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For people with limited credit histories, qualifying for a credit card can be a Catch-22: It’s hard to prove that you’re creditworthy without access to a line of credit, and you can’t get a line of credit without showing that you’re creditworthy.
Petal is a nontraditional option for people looking to build credit. By analyzing an applicant’s other financial factors in addition to credit scores, the company aims to provide a credit card that’s accessible to people who may not otherwise qualify for one.
Petal® Visa® Credit Card: Basics and benefits
You must be a U.S. resident with a valid Social Security number or an individual taxpayer identification number to qualify for the Petal® Visa® Credit Card. As of 2017, there’s a waiting list to apply.
Here’s what applicants can expect:
Evaluation based on multiple factors. For people with zero or limited credit history, Petal may be a good alternative to other cards because the issuer doesn’t look only at credit scores. It also uses an underwriting model that evaluates your income and liabilities to help determine creditworthiness.
A report to three credit bureaus. Petal reports to all three major credit bureaus, though it says it is carefully monitoring the recent Equifax data breach to ensure customer information isn’t at risk.
No deposit. The Petal® Visa® Credit Card is an unsecured card, which means the issuer doesn’t require customers to provide cash collateral to get a credit line.
No fees. Petal® Visa® Credit Card cardholders will owe no annual fee, no late fees, no overdraft fees and no foreign transaction fees. The issuer charges interest only if the cardholder doesn’t pay the balance in full every month; it doesn’t charge interest on new purchases. Petal makes money off merchant transaction fees and interest paid on revolving balances.
Reasonable APR. The ongoing APR is 12.99% - 23.99% Variable APR, which isn’t out of line for a card that requires no security deposit and no credit history. And as with any credit card, if you pay your bill in full every month, you’ll never be charged interest anyway.
Wide credit limit range. Petal says customers can get a line of credit of $500 to $10,000.
A card that can be used anywhere Visa is accepted. This includes domestic, international, online and in-person transactions. The card also offers some benefits through its partnership with Visa, such as auto rental collision damage or theft coverage and roadside dispatch.
Access to online tracking tools. Customers can keep track of their spending and balances with the Petal desktop site and mobile app. The site also calculates and displays the interest customers will be charged on next month’s statement if they don’t pay their balance in full.
Things to consider
For certain applicants, the Petal® Visa® Credit Card has plenty of upsides. But be aware of a few potential drawbacks:
No rewards program. Many credit cards for low or no credit don’t offer any rewards, so Petal isn’t unique in this regard. But just know that if you’re looking for cash back or points, the Petal® Visa® Credit Card doesn’t currently offer any.
No balance transfers or ATM cash advances. If you have no credit history, you may not have any existing balances to transfer; regardless, it’s not an option with this card. Ditto for cash advances. Those can end up costing you in fees and interest, but if you’re in need of cash quickly, you won’t be able to draw any against the Petal® Visa® Credit Card.
Is the Petal® Visa® Credit Card right for you?
If you lack a credit history and want to build one without putting down a security deposit, Petal could be a good option. The Petal Visa can also help you avoid complicated and potentially costly fees, as long as you pay your balance in full each month.