Petal 2 Credit Card Review: A Fee-Free Credit-Building Alternative
The Bottom Line
4.8
You'll get rewards, plus you'll get simplicity and transparency — not to mention a pass on security deposits and fees.
Rates, fees and offers
Annual fee
$0
Rewards rate
1%-10%
Bonus offer
None
Intro APR
N/A
Ongoing APR
APR: 29.49%-31.49% Variable APR
Foreign transaction fee
0%
More details from Petal
- No annual fee– in fact, no fees of any kind
- Up to 1.5% cash back on unlimited everyday purchases (1% right away increases to 1.25% after 6 monthly on time payments and 1.5% after another 6 monthly on time payments)
- 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
- No security deposit required
- 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
- Card issued by WebBank
Pros and Cons
Pros
No annual fee
Qualify with average credit
No foreign transaction fees
Reports to the three major credit bureaus
Cons
Complicated rewards
No bonus offer
No intro APR offer
Detailed Review
The Petal® 2 Visa® Credit Card may be an ideal option if you want to avoid fees as you start the clock on your credit history. Unlike many starter cards, no security deposit is required, nor will you pay an annual fee to hold the card.
Plus, Petal's issuing bank, WebBank, can look at more than just traditional FICO scores to determine creditworthiness. The bank has an algorithm that can take into account things like income, savings and spending. The card even offers a cash-back rewards program comparable with those on cards for people with good to excellent credit.
So if you're looking for help in building your credit while also earning rewards for your healthy habits, the Petal® 2 Visa® Credit Card seems legit.
In mid-June 2023, some holders of the Petal® 2 Visa® Credit Card were notified by Petal that they were being switched to a different card — a version of the Petal 1 Rise that charges an $8 monthly fee. This came about a month after select cardholders of the Petal® 1 Visa® Credit Card learned that their "No Annual Fee" card would also begin charging them an $8 monthly membership fee. Both cards remain available to new cardholders under their original terms, but it's not clear whether similar switches could occur in the future.
Petal® 2 Visa® Credit Card: Basics
Card type: Starter and alternative.
Annual fee: $0
Security deposit: None.
Rewards: Up to 1.5% cash back on all purchases. Details:
You start by earning 1% cash back on all purchases.
Make six monthly payments on time, and your rewards rate rises to 1.25% cash back.
Make 12 monthly payments on time, and the rate rises to 1.5% cash back.
Plus, up to 10% cash back when you use the card to make purchases with select merchants.
APR: The ongoing APR is 29.49%-31.49% 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 via the app (iPhone and Android) or mobile-optimized website. For instance, 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.
Certain Visa partnership benefits, like auto rental collision insurance, theft coverage and roadside dispatch. Petal also supports Visa Local Offers, a way to earn Uber credits.
Petal® 2 Visa® Credit Card vs. other Petal cards
As the number in its name would suggest, the Petal 2 isn't the only card in the Petal lineup. Petal and WebBank also offer the Petal® 1 Visa® Credit Card and Petal 1 Rise.
You don't really need to worry about "choosing" between the Petal cards; the one you're eligible for will hinge on your credit history or cash flow. (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
You must be a U.S. resident with a valid Social Security number or an individual taxpayer identification number to qualify for the Petal® 2 Visa® Credit Card, but Petal's issuing bank may opt to weigh more than just your credit scores. It can also evaluate creditworthiness with an algorithm that also analyzes your income, savings and spending, according to co-founder and CEO Jason Gross. You’ll have to link your bank account to provide this information. Petal will have read-only access and won't keep your login credentials, according to its website.
No security deposit
Many cards designed for those with limited credit are secured products, meaning they require an upfront cash deposit as collateral, usually at least a few hundred dollars that's equal to your credit limit. You get the deposit back when you close the account (or upgrade it to an unsecured card), but it's money you've got to come up with on the front end. The Petal® 2 Visa® Credit Card has no such requirement.
A solid rewards program
The 1.5% maximum cash-back rate on the Petal® 2 Visa® Credit Card equals the ongoing rate on stalwart cards like the Capital One Quicksilver Cash Rewards Credit Card and the Chase Freedom Unlimited®. You'll need a year of on-time payments to work your way up to the top rate, but even the 1% base rate is better than what you'll get on most starter cards.
No fees
Petal® 2 Visa® Credit Card cardholders pay no fees. That means a $0 annual fee, no late fees, no foreign transaction fees or any other fees. You also won't be charged a penalty APR if you're late on a payment (although paying late can affect your credit scores). The company makes money from merchant transaction fees and interest paid on revolving balances. You can avoid interest charges by paying your bill in full every month. Paying on time will also keep your credit scores in good shape.
Worthy travel companion
The Petal® 2 Visa® Credit Card is a travel-friendly card that can save you money when you’re abroad. It has no foreign transaction fees, which generally range from 1% to 3% per transaction for other credit cards. As a Visa card, it also has broad international acceptance.
