Petal® 1 “No Annual Fee” Visa® Credit Card review: A safe choice for newcomers

The Petal 1 card is exactly as it markets itself — a starter card. Its features are mainly for people without any credit history (it doesn’t even require a Social Security number to apply). With no annual fee or foreign transaction fees, you can avoid most associated costs as long as you pay off your balance on time and in full. As an unsecured card, it also doesn't require any upfront costs.

On the other hand, the Petal 2 Card and its rewards blow the Petal 1 Card out of the water. Similar to Petal 1, it has no annual or foreign transaction fees, but its safety net extends to waiving any late or returned payment fees — which is an uncommon perk that can be a saving grace if you’re new to credit. What’s more, the Petal 2 also doesn’t require a security deposit. If you might carry a balance in an emergency, the Petal 2 has a chance at a better APR as well, depending on your creditworthiness.

The crown jewel of these perks is the Petal 2 Card’s up to 1.5 percent cash back on all eligible purchases, which matches the rewards value of full-fledged flat-rate cash back cards. However, it takes longer to warm up from 1 percent to 1.5 percent. To enjoy up to 1.5 cash back, Petal 2 requires 12 consecutive on-time monthly payments before your earning rate increases — which could be added motivation to help pay your bill on time. 

Even still, upon activation you automatically receive 1 percent back on eligible everyday purchases. As long as you don't overspend, you can enjoy some rewards while building your credit with the Petal 2.

You'll have to put down a security deposit for this card, but the Discover it® Secured Credit Card earns 2 percent cash back at gas stations and restaurants on up to $1,000 in combined purchases each quarter, then 1 percent. Plus, earn unlimited 1 percent cash back on all other purchases. Its rewards advantage is even more pronounced when you consider the card’s first-year cash back match.

Additionally, it offers perhaps the best secured card value if you plan to hop to a full-fledged, unsecured credit card once you’re able. The Discover it® Secured Credit Card performs automatic account reviews as soon as your seventh month to see if you are eligible for an unsecured line of credit. And, unlike many secured cards, you can potentially have a high credit limit if your deposit is on the higher end of its $200 to $2,500 range. 

The Discover it® Secured Credit Card is great for beginners or people with limited credit who want safety measures in place with their card while earning cash back. According to J.D. Power’s 2023 U.S. Credit Card Customer Satisfaction Survey, Discover’s acclaimed credit card customer service ranks second, which could bring added value for credit newbies. However, this card has a few drawbacks, such as its $200 minimum security deposit and its slightly higher variable APR, so make sure you pay off your balance monthly. And if you don’t want money tied up in a security deposit and need an even higher potential credit limit, the Petal 1 Visa card may be a better fit.

This card is suited for people who don’t have a robust credit history and who are working to build up their credit-management skills. People without a credit score are even eligible to apply, and with no security deposit, this card presents few barriers in its application process.

Since this card accepts either a Social Security number or an ITIN, people without a Social Security number, such as international students or immigrants, can still apply — a feature not found on all cards. With an ITIN, you can submit an application for the Petal 1 Card and, if approved, begin your credit journey.

A student or credit-building card’s cost has a large influence on its overall score. 

Students already face a ton of expenses, so extra card costs are best avoided if possible, and people with limited or damaged credit tend often find the cards they can qualify for are much pricier than traditional credit cards designed for people with a good or better credit score. 

We compare a card’s total cost, including any annual fees, account activation fees, monthly fees and more against the total cost of other cards in this category and assign each card a score based on its affordability. We also factor rewards-earning potential into our assessment of a credit-building card’s total cost, subtracting a card’s expected earnings from the sum of its fees. 

To get a sense of a card’s rewards-earning potential, we estimate its average annual rewards rate and average annual earnings based on the most popular spending categories (as covered in the latest Bureau of Labor Statistics consumer spending report). 

However, we use a slightly lower spending assumption ($300 per month or $3,600 per year) to estimate average earnings, assuming students and credit-builders will start out with a lower credit limit, will want to keep credit utilization low and will focus primarily on small purchases they can easily pay off.

Given the many costs students face — from textbooks to laptops — the presence of an introductory APR on purchases or balance transfers also plays a role in a student card’s score.

A card’s APR is also a major factor in its credit-building score. Each card’s average APR is compared against the average APR of other cards in the category, and the cards with lower-than-average APRs receive a higher rating. 

Though high APRs are hard to avoid when you’re just starting out or working on your score, credit-builders should strive for as low an APR as possible since they’re likely to either be new to managing cards or trying to establish better financial habits and avoid falling into debt.

Along with a credit-building card’s cost, our rating system takes into account how easy the card makes it to build credit. To assess this, we evaluate its credit limit potential and minimum deposit requirement.

Unsecured cards with a high starting credit limit and secured cards that let you put down a large deposit and get a matching high credit limit will score the highest according to our “Ease of building credit” rubric and are more likely to appear on our list. 

This is because a high credit limit can make it much easier to keep your credit utilization low, a primary credit-building factor that makes up 30 percent of your FICO credit score. 

Secured cards have a slight advantage in this category since the maximum credit limit on a secured card tends to be much higher than the typical starting credit limit on an unsecured card that’s available with a bad or fair credit score. However, unsecured credit-building cards have the upper hand in another key aspect of building credit: accessibility. 

Cards that carry no or a low deposit requirement can also receive a high score according to our “Ease of building credit” rubric since these cards offer a lower barrier to entry than secured cards that require you to put up hundreds of dollars in an upfront deposit. 

Indeed, some users may prefer to pay a non-refundable $50 annual fee while they work on their credit score than tie up hundreds in a refundable security deposit.

We also evaluate each card’s benefits based on how useful they are for students or someone looking to build a positive credit history and save money on everyday spending. 

We consider the inclusion of a rewards program, student-centric perks and access to your credit score or a credit monitoring service of prime importance, along with the ability to prequalify for the card with only a soft credit pull and a clear path to increase your credit limit or graduate to an unsecured or full-fledged rewards card.

Cards that include these benefits are likely to score higher according to our credit-building card scoring rubric.

You can become eligible for a credit limit increase in as little as six months through the Petal Leap program which is by invite only (terms and conditions apply). If eligible, you'll need to complete certain requirements before being considered for a credit increase.

The Petal 1 card can be used anywhere Visa cards are accepted in the U.S., online and internationally, without any foreign transaction fees.

Your card should arrive within six to 10 business days after approval. If your card hasn’t arrived after 15 business days, contact Petal’s help center for support.