For people with limited credit histories, qualifying for a credit card can be a Catch-22: It’s hard to prove that you’re creditworthy without access to a line of credit, and you can’t get a line of credit without showing that you’re creditworthy.
Petal, a credit card startup, is a nontraditional option for people looking to build credit. By analyzing an applicant’s other financial factors in addition to credit scores, the company aims to provide a credit card that’s accessible to people who may not otherwise qualify for one.
Petal Visa card: Basics and benefits
At the moment, the Petal Visa card is in beta testing and is available only by private invitation. But those interested can sign up to be on the waitlist for the card at the Petal website. Aiming to shorten your wait time? The website says you can “share your private waitlist link to move up the list and get an invitation quicker.”
Here’s what applicants can expect:
Evaluation based on multiple factors. For people with zero or limited credit history, Petal may be a good alternative to other cards because the issuer doesn’t look only at credit scores. It also uses an underwriting model that evaluates your income and liabilities to help determine creditworthiness.
Petal doesn’t look only at credit scores. It also uses an underwriting model that evaluates your income and liabilities to help determine creditworthiness.
Planned payment reporting to credit bureaus. Petal plans to report to all three major credit bureaus, though it says it is carefully monitoring the recent Equifax data breach to ensure customer information isn’t at risk.
No deposit. The Petal Visa is an unsecured card, which means the issuer doesn’t require customers to provide cash collateral to get a credit line.
No fees. Petal Visa cardholders will owe no annual fee, no late fees, no overdraft fees and no foreign transaction fees. The issuer charges interest only if the cardholder doesn’t pay the balance in full every month; it doesn’t charge interest on new purchases. Petal makes money off merchant transaction fees and interest paid on revolving balances.
Petal Visa cardholders will owe no annual fee, no late fees, no overdraft fees and no foreign transaction fees.
Reasonable APR. The Petal Visa has variable annual percentage rates ranging from 13.99% to 24.99%, which isn’t out of line for a card that requires no security deposit and no credit history. And as with any credit card, if you pay your bill in full every month, you’ll never be charged interest anyway.
Wide credit limit range. Petal may approve customers for a line of credit anywhere from $500 to $10,000.
A card that can be used anywhere Visa is accepted. This includes domestic, international, online and in-person transactions. The card also offers some benefits through its partnership with Visa, such as auto rental collision damage or theft coverage and roadside dispatch.
Access to online tracking tools. Customers can keep track of their spending and balances with the Petal desktop site and mobile app. The site also calculates and displays the interest customers will be charged on next month’s statement if they don’t pay their balance in full.
Things to consider
For certain applicants, the Petal Visa has plenty of upsides. But be aware of a few potential drawbacks:
Limited access. At least for now, you have to be invited to apply.
No rewards program. Many credit cards for low or no credit don’t offer any rewards, so Petal isn’t unique in this regard. But just know that if you’re looking for cash back or travel points, the Petal Visa doesn’t currently offer any.
No balance transfers or ATM cash advances. If you have no credit history, you may not have any existing balances to transfer; regardless, it’s not an option with this card. Ditto for cash advances. Those can end up costing you in fees and interest, but if you’re in need of cash quickly, you won’t be able to draw any against the Petal Visa.
Is the Petal Visa right for you?
If you lack a credit history and want to build one without putting down a security deposit, Petal could be a good option — assuming, of course, that you can score an invite. The Petal Visa can also help you avoid complicated and potentially costly fees, as long as you pay your balance in full each month. But if the idea of a waitlist isn’t appealing and you’re seeking a card that offers rewards, you may want to look elsewhere.