Should you graduate from a student credit card to a regular card?

Congratulations – you’ve graduated from college. Is it time for your student credit card to graduate to a regular one, too?

It’s not a bad idea to consider, experts say. But like everything else in your new financial life, approach this change cautiously and thoughtfully to achieve the best results. You do have a few options to consider: keep the card and continue using it, cancel the card or request an upgrade from the same issuing bank.

Here’s everything you need to know about graduating from a student card to a regular rewards credit card while also protecting your credit.

1. Find out what happens to your student card when you graduate

If you have a student credit card, a couple of things might happen when you graduate. The most common is the lender will let you keep your student card open as long as you want. If your student card has everything you are looking for in a credit card and you keep using it, you may very well just decide to keep it.

Another possibility is your lender will automatically reclassify your student card to a similar credit card. For example, if you have the Discover it® Student Cash Back, Discover will reclassify your account so it’s not considered a student card anymore.

The most important thing is to contact your credit card company and see what options are available to you. That will help you make an informed decision.

2. Keep your student credit card open

Whatever you do, don’t start by canceling your student credit card.

“That’s a mistake,” said Beverly Harzog, consumer finance analyst and credit card expert. “This is your first card. You’re young. You’ve got a very short credit history at this point, so you don’t want to cut off the only credit you might have.”

Your student card usage shows potential lenders of all kinds whether you pay your bills and how you do so – in full or partially and on time or late. It also gives you a credit limit, which, whatever its size, is like the first step on a flight of stairs; if you cancel it, the next card issuer is not likely to begin at the second step but rather start back again at the first.

If you close your student credit card and “that’s the only form of credit that you have,” said Lewis Goldman, chief marketing officer at LendKey Technologies, “you’re not proving, at this current moment, that you can pay somebody back.”

Lenders also look at a potential cardholder’s credit utilization ratio. This is the amount of credit a customer is currently using as a percentage of their total credit available. It’s also the second most important factor in credit scoring calculations after making on-time payments. If you close the card, you’ll eliminate this credit scoring element.

If you have only one form of credit – for example, a student credit card with a credit limit of $1,000 and a $200 balance – your credit utilization would be 20%. Card issuers like to see credit utilization ratios of 30% or lower.

“That’s the gold standard,” said Harzog, who also recommends that students keep theirs at 10% or lower. “That part of the FICO score … it can give you a little boost,” she said.

But if you cancel your student card before getting another one, you might have no credit utilization at all. One way students or anyone with a low credit limit can head off the credit utilization problem is to not let the card’s balance rise.

“Try and pay off your credit card balance in full every month and, preferably, every week,” said J.R. Duren, credit card analyst at consumer reviews site HighYa.com. That way, he said, “your scores will stay as high as they can be.”

3. Ask your issuer to upgrade your student card

Often, a lender will contact you before you even get around to considering a card product change.

LendKey’s Goldman, who used to work at Citibank, recalled how often the bank would reach out to recent graduates to see if they wanted to swap out their student cards for a regular one.

“A lot of times, the card company will want to graduate you,” Goldman said. “It’s a continuation of the card, just changing the kind of card it is.”

If you have a Capital One SavorOne Student Cash Rewards Credit Card, you might try to upgrade to the Capital One SavorOne Cash Rewards Credit Card to get a similar card with mostly the same benefits.

4. Graduate your student card yourself

If your card issuer doesn’t get in touch with you, wait a few months before you make that call yourself. In the meantime, you can focus on getting a job and figuring out what you’ll spend on rent, food and other wants and needs.

“I’d say you should consider getting a new card once you create a budget based on your expenses and your income,” Duren said. It’s easy to assume your new income stretches farther than it actually does.

Once you understand your new financial reality, you’re better equipped to step up to the higher credit limits that come with regular cards, he explained.

Goldman also advised keeping an eye on your credit score. “I wouldn’t apply until you have a score of 700 or higher,” he said.

Duren recommended subscribing to a free credit reporting service as well. “You can keep an eye on any suspicious accounts that pop up,” he said. “Verify that all the information on your accounts is correct and take action if your score suddenly drops.”

