Tips: What happens to your student credit card when you graduate?

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If you are one of millions of college students planning to graduate in May, you may be wondering what to do with your student credit card once you’ve gotten your diploma.

You’ve probably heard the advice that you should never close your oldest credit card. But what happens when your oldest card also happens to be your college student credit card? Below, CNBC Select goes over what you need to know.

What happens to your student card when you graduate?

Student credit cards are just like any other unsecured card except that many of the rewards are student-centric, like the free year of Amazon Prime Student that you get when you sign up for a Deserve® EDU Mastercard for Students. Student cards also tend to have lower credit limits.

Sometimes, when you graduate, your card issuer could reclassify your account so it’s no longer tagged as a student account. But your card will still continue to work.

In a lot of cases, your card issuer will roll your account into the non-student version of your student card. For example, the Citi Rewards+℠ Student Card and the Citi Rewards+℠ Card both earn 2X ThankYou® points at supermarkets and gas stations for the first $6,000 per year and then 1X points thereafter — plus 1X points on all other purchases. It would be a seamless transition from the Citi Rewards+ Student Card to the non-student equivalent.

If you have a student card with an issuer that offers a similar non-student card, you should call to confirm that your card can be switched over, but it may also happen automatically.

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If you have a student card with a smaller card issuer, like the Deserve Edu Mastercard, there may not be an option to switch your account or upgrade, but you can typically still continue using your card without any issues.

Should I get rid of my student credit card?

There’s no real reason to close a credit card unless it has an annual fee that’s not worth the expense. Usually, college student credit cards don’t come with annual fee.

One of the major reasons to open a student card in the first place is that it’s good to start building credit as soon as you can. If you open a card your freshman year, by the time you graduate, you’ll have four years or so of credit history on your report. Canceling your first credit card would ding your credit score because it would remove the oldest card from your report.

If you’re not using the card regularly, but you want to keep the account active, you can simply use the card to pay for a low recurring expense (like your Netflix account) and set up autopay so you don’t forget to pay the bill each month.

Should I ask for a credit limit increase?

If you plan to use your college student credit card for longer, you can ask for a credit limit increase so that you have more flexibility to pay with your card and earn more rewards. However, it’s best to wait to make this move until after you’ve built up a small emergency fund. It doesn’t take long for your expenses to start increasing upon graduation, especially once you move into your first apartment and start to pay off your student loans.

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By prioritizing saving before you ask for a credit line increase, you’re more likely to set yourself up for success. As a rule of thumb, you should be able to pay your balance off in full every month and spend comfortably within your means when you use a credit card for everyday spending.

Should I upgrade my card or get a new one?

If you have a student credit card with a major issuer like Capital One, Bank of America or Citi, you may be able to upgrade your card to a better card that offers cash back, like the Capital One® SavorOne® Cash Rewards Credit Card which delivers 3% cash back on dining and entertainment, 2% at grocery stores and 1% on all other purchases. Your chances of qualifying for a rewards credit card will be better if you have a good or excellent credit score.

If you upgrade, you may not qualify for promotional sign-up bonuses or 0% APR periods, since you’re not technically applying for a new line of credit. If you want to take advantage of a special offer, it is easiest just to apply for a new card.

Right now, the Blue Cash Preferred® Card from American Express provides one of the best opportunities to earn cash back on groceries and streaming entertainment. With the Blue Cash Preferred, you can get 6% cash back on groceries at U.S. supermarkets on up to $6,000 per year in purchases (then 1%), 6% cash back on select U.S. streaming subscriptions, 3% cash back at U.S. gas stations, 3% cash back on transit including taxis/rideshare, parking, tolls, trains, buses and more and 1% cash back on other purchases. You can earn a $250 bonus when you spend $1,000 in purchases in your first 3 months. It also offers 0% APR for the first 12 months on purchases and balance transfers (then 12.99% to 23.99% variable APR). This card has a $95 annual fee.

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