Petal^® 2 Cash Back, No Fees Visa^® Credit Card Review

The Petal 2 Credit Card, issued by WebBank, is aimed at helping consumers establish and build a credit history through responsible behavior. It’s a solid first credit card option for those with little to no credit history. If you don’t have a credit score, Petal uses what it calls a “Cash Score,” based on your banking and other financial history to determine your eligibility. Furthermore, Petal allows you to see if you’re preapproved for the card with no credit check. Petal only performs a hard pull of your credit once you apply.

There’s a $0 annual fee and the opportunity to earn rewards, which keeps more cash in your bank account. Even better is that there’s no security deposit required, which is rare among cards for people with little or no credit.

But if you have a blemished credit history, this isn’t the card for you. Instead, take a look at the Petal^® 1 No Annual Fee Visa^® Credit Card, which helps consumers rebuild credit.

• No credit history required

  The Petal 2 Credit Card is an ideal beginner credit card, as a credit history isn’t required. Your eligibility may be determined by creating a “Cash Score” with data that’s run through an algorithm. You have to allow read-only access to a bank account, so Petal can analyze factors like transaction history, income, bills paid and other money spent. So if you have limited credit and a great history of managing the money in your checking account, you may qualify for this card.

  However if your credit history is less-than-stellar, consider its sister card, Petal 1 Credit Card, which is specifically aimed at helping consumers rebuild their credit.

• Rewards program

  With the Petal 2 Credit Card you’ll earn 1% cash back on eligible purchases right away, and 2% to 10% cash back at select merchants. Generally beginner credit cards don’t offer rewards at all, so this is a nice feature. Note that the higher rewards rate is only applicable with select merchants, which may not be ones where you typically shop at or available in your area.

• No fees

  Unlike many cards aimed at consumers with limited credit histories, the Petal 2 Credit Card is a very affordable option. The annual fee is $0, there are no late fees and the foreign transaction fee is also none.

  While you won’t pay any fees with the Petal 2 Credit Card, you should pay on time because late payments are still reported to the credit bureaus. Your payment history accounts for 35% of your FICO Score — so when you have a thin credit file, a single missed payment could do significant damage to your credit score.

• Reasonable APR

  When you pay your credit card balance in full each month, you won’t pay any interest. For those times when you can’t pay it off, you’ll be glad to know that the lower range of the Petal 2 Credit Card’s APR is reasonable. There’s a 27.99% - 31.49%, but you should know that there’s no guarantee that you’ll qualify for the lower rate.

• Potentially high credit limit

  The credit limit for Petal 2 Credit Card can range from $300 to $10,000. Typically, a secured credit card gives you a $200 credit limit with a deposit of an equal amount, so an unsecured card with a $300 credit line is quite good. Be sure to keep your credit utilization low, especially when you have a credit limit that’s near the low-end.

• Builds credit history

  Petal reports your credit card activity to the three credit bureaus: Equifax, Experian and TransUnion. You can build up to an excellent credit score with this card if you keep your credit utilization rate low and make on-time payments.

• Low initial rewards rate

  The rewards program is just so-so and takes at least 12 months to achieve the highest rewards potential. Upon card activation, you’ll earn 1% cash back points on eligible purchases. After six on-time payments, your rewards rate will increase to 1.25% and after 12 on-time payments the rewards rate increases to 1.5%.

  You can earn higher cash back rewards on purchases from select merchants, but these are personalized to cardholders and not published.

  Know that there are no-annual-fee cards, like the Discover it^® Secured Credit Card, that offer cash back rewards from day one, with a higher rewards rate in some categories.

• Potentially high APR

  The Petal 2 Credit Card has a 27.99% - 31.49% which is a wide range. Only some cardholders will be eligible for the lowest APR on the lower end, which is a good rate for this type of card.

  However if you’re approved for an APR that’s at the higher end, be prepared for expensive interest charges if you carry a balance from month to month. You can avoid interest altogether if you pay your balance in full each month, which we recommend to help to improve your credit score.

• No sign-up bonus or intro APR

  Without a sign-up bonus or intro APR there’s little incentive to apply for this card aside from building credit. This is typical of cards that are geared toward building credit and shouldn’t be a deal-breaker. In the long-term, building your credit history is more important than getting a one-time bonus or short-term interest rate.

Petal 2 Credit Card vs. Discover it^® Secured Credit Card

If your credit history is damaged, or you’d prefer a potentially more rewarding card for building credit, check out the no-annual-fee Discover it^® Secured Credit Card

Like the Petal 2 Credit Card, you won’t need a credit score to apply. You’ll need to put down a $200 to $2,500 deposit to open the card — but that deposit is fully refundable if you close your account in good standing or are transitioned to an unsecured Discover card.

You’ll earn higher rewards from the start, rather than having to work your way to a higher rewards rate: 2% cash back at Gas Stations and Restaurants on up to $1,000 in combined purchases each quarter. 1% unlimited cash back on all other purchases - automatically. In addition, there’s a unique sign-up bonus for new cardmembers. Discover will match all the cash back you’ve earned at the end of your first year. If you earned $200 in cash back over the year, you’ll receive an additional $200.

After seven months, Discover reviews your account each month to potentially graduate you to an unsecured card and refund your deposit. Discover will look at your behavior across all of your financial accounts to determine your eligibility.

On the downside, the card does carry fees for late and returned payments as well as a high 27.49% Variable APR. However, high APRs and penalty fees are common for secured credit cards, so they shouldn’t be a deal-breaker.

Petal^® 2 Cash Back, No Fees Visa^® Credit Card vs. OpenSky^® Secured Visa^® Credit Card

Like the previously mentioned cards, the OpenSky^® Secured Visa^® Credit Card doesn’t require a credit check to be approved, which makes it a good potential choice if you have poor credit (you will have to provide basic financial information). If approved for the OpenSky^® Secured Visa^® Credit Card, you’ll need to submit a minimum of $200 security deposit and pay a $35 annual fee.

Through responsible use of the OpenSky^® Secured Visa^® Credit Card, you can build your credit history and improve your credit score. It reports to the three major credit bureaus: Equifax, Experian and TransUnion. The OpenSky^® Secured Visa^® Credit Card also offers a path to upgrading to an unsecured card — you’ll be reviewed for the upgrade after six months, and there’s no application or credit check required.

Unlike other secured cards, you’ll get a reasonable 25.14% (variable) APR. Unfortunately, there is no sign-up bonus, intro APR offer or rewards program with the OpenSky^® Secured Visa^® Credit Card.

For those who have a thin credit history, or none at all, the Petal 2 Credit Card could be your gateway to building your credit score. It’s an ideal credit card to build credit with because it has no fees, meaning more cash in your bank account. The mobile app offers you tools to manage your card including making payments and redeeming your rewards.

Since you’ll be able to see if you’re prequalified for this card without hurting your credit score (if any), it’s worth trying especially if you’ve been unsuccessful in getting a credit card with no credit.