Best for unsecured credit-building
Petal® 1 "No Annual Fee" Visa® Credit Card
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An unsecured credit card option for people with limited credit history.
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It can be tough figuring out where to start on a credit-building journey, especially for people with limited credit history. If you’re not a student, but ready for an unsecured card, the Petal 1 is a low-cost, low-risk option.
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If you’re brand-new to the world of credit scores but secured credit cards carry too many upfront costs, the Petal 1 “No Annual Fee” Visa Credit Card can help. Instead of just looking at your credit score, the Petal 1 Card evaluates other financial factors like your income and bill payment behavior. With the Petal 1 card, you can earn a credit limit increase in as little as six months.
The Petal 1 Card’s easy-to-use experience makes it a solid unsecured alternative until you build your credit to the next level. It’s even available to international students, since you can use an International Taxpayer Identification Number (ITIN) instead of a Social Security number to apply. Still, you may be able to find more consistent rewards and better benefits with other starter cards — even with limited credit history — if you’re willing to settle for certain secured cards or if you qualify for a student card.
Outside of student cards, the Petal 1 card could be the next-best, low-cost, unsecured option if your financial history can’t bump you up to the Petal® 2 “Cash Back, No Fees” Visa® Credit Card.
No annual fee and no foreign transaction fees make it easier to learn the credit-building ropes without additional charges.
The rates and fees are surprisingly minimal for an unsecured credit card available to consumers with limited credit history.
The $300 to $5,000 credit limit can start and extend higher than some rival cards’ limits.
No consistent ongoing rewards outside the Petal Perks program, unlike some competing cards that offer full cash back programs.
This card poses a high APR and has late payment fees, unlike its successor card, the Petal 2.
No added benefits other than what’s standard for Visa and credit-building cards, reducing its long-term value.
The Petal 1 card doesn’t provide a welcome offer, which is relatively common among credit cards for people with limited credit history.
The main focus of the Petal 1 Visa is providing a stepping stone to a better card after proving your merit as a cardholder and increasing your credit score. However, since a credit-building card is a short-term tool to begin with, a card with a welcome offer can provide much more value if you don’t plan to use it as your primary credit card for more than three years or so (based on your spending).
Very few credit-building cards deliver welcome offers, but the Discover it® Student Cash Back is a notable example — matching all cash back earned at the end of your first year with the card.
The Petal 1 credit card doesn’t have its own consistent cash back program, but the Petal Perks program may occasionally earn you cash back at select merchants.
The Petal Perks program works like Amex Offers and other card-linked offer programs, except you’re automatically enrolled into each Petal Perks offer without activation required. You can earn anywhere from 2 percent to 10 percent rewards on eligible purchases at participating retailers in the form of “cash back points.”
Earning rewards this way can be hit-or-miss since each offer depends on its own terms and time frame. If you like earning consistent rewards, you should switch to a more effective cash back card once you’ve built credit with your card. You can also look for a secured card with a cash back program instead, for a full rewards experience before upgrading cards. For example, the Capital One Quicksilver Secured Cash Rewards Credit Card earns unlimited 1.5 percent cash back on every purchase from the moment you activate your card.
You can redeem your cash back for a statement credit of any amount. You can also redeem for a check or a direct deposit, as long as you have at least $20 in earnings for both options. Since these are the typical redemption options at this credit level, it's a good way to start learning about cash back without confusing stipulations.
Other than the Petal Perks program, the Petal 1 Card doesn’t carry many additional benefits, which is common for starter cards. When you build more credit history and establish good habits, you can start to upgrade to cards with better features, such as higher cash back rates and rewards credit cards.
However, the Petal 1 Card does offer traditional Visa perks, including:
However, Visa benefits can vary from card to card, so contact your issuer for the full benefits list.
These points work like cash back since they’re earned as a percentage of a dollar. Therefore, each cash back point is worth 1 cent.
Establishing a credit history is crucial in your overall financial health as many lenders use credit scores to determine your eligibility for products like mortgages and car loans. Plus, a higher credit score can increase your chances of approval when applying for a credit card.
