards are so similar, you may be able to keep the same student card without any action on your part, or your issuer will transfer you to a similar non-student card. Below, we list the student card you may have and what happens when you graduate.

   

Citi ThankYou® Preferred Card for College Students

No action required, card remains the same

Bank of America® Cash Rewards Credit Card for Students

No action required, card remains the same

Bank of America® Travel Rewards Credit Card for Students

No action required, card remains the same

Wells Fargo Cash Back CollegeSM Card

Automatic upgrade to the Wells Fargo Cash Back CollegeSM Card when you graduate and meet the credit requirements.

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