Drawbacks and Considerations
No bonus rewards
When you're new to credit, rewards aren't the most important thing — building credit is. But rewards are still a factor, and it's worth weighing your options. Flat-rate cash-back cards like the Petal® 2 Visa® Credit Card are popular because they require minimal effort. But a card that offers bonus cash back in certain categories might be a better fit for your spending. For instance, the Deserve® Pro Mastercard is designed for applicants with established credit, but the company's underwriting process may allow exceptions for those who can meet income and employment verification criteria. The card earns 3% cash back on travel and entertainment and 2% cash back at restaurants, on up to $500 in combined purchases per billing cycle. For all other purchases, it earns 1% back.
No cash advances
Cash advances are short-term loans that you can get at a bank or ATM with your credit card. They can end up costing you dearly in fees and interest, but just know that if you happen to be in need of cash quickly, you won’t be able to draw any against the Petal® 2 Visa® Credit Card. The AvantCard Credit Card — another card designed for thin credit files — does offer cash advances, but again you'll pay for those, and you'll also owe an annual fee of $39.
Permanent minimum payment due date
Petal doesn’t allow you to change your minimum payment due date. If that’s a deal breaker, the Capital One Platinum Secured Credit Card lets you choose a date that works for you. That card does require a security deposit, but for those who qualify, it might accept one as low as $49.
Cost uncertainty
As noted above, a number of Petal cardholders who had been paying no annual fee were notified in mid-2023 that the terms of their account would be changing or that they were being moved to a different card entirely, so they would now be paying fees. As of June 2023, Petal's website said only that "Card fees and terms may vary for members acquired prior to 5/16/23."
You can review NerdWallet's list of the best credit card offers to see how these cards compare with each other.
How To Decide If It's Right For You
The Petal® 2 Visa® Credit Card is a great choice if you're just starting out with credit. You'll get simplicity and transparency: no deposit requirement, no fees and a decent travel companion. Plus, you’ll be incentivized to pay your bill on time to earn rewards, which can help you develop responsible habits for the future.
You'll owe a minimum $200 security deposit upfront, but the card also earns 2% cash back on up to $1,000 in combined spending per quarter at restaurants and gas stations (1% on all other spending). INTRO OFFER: Unlimited Cashback Match – only from Discover. Discover will automatically match all the cash back you’ve earned at the end of your first year! There’s no minimum spending or maximum rewards. Just a dollar-for-dollar match. The annual fee is $0.
Looking For Something Else?
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.
Frequently asked questions
Is the Petal 2 credit card legit?
The Petal® 2 Visa® Credit Card is a legitimate credit card. It’s offered by the personal-finance startup Petal in partnership with WebBank, an FDIC-insured, state-chartered industrial bank based in Utah. It doesn’t have the same requirements as a traditional credit card, though. The issuer can look beyond traditional FICO scores to determine creditworthiness using an algorithm that takes into account things like income, savings and spending. This card accepts applications from anywhere in the United States.
Is the Petal 2 credit card good?
The Petal® 2 Visa® Credit Card is a great choice for credit beginners. The card offers simplicity and transparency: no security deposit requirement, no fees, travel-friendly features and possibly a higher credit limit than you’ll get elsewhere. Plus, you’ll get rewards as an incentive to pay your bill on time.
Is the Petal 2 credit card for bad credit?
The Petal® 2 Visa® Credit Card is not for those whose credit has been damaged. It’s ideal for those with good credit or credit newcomers strong cash flow (income, savings and on-time payment history) that can be measured with banking data.
Does the Petal 2 credit card require a credit check?
Petal does run a "hard" credit check when you formally apply for the Petal® 2 Visa® Credit Card. Hard inquiries can knock points off your credit score. Before you get to that point, however, you go through a pre-approval process that consists of a "soft" check that has no impact on your score. If you're pre-approved, you’re then invited to submit an official application.
Does the Petal 2 credit card give credit increases?
The Petal® 2 Visa® Credit Card may offer credit limit increases if you qualify for them, but Petal does not currently accept cardholder requests for higher limits. You may qualify for an increase in the future by keeping your bank accounts linked and managing the Petal® 2 Visa® Credit Card responsibly, according to Petal’s website.
What credit bureau does the Petal 2 credit card use?
Payments made on the Petal® 2 Visa® Credit Card are reported to the three major credit bureaus: TransUnion, Equifax and Experian.
What’s the difference between the Petal 1 and Petal 2 credit cards?
The Petal® 1 Visa® Credit Card is for those who don't have a strong enough cash flow or credit history to qualify for the Petal® 2 Visa® Credit Card. The $0-annual-fee Petal® 1 Visa® Credit Card charges certain penalty fees — including late fees and returned payment fees — but those can be easily avoided with responsible credit card use. The Petal® 2 Visa® Credit Card skips fees altogether and offers more rewards.
Can you qualify for the Petal 2 credit card with no credit?
You can qualify for the Petal® 2 Visa® Credit Card with no credit as long as you have a strong cash flow that can be demonstrated with banking data. Petal's issuing bank, WebBank, looks beyond traditional FICO scores to determine creditworthiness. The bank uses Petal’s algorithm, which can take into account things like income, savings and spending.
