Fine print, Living with credit, Rewards

It’s time to graduate from student card

Sienna Kossman

Holding onto a student credit card almost two years after graduating from college is starting to feel like I’m holding onto a security blanket. It’s familiar and safe, but not particularly useful.

Four years ago, just before my second year of college, my student Visa was the second card to join my humble credit portfolio just over four years ago now. While four years is not a long time to hold a card, it has a high APR (19.80 percent), a measly $500 credit limit and doesn’t boast any reward benefits whatsoever. Sure, it doesn’t have an annual fee, but it’s not really doing anything else for me either.

It's time to graduate from student credit

For those reasons, I think it’s time I completely graduate from college-level credit.

So I called my card issuer to find out what I need to do to let my college card go without hurting my credit profile. After a 10-minute phone call with an overly cheery customer service representative, I learned I have these options:

1. Do nothing.

I may be two years-post graduation, but that won’t affect my status as a college Visa  cardholder. According to the customer service representative, they don’t check college enrollment status or care that I’m an almost-24-year-old ex-student.

Holding the bland student card isn’t hurting anything. I’m not carrying a balance, there’s no annual fee and it’s a positive record on my credit history. Plus, it’s one of my oldest cards, so it’s helping build my length of credit history, which accounts for 15 percent of a FICO score.

But I still want to ditch the card because I could use something that actually rewards me for regular card use. Until I figure out my next step, at least I can rest easy knowing I’m not going to be punished for outgrowing this card.

2. Ask for a card upgrade.

Another option I have is to keep the card open and request a higher credit limit and a lower APR.

Improvements to both features would make this student card more like a general purpose card, and a higher limit would positively impact the credit utilization ratio portion of my credit score (I’m still paying off a pesky balance on a different card). The percentage of available credit that has been borrowed accounts for 30 percent of your FICO score. Plus, I’d be more inclined to use the student card if I didn’t have to fret so much about keeping my balance as low as possible when I carry one, which is what experts recommend. It sure doesn’t take many grocery and fuel purchases to consume half (if not more) of the card’s small $500 credit limit.

However, until I ask for these card improvements I won’t know how much my credit limit could increase or how low my APR could drop. Once I make the requests, the issuer will make a hard credit inquiry. So if I’m not happy with what they have to offer, I’d want to wait a bit before applying for a whole new card to present my best credit score to get the best offer. Even if I do like the new adjustments, the card still won’t have a rewards program.

Not sure this option would entirely fix the situation.

3. Open a new card and close the student card.

My last option — and the one recommended by my college card issuer — is to look for a whole new card that better suits me, apply for it and after a new card is open, close the college Visa.

I kind of figured this is what I would end up doing. After all, it’s not like I have the power to rework the college Visa cardholder agreement to my liking. By opening a new one before closing the old, I won’t risk lowering my credit utilization ratio and score by cutting a line of credit while holding a balance on another.

The customer service rep gave me a few recommendations of more mature cards from the same issuer based on my interest in cash-back programs and travel rewards that don’t take years to accumulate. If I decide to maintain a relationship with this particular issuer, I have some good “adult” credit card options.

But before I settle for a card based on a biased customer service rep recommendation, I’m going to shop around. My goal is to have a new cash-back card in my wallet, and the college Visa shredded in the trash by the end of the month.

That means I have about two weeks to analyze the terms and conditions of cash-back cards and pick the best one for me. I’ve never had one before so I’m entering new credit territory, but that’s what happens when you graduate, so it’s fitting. Wish me luck!

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  • Mace

    This is really terrible advice advocating for 3. Number 1, doing nothing, is your best option. Put the card in your sock drawer and apply for a new credit card that gives you the rewards you are looking for.
    By cancelling the card, you are reducing your utilization, lowering your average age of accounts, and lowering number of accounts (which are all factors that will hurt your credit score). You should always keep your first cards, especially if they come without an annual fee. It will make it easier for you to apply for new cards.