Petal 1 Credit Card Review: A Low-Fee Credit-Building Alternative
The Bottom Line
3.5
There’s no annual fee or security deposit required, and you’ll avoid charges typically found on unsecured cards for bad credit. But if you have good credit or a strong cash flow, a different Petal card has more to offer.
Rates, fees and offers
Annual fee
$0
Rewards rate
2%-10%
Bonus offer
None
Intro APR
N/A
Ongoing APR
APR: 29.49%-34.49% Variable APR
Foreign transaction fee
0%
More details from Petal
- No annual fee, and no security deposit required
- 2%-10% cash back at select local and national merchants
- See if you’re pre-approved in minutes without impacting your credit score
- No Credit Score? No problem. Credit history isn’t required for approval
- Get an automatic credit limit increase after 6 qualifying on time monthly payments. Terms apply
- Build credit alongside hundreds of thousands of Petal card members
- Petal reports to all 3 major credit bureaus
- Pay with ease with a contactless card or on your phone using Apple Pay, Google Pay, or Samsung Pay
- Zero liability fraud coverage
- Card issued by WebBank
Pros and Cons
Pros
No annual fee
Qualify with limited/bad credit
No foreign transaction fees
Reports to the three major credit bureaus
Cons
No bonus offer
No intro APR offer
Detailed Review
The $0-annual-fee Petal® 1 Visa® Credit Card is one of three credit cards offered by Petal — all issued by WebBank — that can facilitate a path to credit for newbies without having to rely solely on traditional FICO scores to determine creditworthiness.
Beyond that, the Petal 1 offers decent features for a starter card, including a report to all three major credit bureaus and the chance to earn rewards. No security deposit is required, and it also doesn't pack the kind of sneaky charges — activation fees, monthly maintenance fees — that can be typical of unsecured cards for bad credit.
But this version is meant for those who don't have a strong enough cash flow or credit history to qualify for Petal's other card, the Petal® 2 Visa® Credit Card. That card offers more robust rewards, not to mention a lower potential APR and a higher possible credit limit. Also, the Petal 2 promises "no fees of any kind," which is not necessarily the case with the Petal 1.
For more information on how the Petal cards compare with each other, see the table below. But here's what to know about the Petal 1.
» MORE: Is the Petal Card legit?
Some cardholders were notified by Petal that they would be charged an $8 monthly membership fee starting in July 2023. The company declined to share the criteria that determined whether a cardholder would have to pay monthly fees. Petal stated that these fees would not apply to new applicants, only to certain existing cardholders, although it's unclear whether new cardholders could also see monthly fees imposed at a later date. As of June 2023, Petal's website did not indicate that there were any membership fees on the Petal 1 card — but it also noted that "Card fees and terms may vary for members acquired prior to 5/16/23."
Petal® 1 Visa® Credit Card: Key features
Card type: Starter and alternative.
Annual fee: $0.
Security deposit: None.
Sign-up bonus: None.
Rewards: Up to 10% cash back when you use the card to make purchases with select merchants.
APR: The ongoing APR is 29.49%-34.49% Variable APR.
Penalty APR: None.
Foreign transaction fee: None.
Other perks:
Payments reported to three major credit bureaus: TransUnion, Equifax and Experian.
Account management and budgeting tools through the app (iPhone and Android) or mobile-optimized website. For example, before making your monthly payment you can see exactly how much it will cost in interest to carry a balance if you don’t pay in full.
Visa partnership benefits that include theft coverage and roadside dispatch. Petal also supports Visa Local Offers, a way to earn Uber credits.
Petal® 1 Visa® Credit Card vs. other Petal cards
In short, your credit history or cash flow will determine which Petal card you qualify for. (Petal’s pre-qualification process will confirm which option, if any, is a match for you.)
Here's how the cards stack up:
Empty Table Header | Petal® 1 Rise Visa® Credit Card | Petal® 1 Visa® Credit Card | Petal® 2 Visa® Credit Card |
|---|---|---|---|
Security deposit | None. | None. | None. |
Fees |
(Card fees and terms may vary for members acquired prior to May 16, 2023.) |
(Card fees and terms may vary for members acquired prior to May 16, 2023.) | None. (Card fees and terms may vary for members acquired prior to May 16, 2023.) |
Sign-up bonus | None. | None. | None. |
Rewards | Up to 10% cash back when you use the card to make purchases with select merchants. | Up to 10% cash back when you use the card to make purchases with select merchants. |
|
APR | The ongoing APR is 29.49%-34.49% Variable. | The ongoing APR is 29.49%-34.49% Variable APR. | The ongoing APR is 29.49%-31.49% Variable APR. |
While any credit card could adjust its rewards, benefits and fee structure at any time, new cards from startup financial technology companies are particularly prone to significant changes as they find their place in the market.
