Are Petal Cards Legit?

Petal is a financial technology company behind the following credit cards, issued by WebBank:

• The Petal® 1 Rise Visa® Credit Card.

• The Petal® 1 Visa® Credit Card.

• The Petal® 2 Visa® Credit Card.

Petal cards are legitimate payment methods and credit-building options that report payments to all three major credit bureaus. For all three cards, the terms and conditions may vary for certain cardholders. You're considered for all three Petal cards when you apply, but the card that you qualify for will depend on your creditworthiness and cash flow.

The Petal 1 Rise comes with an annual fee of $59and the ability to earn rewards on purchases made with select merchants. The Petal® 1 Visa® Credit Card, per its name, carries no annual fee for new cardholders, but you can incur other fees with it. This card, too, lets you earn rewards with eligible merchants.

The Petal® 2 Visa® Credit Card, unlike either of the Petal 1 cards, doesn't charge fees of any kind for new cardholders, and it earns up to 1.5% cash back on all eligible purchases with qualifying on-time payments, as well as elevated rewards at select merchants. The ongoing APR is 29.49%-31.49% Variable APR.

Here's more about Petal and its credit cards with answers for frequently asked questions.

» LEARN: Which Petal card is right for you?

Are the Petal cards actual credit cards?

Yes, the Petal cards are actual credit cards.

When did the cards come out?

The first card that was launched was actually the Petal® 2 Visa® Credit Card, in October 2018. However, at the time it was called Petal Visa. It was renamed when the company launched its second card, the Petal® 1 Visa® Credit Card, in October 2020.

Petal® 1 Rise Visa® Credit Card became available in 2023.

How do the Petal cards differ?

The Petal cards have different target audiences, rewards structures, fees and interest rates. But here are the standout differences:

• The Petal® 1 Rise Visa® Credit Card and the Petal® 1 Visa® Credit Card: Earn up to 10% cash back when you shop with certain merchants. Some fees are possible.

• The Petal® 2 Visa® Credit Card: Earn up to 10% back when you shop with certain merchants and up to 1.5% back on all other qualifying purchases, depending on your on-time payments. No fees are charged for new cardholders.

What makes Petal cards different from traditional credit cards?

Petal has an algorithm that analyzes banking history to evaluate income, savings and spending to determine eligibility. As a result, Petal cards don't require a credit history, a security deposit or other requirements that beginners to credit encounter with traditional credit cards. Other requirements for eligibility include being at least 18 years old, U.S. legal residence status, a Social Security number or Individual Taxpayer Identification Number and the ability to make payments from a U.S. bank account.

Are there any red flags to consider?

As compared with more traditional credit cards, newer alternative credit cards from startup fintechs tend to undergo more frequent changes to their terms and conditions. And indeed that's happened with Petal.

After years of charging no annual fee on the Petal® 1 Visa® Credit Card and the Petal® 2 Visa® Credit Card, Petal notified select cardholders in May and June 2023 that the terms of their accounts would be changing. Some holders of the Petal® 1 Visa® Credit Card were told they would start being charged a monthly membership fee of $8. Some holders of the Petal® 2 Visa® Credit Card, meanwhile, were told they would be shifted to a variation of the Petal® 1 Rise Visa® Credit Card, also with an $8 monthly fee but with the same cash-back rewards as the Petal® 2 Visa® Credit Card.

Affected cardholders could opt out of these changes, but doing so would result in an account closure. For people who had set out to build credit with a once-fee-free Petal card, a closed account could disrupt their credit journey because it might lower credit scores.

Petal indicated on its website that these changes applied to select existing cardholders only and not new accounts, but it’s unclear whether new cardholders might have monthly fees charged in the future. As of June 2023, Petal’s website doesn't specifically state that there are any membership fees for the Petal® 1 Visa® Credit Card or Petal® 2 Visa® Credit Card, but it does note that card fees and terms may vary for members acquired prior to 5/16/23.

» MORE: A credit-building road with alternative cards could be bumpy

Are Petal cards good credit cards?

As long as the terms allow for no annual or monthly fees, the Petal® 1 Visa® Credit Card and the Petal® 2 Visa® Credit Card can be good options, especially for those who are beginners to credit. Neither card requires a security deposit, and both offer decent reward rates compared with other cards in their class. But if the terms eventually change again to include a monthly or annual cost, it could be worth exploring other options.

The Petal® 1 Rise Visa® Credit Card is less desirable because of its annual fee, which is higher than some other credit cards for no credit or even bad credit.

What credit score is needed to qualify for Petal credit cards?

The credit score requirement for Petal cards varies depending on the version. You can find out whether you qualify for any of the Petal cards, with no impact to your credit scores, when you use a pre-qualification process via the website.

» MORE: Pre-qualification vs. preapproval: When do I get the card?