Expert Q&A

Be wary of getting more credit when student loan comes due


With a $14,000 student loan coming due soon, a reader wonders if getting a new department store credit card was wise. Our expert’s answer: It depends.

The editorial content below is based solely on the objective assessment of our writers and is not driven by advertising dollars. However, we may receive compensation when you click on links to products from our partners. Learn more about our advertising policy.

The content on this page is accurate as of the posting date; however, some of the offers mentioned may have expired. Please see the bank’s website for the most current version of card offers; and please review our list of best credit cards, or use our CardMatch™ tool to find cards matched to your needs.

Question for the expert

Dear Credit Care,
I just applied for a department store credit card and received an approval of $500. I am barely starting my credit. I do have a school loan worth $14,000 coming up, and I wanted to know if it would be a good idea to cancel my department store credit card when I receive it? If so, how bad would this affect my credit score? I forgot to mention I do own a bank-issued credit card and am paying on time as we speak.— Yesenia


Answer for the expert

Dear Yesenia,
I’m glad you wrote. Your credit history can affect much more than your ability to obtain future credit; it can also affect whether you are approved for a lease, hired by a new employer or receive a promotion at work. So, it is important to keep your credit in the best shape it can be at each period of your life. You are just starting to build a credit history and you will want to avoid as many mistakes as you can along the way. Life does happen and may contribute to some bumps in your credit history, but you can do your best to keep any credit damage to a minimum.

The answer to your question of whether to cancel your department store credit card depends on a couple of things. First, how do you plan to use the card? If you have the discipline to use the card only for purchases that you can pay off when the statement arrives, it may make sense to keep it. However, if you believe it is more likely you will end up charging to your $500 limit and carrying a balance from month to month, then it may be better to cancel the card. Department store cards typically have high interest rates, so carrying a balance on one can get expensive quickly.

Second, does the card fit in with your overall financial goals/plan? Many people obtain department store cards at the point of purchase to receive a percentage off of the purchase or to obtain some other incentive. What many fail to realize is the potential impact the card could have on their credit histories. For example, the available credit on the card may push your utilization rate above a comfortable level for other potential creditors. Opening a credit card account should be planned to ensure it fits with your spending habits and your financial situation, not as an impulse when shopping.

With $14,000 in student loan debt, I would encourage you to consider one more important thing when debating whether to obtain additional credit: your current income, or what you project your income will be once you have finished school and begin working. You will want to keep your nonhousing debt to less than 10 percent of your gross income if possible. If you are able to do so, it will be much simpler to qualify for a home mortgage when you are ready to buy a house. I realize that purchasing a home may be well into your future, but keeping your debt-to-income ratio in line will also keep you from ending up with a debt burden that could cause you financial problems and damage your credit.

Handle your credit with care!

See related:How your FICO score is calculated: Payment history, 5 federal laws that protect cardholders, TransUnion asked to limit employer access to credit reports

Meet’s reader Q&A experts

Does a personal finance problem have you worried? Monday through Saturday,’s Q&A experts answer questions from readers. Ask a question, or click on any expert to see their previous answers.




What’s up next?

In Expert Q&A

Rate survey: Credit card APRs unchanged as holidays near

Interest rates on new credit card offers remained unchanged this week as banks took their traditional Thanksgiving break from changing rates, according to the Weekly Credit Card Rate Report

Published: November 23, 2011

See more stories
Credit Card Rate Report Updated: May 23rd, 2019
Cash Back

Questions or comments?

Contact us

Editorial corrections policies

Learn more

Join the Discussion

We encourage an active and insightful conversation among our users. Please help us keep our community civil and respectful. For your safety, do not disclose confidential or personal information such as bank account numbers or social security numbers. Anything you post may be disclosed, published, transmitted or reused.

The editorial content on is not sponsored by any bank or credit card issuer. The journalists in the editorial department are separate from the company’s business operations. The comments posted below are not provided, reviewed or approved by any company mentioned in our editorial content. Additionally, any companies mentioned in the content do not assume responsibility to ensure that all posts and/or questions are answered.