Compare to Other Cards
Benefits and Perks
Evaluation based on multiple factors
To qualify, you must be a U.S. resident with a valid Social Security number or an individual taxpayer identification number. But in this case, the issuing bank can use Petal’s algorithm to look beyond credit scores, analyzing banking data that offers a full picture of how you manage your income, savings and spending. As a result, linking your bank account may be required to get a pre-approval decision. Petal claims on its website that it has read-only access and does not store your login credentials.
No security deposit
Unlike secured credit cards for those with bad or limited credit, the Petal® 1 Visa® Credit Card doesn’t require an upfront deposit as collateral. Also unlike secured cards, which typically base your credit limit on that deposit amount, the Petal® 1 Visa® Credit Card bases your credit limit on your creditworthiness. That spares you from having to pay a few hundred dollars upfront that would otherwise be tied up until you close the account (or upgrade it to an unsecured card).
A chance at rewards
When you're just starting out with credit, earning rewards isn't necessarily a priority; building your credit is. But if you can also earn rewards while doing so, even better. The Petal® 1 Visa® Credit Card offers up to 10% cash back when you use the card to spend with select merchants. These offers are automatically loaded to your Petal account.
Light on fees
The Petal® 1 Visa® Credit Card does charge certain penalty fees — including late fees and returned payment fees — but those can be easily avoided with responsible credit card use (paying your bill on time every month and making sure you have enough funds to cover those payments). It doesn’t, however, charge a late penalty APR. In many ways, this is a step up from some unsecured credit cards that charge annual fees, activation fees, monthly maintenance fees, foreign transaction fees and others.
Travel-friendly features
The Petal® 1 Visa® Credit Card is an excellent travel companion. As noted above, it has no foreign transaction fees, which typically range from 1% to 3% per transaction for other credit cards. And as part of the Visa network, it also has broad international acceptance.
Drawbacks and Considerations
You could earn better rewards
If you can qualify for it, the Petal® 2 Visa® Credit Card offers up to 1.5% in cash back on all purchases — not just rewards with select merchants (terms apply). But this option requires you to have a stronger cash flow or credit history. If you can’t meet that requirement, the $0-annual-fee Discover it® Secured Credit Card can offer 2% cash back at gas stations and restaurants on up to $1,000 in combined purchases each quarter. All other purchases earn 1%. Unlike either Petal card, it also offers a chance to earn a sign-up bonus. But — also unlike the Petal cards — you’ll have to pay a security deposit of at least $200.
Inflexible minimum-due date
Petal doesn’t offer the option to change your minimum payment due date, so you’re locked into the date you're assigned. If you need more flexibility, consider the Capital One Platinum Secured Credit Card. You’ll have to pay a security deposit to qualify, but if you’re eligible you might be able to pay one as low as $49 depending on your creditworthiness. It has a $0 annual fee, but it doesn’t offer rewards.
Some cost uncertainty
As noted above, some cardholders who applied for this "No Annual Fee" card found out later that they would be charged $8 a month, equivalent to a $96 annual fee. Petal has said that this monthly fee does not apply to new accounts — only on select accounts opened before May 16, 2023. But if the rules changed on cardholders before, it's possible they could again.
How To Decide If It's Right For You
The Petal® 1 Visa® Credit Card is a solid choice to begin or continue building credit. You’ll face fewer potential fees than you would with an unsecured credit card for spotty credit, and no fees at all if you pay your bill on time. Plus, you’ll get rewards when you use the card to shop with eligible merchants.
To see how this card stacks up with the competition, see NerdWallet's list of the best credit cards.
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Methodology
NerdWallet reviews credit cards with an eye toward both the quantitative and qualitative features of a card. Quantitative features are those that boil down to dollars and cents, such as fees, interest rates, rewards (including earning rates and redemption values) and the cash value of benefits and perks. Qualitative factors are those that affect how easy or difficult it is for a typical cardholder to get good value from the card. They include such things as the ease of application, simplicity of the rewards structure, the likelihood of using certain features, and whether a card is well-suited to everyday use or is best reserved for specific purchases. Our star ratings serve as a general gauge of how each card compares with others in its class, but star ratings are intended to be just one consideration when a consumer is choosing a credit card. Learn how NerdWallet rates credit cards.
