Credit card tips for the college graduate

With degree in hand, it's a perfect time to reassess what's in your wallet.

By David Ellis, staff writer

NEW YORK ( -- Owning a credit card used to be a sign you had finally grown up, a trophy reserved for college grads who were putting down their roots in the working world.

But nowadays college kids are old pros at the credit card game.
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Top cards for college grads
Low APR cards
Capital One Platinum Prestige 7.88% variable APR
Pulaski Bank Visa 7.99% fixed APR
Reward cards
Discover More Card 5% cashback at select retailers
Chase Freedom Cash Visa 3% on gas, fast food and groceries
Balance Transfers
Discover Motiva Card 3.9% on transfers till 2010
Citibank Platinum Select MasterCard 0% for a year, no transfer fee, Consumer Action,

Of the 1.5 million students collecting college degrees this spring, an overwhelming majority will have at least one card in their wallet, based on a 2005 study done by student lender Nellie Mae. In that same survey, students in their final year of school carried an average credit card balance of $2,864.

So with diploma in hand and your career about to begin, it might be a good time to realize that what worked in college doesn't necessarily make sense for a working adult.

'You're an adult now...'

If you carried plastic in your wallet during your undergrad days, you may want to consider upgrading from your student credit card to a traditional credit card, said Curtis Arnold, the founder of

Student cards typically carry a higher annual percentage yield, have fewer benefits and a narrower credit line. And let's face it, if you're out on your own, chances are you'll probably have a number of one-time expenses like furnishing your apartment or a wardrobe for your new job, so upping that credit limit may not be all that bad.

While you can stick with the same issuer, it's worth spending some time shopping around for the best deals out there at sites like, and

"Even if you feel comfortable with the issuer realize that it is a very competitive industry and chances are that there is a better offer out there," says Arnold.

But whatever you do, don't cancel the card you carried in college, warns Joseph Ridout, a spokesman for the advocacy group Consumer Action, unless you are paying an annual or inactivity fee. Granted opening another credit card account does open yourself up to spending temptation, but closing out your first card will more than likely ding your credit score. That's because your debt as a percentage of your available credit will go up.

Pick like a pro

With the thousands of card offers out there, it may seem easiest just to pick the first one that comes your way.

But choosing a credit card really requires some self-assessment.

If you plan on carrying a balance, consider a card's introductory offer, but focus on finding the card with the best annual percentage rate so you minimize what you are paying out in finance charges. Issuers like Pulaski Bank, said Ridout, have a very good reputation for low interest rate credit cards.

But if you're a disciplined spender and pay off your balance in full at the end of every month, go for a rewards card that is tailored to your spending habits, said Arnold. For those that spend a lot of time behind the wheel, for example, there's Citibank's Driver's Edge Platinum card, which gives a 6 percent rebate on gas station purchases for the first year and a 3 percent rebate after that.

If you are considering rolling over your balance to a new card, keep in mind that a number of credit card companies recently removed the cap on transfer fees, which means that you could paying a heck of a lot more than in years past.

Luckily there are some cards out there that are pretty favorable for balance transfers. Discover's Motiva card, while not as widely accepted as say Visa or Mastercard, will offer a fixed interest rate of 3.9 percent until 2010 if you transfer your balance by July 1 of this year.

All about your habits

But besides picking the right card, recent grads who are in the nascent stages handling their own finances should really focus on using their card responsibly.

Grads should first and foremost pay their card in full every month and on time, says Bill Hardekopf, CEO of the card rating site

That also means avoiding cash advances, which carry hefty finance charges, forgoing the department store credit cards which carry sky-high interest rates and not spending excessively just to get the rewards offered by the issuer of your card.

"Make sure you do not get behind," says Hardekopf. "As a recent college grad you are being scrutinized a lot more than an adult who might be 40 or 50 (years old) with a 20 to 30 year credit history." Top of page