Petal® 2 "Cash Back, No Fees" Visa® Credit Card review

When you’re looking to build your credit, you’ll likely only be approved for certain credit building cards, many of which offer low credit limits and require a deposit or annual fee. You’ll also usually miss out on the bonuses and perks of more lucrative rewards cards.

That’s what makes the Petal 2 “Cash Back, No Fees” Visa Credit Card such a great option. Not only can you build credit and earn cash back without dealing with the fees and limitations of other starter cards, but the Petal 2 also offers a unique cash back structure and money-management tools that encourage you to pay on time and build good financial habits in the process.

However, if you have trouble keeping up with due dates or are prone to overspending, the Petal 2 may not be the best fit, as the tradeoff for its rewards and simplicity may be a higher APR than some other credit cards.

A unique cash back reward structure

Unlike many credit building cards, which generally offer little in the way of rewards, the Petal 2 boasts a unique cash back program that incentivizes consistent on-time, monthly payments.

To start, you’ll earn 1 percent cash back on eligible purchases. This rate then increases to 1.25 percent on eligible purchases after you make six on-time, monthly payments, and to 1.5 percent on eligible purchases after 12 on-time, monthly payments, which is not far-off from the base rate of many of the best cash back cards available. You may also have the opportunity to earn 2 percent – 10 percent cash back at select merchants.

No deposit required

The Petal 2 is unsecured and does not require any sort of deposit.

No fees of any kind

You won’t be charged any fees with the Petal 2: no annual fee, no late fees, no foreign transaction fees. And as long as you pay your entire new balance by the due date each month, you will not pay any interest charges.

Keep in mind, however, that unpaid bills could lead to your card being suspended. Petal also reports to the three major credit bureaus, so be sure to pay at least the minimum each month to avoid negatively impacting your credit score.

Credit scores are just one factor

With the Petal 2, more than just your credit score can be evaluated for approval and interest rates. While a credit report, if available, is used in the decision-making process, it isn’t the only factor considered.

If an approval decision can’t be made based on your credit report, you’ll be asked to link your bank account. This allows an algorithm to evaluate other financial information like your income and bill payment history. While this may raise some privacy concerns, it could provide an option for applicants with limited credit histories who need alternative credit data to prove their creditworthiness.

Credit limit up to $10,000

The Petal 2 has a much higher upper credit limit than most starter cards. Since the approval process can take into account your income and spending along with your credit score, you could qualify for a higher limit than you would with most credit building cards, without putting down a deposit.

A higher credit limit offers flexibility and could also help to keep your credit utilization ratio low, which could further improve your financial reputation.

Unlike some cards, though, the Petal 2 does not allow you to increase your credit limit over time. Your credit limit is set when you apply, and requests for credit line adjustments are not currently accepted.

Watch out for the high APR

The unique perks on the Petal 2 come with a price, namely an APR of 18.24% to 32.24% (variable).

The high end is quite a bit higher than the average APR, and high even compared to many other credit building cards. If you have any doubt about your ability to pay off your balance by the due date each month, you might be better off opting for a secured credit card with a lower APR.

Redeeming cash back

Cash back redemption is pretty simple with the Petal 2. As long as your account is in good standing, you can redeem your cash back as a statement credit at any time. You can also request a check if you redeem at least $20.

Your cash back won’t expire as long as your Petal account is open and in good standing, but if your monthly payment is overdue or your balance is less than the cash back you intend to redeem, then you will not be able to redeem your cash back. Additionally, if your account is closed or suspended, you may lose any cash back you haven’t redeemed.

Money-Management tools

As part of its effort to help people build their credit history, Petal offers cardholders some powerful money-management tools in its app. The sleekly designed Petal app shows your account balance, spending, payment due date and exactly how much it will cost you in dollars to carry a balance. Having this information available at a glance could be very useful for someone who’s new to credit cards or hoping to build good financial habits.

Approval odds

You must have a permanent residence in the U.S.,  Social Security Number or Individual Taxpayer Identification Number (ITIN) and be at least 18 years old (19 or older if you reside in Alabama or Nebraska) to be approved for the Petal 2. The approval decision is based on a variety of factors, including your credit score and, if requested, your income, bill payment history and other financial details.

You can check if you’re preapproved on Petal’s website without impacting your credit score. While the Petal 2 is geared toward those with limited credit histories, a history of missed payments or delinquency will negatively impact your preapproval decision, so you may want to consider alternatives if you’re looking for a card for someone with bad credit.

Why get the Petal 2?

• You have a limited credit history, but want the flexibility of an unsecured card.
• You have an average credit score, but good bill payment history and income.
• You don’t want to put down a deposit.
• You’d like a chance at a higher credit limit than what’s offered by most credit building cards.
• You’re confident in your ability to pay off your balance in full each month.

How to use the Petal 2:

• Pay your bill on-time every month to secure the maximum cash back rate.
• Pay off your entire new balance by the due date every month to avoid the card’s high APR.
• Use the Petal app to build good financial habits by monitoring your spending, due dates and interest charges.
• Take advantage of the card’s free credit score tracking by regularly monitoring your credit.

Is the Petal 2 worth it?

If you’re a responsible spender with a limited credit history, there’s not much downside to the Petal 2. Given that most credit building cards offer little to no rewards, require deposits and fees or have low credit limits, the Petal 2 is an attractive option.  As long as you commit to paying your balance in full by the due date each month, this card could be a great first step on the path to building your credit.

The Petal® 2 “Cash Back, No Fees” Visa® Credit Card is issued by WebBank

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