If you are still limited to a student card three to six months after graduating, it’s not a bad time to phone your card issuer. “Tell them, ‘Look, I’ve just graduated,’” Goldman said. “’I want to upgrade my credit card, and I’m looking at some options.’”

5. Know what to look for in a new card

You’ll be best served at this point if you know what you want in your next card, Goldman noted. Are you after cash back? Airline rewards points? The lowest possible interest rate? Then you can narrow your search for a card tailored to your needs.

If you’re wondering what you’ll be eligible for, you can also ask the bank to do a soft pull on your credit, Goldman said. It’s only a preliminary look, but it will give you a sense of what type of card you may be eligible for. Unlike a hard pull, it doesn’t go on your credit report. Too many hard inquiries into your credit can lower your score.

If the bank is reluctant to give you what you want, this is the time to sell yourself, Harzog said.

A low credit utilization ratio, well-paying job and bills consistently paid in full and on time are the kinds of things that card issuers like to see. It shows them you’re a responsible borrower and are likely to pay your bills on time and in full.

“Anything that makes you look hardworking and responsible – that’s all in your favor,” she said.

If, however, you haven’t yet nailed down that dream job or have made some financial mistakes in college, then be prepared to be flexible.

See if a parent is willing to add you as an authorized user to one of their cards with an excellent payment history and low balance, Goldman said. The history of that card will then appear on your credit report and boost your score. Or consider talking with your bank about increasing your credit limit, which will help you lower your credit utilization and improve your credit score.

Then, once your financial situation has improved, you can go back to your bank and discuss options for upgrading to an unsecured card once again.

6. Consider the benefits of graduating to a regular card

There’s no reason to not switch your student card to a regular points or cash back credit card if you can qualify for one, experts said.

For example, student cards usually have higher interest rates and lower credit limits than regular cards, so there’s a built-in advantage to swapping them out once your credit scores are in good shape.

There’s also potential for better rewards, benefits and other card-related perks when you graduate from a student card to a standard rewards credit card. You may even qualify for a credit card with a welcome bonus, meaning you’ll be rewarded for your spending – so long as you meet the spending requirements of the bonus.

Further, there are advantages if you’re graduating from a student card to a rewards card with the same issuer, like going from the Bank of America® Customized Cash Rewards for Students* to the Bank of America® Customized Cash Rewards credit card. You may have a better chance of approval if you have a demonstrated history of using your student card responsibly.

7. Learn more about credit now to ensure financial well-being later

Graduating from a student card to a rewards card is an important step in your financial journey, but it doesn’t stop there. In order to set yourself up for a successful financial future (think staying out of credit card debt, paying off your student loans, buying a house and other big moves), it’s crucial that you understand how credit works and how to preserve and improve your credit score. (In fact, employers may even request to see your credit file in order to verify your identity, for example.)

Be sure you know what your credit score is and what range it falls within (poor, fair, good or excellent). Check your score regularly. There are plenty of free ways to do so, first and foremost through the three major credit bureaus – Experian, Equifax and TransUnion. You can request your free credit report once a week from each credit bureau via AnnualCreditReport.com through April 2022. Further, your current student card issuer may offer free credit reporting, such as Capital One CreditWise and Discover Credit Scorecard. (Note that checking your credit score will not lower it.)

Your student card account may even provide resources for learning more about credit, good financial habits and everything in between. Having a solid understanding of these topics early on will hopefully ensure that you responsibly manage your finances in the future. It also leaves less room for uneducated financial mistakes.

Bottom line

Before applying for more cards, see if your current bank will let you transition from a student card to a regular rewards card. Down the road, if you want to add another card to your wallet, look around for one that complements your existing card. “Maybe you had a student card that had no perks,” Harzog said. “Or it had minimum rewards or cash back, and you’d like to get something with airline rewards or something like that.”

Take your time and think about what you need. When it comes to credit cards, there’s no one-size-fits-all solution. “It’s different for every person,” Harzog said.

The information about the Bank of America Customized Cash Rewards for Students here has been collected independently by CreditCards.com. The card details have not been reviewed or approved by the issuer.