About Petal Card
The Petal Card is a soon-to-be-released Visa credit card that doesn’t take credit scores into account and doesn’t charge fees, making it a good fit for consumers who have low or no credit scores.
The company was launched in 2016 by four entrepreneurs who, according to Petal’s website, wanted to create a credit card that solved the problems they were facing as consumers with credit cards.
Here’s an excerpt from Petals’ website: “Despite working and paying bills responsibly, members of our team had trouble qualifying for a decent credit card and establishing credit history. Others on our team struggled with credit card debt and fees...”
The card claims that its customers don’t have to pay any fees and that it’s a better choice over traditional credit cards and even cards designed for people with bad credit.
We wanted to make sure those claims were legit, so we did some pretty thorough research on the card and found pertinent information in the following areas:
- Fees and rates
- Comparison to other cards
- Public opinion
Before we jump into these topics, keep in mind that the card has yet to launch. While we believe that all the information we’re going to analyze is accurate and will match what the card offers when it launches, some of the card’s features, benefits or rates could change.
The Petal Visa’s Fees and Rates
As we mentioned earlier, the Petal Visa has no fees. This is an anomaly in the credit card world, as nearly every credit card we’ve reviewed has fees associated with it: late fees, returned payment fees, cash advance fees, and balance transfer fees.
The motivation behind these fees, Petal claims, is to earn revenue. Their website says that credit card companies make money one of three ways: consumer fees, interest and merchant fees.
All three of these fees affect the consumer. Merchant fees are what companies pay every time someone uses a credit card, and those fees are incorporated into the company’s prices.
According to Petal, they make their money through merchant fees and interest payments. Merchant fees are a pretty lucrative business. In 2016, the four biggest credit card networks (Visa/MasterCard, AmEx, Discover) made more than $55 billion from them.
As far as interest goes, the Petal Visa will have interest rates, at the time of publishing, of between 13.99% and 24.99%.
The card’s credit limit will be between $500 and $10,000.
The low-end APR on this card is actually pretty great compared to some of the other options out there. Here’s a quick chart of the low APRs on some of the bad-credit cards we’ve reviewed:
|Card Name||Lowest APR|
|Discover it Secured||23.74%|
|Total Visa Unsecured||29.99%|
|USAA Secured AmEx||10.65%|
|Credit One Platinum||16.15%|
|First Progress Platinum||9.99%|
As you can see, the Petal’s low APR of 13.99% is among the lowest, but here’s the catch: Petal offers a range of APR’s unlike some of the cards on this list. So, if you have a poor or non-existent financial history, you’ll probably get the highest APR of 24.99%.
Pro tip: The Petal has no annual fee.
The Petal Visa’s Benefits
Based on our research, we’d say the main benefit of the Petal Visa is that they go beyond your credit scores to determine if you can get the card.
That’s great news if you don’t have a credit score or your scores are really low because you only have one or two borrowing accounts or you’ve made some financial mistakes that have dropped your scores.
How do they do it? According to Petal’s website, they tap into alternative credit data: income and bill payment. This data is popular with alternative credit companies – eCredable is one of them – who work to get you credit based on bill payments and other factors rather than your credit scores.
So, if you have a consistent history of on-time payments and you have enough income to cover your monthly expenses, we’d say that you have a good chance of getting the Petal card. It’s not a guarantee, though, so keep that in mind when you apply.
In addition to not taking your credit score into account, you also don’t have to put down a deposit in order to get this card. Some credit cards require that you put down a certain amount of money – usually less than $500 – to open an account and your credit limit is equal to what you put down. These cards are known as “secured” cards because the bank issuing the card gets a security deposit from you.
Based on what we’ve learned about the Petal Visa, we think it has a strong set of benefits if you’re struggling with low or no credit scores and you need a credit card without fees that can help you get back on your feet.
Comparing the Petal Visa to Other Credit Cards for People With Bad Credit Scores
While there’s a lot of good things going on with the Petal Visa, there are some drawbacks when you compare the card to other cards in the bad-credit genre.
For example, the card doesn’t offer rewards. Their explanation is that rewards can be confusing and that Petal will introduce some perks down the road. There are other bad-credit cards out there that have simple rewards programs. The Discover it Secured is a good example.
While you have to put a refundable deposit down, you do get 1% cash back on all your purchases. That cash back is automatically added to your rewards balance. You can redeem that balance as a statement credit. The Discover card charges late fees, but the first one is waived.
As far as APR goes, the USAA Secured Card from American Express has an interest rate a full 3% lower on the low end and around 4% lower on the high end. While the APR is lower, the card has a flaw: a $35 annual fee.
Another card that has a solid APR is the First Progress Platinum Prestige MasterCard, whose 9.99% interest rate is the best we’ve found among cards for people with bad credit. However, like the USAA card, this one’s got an annual fee. Both cards also charge late fees.
Public Opinion of the Petal Visa
This credit card is part of a new movement of financial institutions who are trying to break the mold of previous products and taking a customer-first approach to the way they do business.
While Citi’s Simplicity card has no annual fee or late fees, it doesn’t focus on a bad-credit or no-credit customer based like the Petal. Based on that, we think the card does break the mold, and so do other websites and publications.
The New York Times wrote an article in 2017 titled “New Credit Card Option for Those With Scant Credit Histories,” in which they elaborated on why the card’s focus on consumers with low or no credit scores is unique.
Other sites who focus on credit cards noted that the Petal is a good choice for consumers with little or no credit history.
Our Final Thoughts on the Petal Visa
This credit card, as we noted, is part of a new generation of financial products. As with every new generation, there are a lot of claims about certain products being better than “the way things were done.”
While it’s easy to get caught up in trends and what’s new, credit cards are the kind of thing that you have to analyze number by number because, as the old saying goes, the numbers never lie.
The Petal is, in our researched-based opinion, a one-of-a-kind card. Credit card companies usually give consumers with low or no scores really bad terms. There are annual fees, maintenance fees, and startup fees involved, all so that you can get a card with a low credit limit and high APR.
There is none of that with this card. Whether it’s consumer-friendly or not, Petal says they’ll make their money on merchant fees and interest payments so other fees aren’t necessary.
If you’ve got no credit history or you’ve got low credit scores that keep you from getting credit cards with good terms, we believe that the Petal Visa could be a good fit for you. You don’t have to make a deposit, there are no fees and the card functions just like a normal credit card.
But let’s say you’re still unconvinced about this card; maybe you like to wait out new products until they’ve been battle-tested with real consumers. Should you fall into this category, read through our guide to five of the best credit cards for people with low or no credit scores.
We list five credit cards – some of which we’ve mentioned in this article – and provide pros and cons for each one.