One of the Petal 1 Card’s biggest draws is that it reports to all three major credit bureaus — Equifax, TransUnion and Experian. You should start seeing the new account on your credit reports one to two months after it’s opened. This contributes to your credit mix and allows the cardholder to establish a positive payment history when paying your bill on time. Further, Petal’s mobile app allows cardholders the opportunity to manage their money, track spending and automate bill payments to help avoid falling behind.
On top of mobile account management features and bureau reporting, the Petal 1 Card provides a $300 to $5,000 initial credit limit, which is great for an unsecured card in its class. If you have access to up to $5,000 for your credit limit, it can lower your credit utilization ratio and boost your credit score if you keep a low balance.
The Petal 1 Card is an overall low-fee card compared to other credit cards for people with limited credit history. This credit card carries no annual fee, no foreign transaction fees and a respectable APR that can be lower than competing cards’ rates. No annual fee means no recurring cost for cardholders to manage, and you can more affordably take the card abroad since there are no foreign transaction fees.
Jumping into the world of credit can be nerve-racking for beginners. Luckily, issuers are creating more cards designed for new credit users. But which option is best for you? For newbies learning the basics, the Petal 1 Visa is a relatively low-cost option. However, you may want to consider different credit cards if you want more substantial value.
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The Petal 1 card is exactly as it markets itself — a starter card. Its features are mainly aimed at people without any credit history (it doesn’t even require a Social Security number to apply). There’s no annual fee or foreign transaction fees, so you can avoid most associated costs as long as you pay off your balance on time and in full. This card is also unsecured, which means you don’t have to tie up your money in a security deposit like you would with a secured credit card. The lowest credit line it offers is $300 and the highest is $5,000, both of which are competitive credit limits for this type of card. While it doesn’t have much short-term or long-term value outside its accessibility and credit-building features, the Petal 1 Visa is an effective way for cardholders to learn the credit-building ropes.
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, transaction, or foreign 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, there’s no security deposit requirement since the Petal 2 is also unsecured. If you might carry a balance in an emergency, the Petal 2 has 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 rival cards offer, and matches the standard 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 may defeat the purpose of getting a short-term card with waived late payment fees for some cardholders. Even so, if you have limited credit history, you need to be a student or put up a security deposit with another card to receive cash back on par with the Petal 2.
Discover it® Secured Credit Card isn’t the only secured credit card that earns cash back, but it offers perhaps the best secured card value if you plan to hop to a full-fledged, unsecured credit card once you’re able. It earns its highest rate of cash back at gas stations and restaurants and unlimited 1 percent back on all other purchases. The Discover it® Secured Credit Card’s rewards advantage over the Petal 1 card is even more pronounced when you consider the card’s first-year cash back match.
Like the Petal 1 Visa, you also can become eligible for an unsecured line of credit with automatic account reviews for positive credit habits starting as soon as your seventh month. Additionally, starting with a security deposit on the higher end of its $200 to $2,500 range may make your credit limit higher than with the Petal, depending on your creditworthiness.
The Discover it® Secured Credit Card is great for beginners or people with bad credit who want safety measures in place with their card while earning cash back. Plus, Discover’s acclaimed customer service adds to the value of starting your credit-building efforts with the issuer. However, there are 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. If you don’t want money tied up in a security deposit and need a higher potential credit limit, the Petal 1 Visa card may be a better fit for you.
With the Petal 1 Visa, it’s better to focus on building your credit rather than applying for more cards to optimize your rewards spending. Every hard credit check on your report will temporarily decrease your credit score.
However, it’s not wise to cancel your Petal 1 once you qualify for a better rewards card — doing so can reduce your credit history and impact your score. Instead, focus on a card that earns rewards and pair it with the Petal 1 Visa when you’re ready to upgrade. This card could be a flat-rate rewards option like the Citi® Double Cash Card or a card with no annual fee like the Capital One Platinum Credit Card.
The Petal 1 “No Annual Fee” Visa Credit Card is a decent low-cost choice if you’re dead set on an unsecured card and your credit score doesn’t reflect the best financial habits yet. However, the Petal 2 Card is the superior no annual fee card, if you’re eligible.
You also have a few better options if you qualify for a student credit card, or if you can afford a deposit for a secured card. Most student cards have no annual fee and may include more cash back opportunities.
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