Card Review: Petal Visa® Credit Card – A New Way to Build Credit
It’s a classic Catch-22: you need a credit history to get approved for a credit card, but need a credit card to establish your credit history. In the past, you may have had to rely on a secured credit card to start your credit journey, but now there’s Petal.
The Petal Visa® Credit Card is a great alternative to secured cards as a way to build credit. It features no credit score requirements, security deposits, or fees of any type. Plus, the relatively new entry to the credit card field now offers a modest rewards program that improves as you pay your bills on time.
The Petal Visa® Credit Card‘s unique application process assesses risk differently than other card issuers. You’ll fill out a standard application form, but you may also provide a link to your bank accounts (and any credit accounts) as part of the process. Petal’s algorithm can go beyond a credit score (which you may not even have) by analyzing your income and spending patterns, as well as your payment history, to determine your qualifications.
Because the issuer is confident of your creditworthiness at approval, Petal offers unusually high credit limits for starter cards. Credit limits range from $500 to a staggering $10,000.
The Petal Visa® Credit Card offers 1% cash back on all purchases - right away. You can earn more rewards by continuing to use credit responsibly – Petal will raise your rewards rate to 1.25% cash back on all purchases after making 6 on-time payments and 1.5% after making 12 on-time payments.
The Petal Visa® Credit Card‘s APR is a reasonable 15.24 - 26.24% based on creditworthiness. What really sets it apart from other starter cards is that it charges no fees at all, including no late fee, international fee, annual fee, or any-other-kind-of-fee, fee. The lack of foreign transaction fees, combined with higher limits and the worldwide acceptance of Visa cards, makes this an excellent choice for young Americans traveling abroad. Since it’s a basic card for purchases, cash advance and balance transfer fees aren’t applicable, as the card doesn’t allow either.
Cash Back Rewards for Responsible Use – The standard 1% cash back rate on all purchases will be increased to 1.25% cash back after making 6 on-time payments and 1.5% after making 12 on-time payments. Late payments won’t cause you to lose a higher cash back rate that you’ve already qualified for. So, if you made six on-time payments and reached the 1.25% cash back tier but then make a late payment, your cash back rate will remain 1.25%. However, any month in which you’ve missed a payment won’t count towards reaching the next rewards tier. To top it off, the Petal Visa® Credit Card has no cap on cash back.
No Credit History Required – By analyzing your banking activity and financial habits, Petal can reward your positive activity with a card even if you have no activity that’s reportable to the credit reporting agencies. You can avoid security deposits and other typical starter card annoyances.
No Fees – Petal is a truly no-fee card. That’s hard to find in any credit card, much less a starter card. The credit card will increase your rewards when you regularly pay on time, but it won’t impose a late fee if you don’t.
Decent Credit Limits – Starter cards often have low credit limits dictated by a deposit. Petal’s minimum credit limit is $500 – well above the maximum of some starter cards – and the credit limit can be as high as $10,000 if your income and banking history can support it.
Helpful Money Management App – Petal’s corresponding app helps you comprehensively manage your money and track spending, thanks to its connection to all of your financial accounts.
May Require Bank Account Access – If you have general concerns about linking your bank account, you may prefer a traditional secured card. Your bank account must also provide a positive picture. If your income is erratic or you show patterns of overdrafts or missed payments, Petal is unlikely to approve you (and you should reconsider whether you’re ready for a credit card at all).
Low Rewards Rate – There are many cards that offer higher rewards, but the tradeoff will be higher credit requirements, various fees, and/or security deposits. The rewards program was added to the card in May of 2019. To be honest, it’s hard to rank this as a negative, as a small rewards program is better than none at all.
The Petal Visa® Credit Card is targeted for people who handle their money responsibly but don’t have a sufficient credit history to qualify for traditional credit cards. Petal offers an unbeatable combination of high credit limits ($500-$10,000), tiered cash back rewards, no fees of any kind, and a helpful app that helps you manage all of your financial accounts.
If you have a sufficient credit history, you can find better deals with standard card offers that include higher rewards and perks. For those who are new to credit and have an adequate income with few blemishes in their money management history, the Petal card makes an excellent entry to the world of credit.