For cardholders looking to build credit, both the Petal 1 “No Annual Fee” Visa Credit Card and Petal 2 “Cash Back, No Fees” Visa Credit Card can make great tools. These cards are geared toward users who want to improve their credit, since they have a built-in path to higher credit limits and use your banking information to assess your creditworthiness beyond just your credit score.
But depending on your goals and your personal financial situation, one Petal card may be a better fit for you than the other. If you’re considering a Petal credit card, here’s what you need to know about the different benefits of each, and how to pick the right one for you.
Rewards and Benefits Comparison
Both Petal credit cards earn anywhere from 2% to 10% on purchases made with select merchants using Petal Offers. These offers are automatically added to your account, and the merchants can vary. Neither card offers a cash welcome bonus.
The Petal 2 Visa Credit Card offers more rewards on every purchase. You’ll automatically earn 1% back on everything you buy, and as you use your card responsibly, you can increase your rewards rate. After six months of on-time payments, you’ll earn 1.25% cash back. And after 12 months of on-time payments, you can get 1.5% back on every purchase. There’s no limit to the amount of rewards you can earn.
You can redeem cash back earned on either Petal card for a statement credit, check, or transfer into your bank account.
There are some other credit-building benefits between these two cards. The Petal 2 Visa Credit Card has a maximum credit limit of $10,000, whereas the Petal 1 Visa Credit Card caps its credit limit at $5,000, though your starting limit on both cards may be as low as $300. After approval, you can also work toward a higher credit limit by making six months of on-time payments.
Pro Tip
You can check which Petal card you’re eligible for by submitting an application for pre-approval through Petal’s website online, with no impact to your credit score.
This can be especially useful if you start out with one of the lower credit limits on either card. Even if you don’t spend up to the limit, a higher credit line can help you improve your credit score by keeping your credit utilization ratio – the amount of credit available to you compared to the amount you use – within a healthy range below 30%.
One of the most valuable perks of a Petal card for anyone looking to build credit is Petal’s alternative approval process. When you apply for a Petal Card, the issuer may use bank account information you provide to give you a Cash Score. Rather than using your credit score alone, this score helps determine your creditworthiness based on factors like your income, savings, and spending history.
And while the Petal 2 Card may offer more opportunity for rewards, the biggest benefit of the Petal 1 Visa Credit Card is its accessibility to people with low credit scores and individuals who have made credit mistakes in the past. Even if you don’t qualify for Petal 2 based on your Cash Score, you may still be eligible to open a Petal 1 Card.
Neither Petal 1 nor Petal 2 comes with an introductory APR for purchases or balance transfers, and they both charge relatively high APRs. However, the Petal 2 Visa Credit Card has a slightly lower variable interest rate range of % to %. Meanwhile, the Petal 1 Visa Credit Card charges a variable APR of % to %.
Carrying a revolving balance on your account with an APR within either range could become costly in a hurry. To avoid high interest debt and begin improving your credit, charge only what you can afford to pay off in full and on time each month.
Both the Petal 1 Visa Credit Card and the Petal 2 Visa Credit Card charge no annual fees or foreign transaction fees.
If you’re approved for Petal 2, you also won’t pay late payment fees and returned payment fees. However, these fees do apply for Petal 1 cardholders. With Petal 1, you’ll pay up to $40 for late payments and $29 for returned payments.