Petal Card Review: A Good Option for First Credit Card?

Are you a new borrower looking for a way to establish credit in 2024? The Petal Card is a non-traditional way to do that, and you’ll get to use a real credit card in the process.

The Petal Card offers a path to a real credit card by analyzing your bank records for payment history rather than relying solely on your credit reports. Petal credit cards are issued by WebBank, Member FDIC.

It doesn’t require a security deposit, and you can earn some rewards to boot. And with Petal 1 and Petal 2, there are two different no-annual-fee cards from which to choose.

“I love the Petal Card,” money expert Clark Howard says.

“It’s a really modern fintech that is using alternative methods to determine what your level of risk is even if you’ve never had traditional credit.”

In this article, I’ll take a deep dive into Petal Card’s unique approach, and I’ll talk with Clark about why he recommends this path for new borrowers.

This article was updated in March 2024 and I review it every 12 months. Detailed notes on all updates can be found here.

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What Is the Petal Card?

Self-described as “credit with a conscience,” the Petal Card is designed to put credit in the hands of creditworthy people who would otherwise have a hard time getting it.

This is accomplished by judging potential borrowers on the transaction history of their bank accounts rather than their credit scores.

Petal offers two no-annual-fee versions of its credit card: card_name and card_name. I’ll break down what each of these offers later in the article.

As mentioned: Those two cards carry no annual fee and, unlike secured credit cards, they do not require a security deposit.

Note: Petal now offers a third option, the Petal 1 Rise card, but it carries a $59 annual fee. Team Clark does not recommend paying an annual fee for a credit card while trying to build or rebuild credit, so we have left this card out of our analysis.

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How the Petal Card Is Different From Other Credit Cards

The primary difference between the Petal Card and many other cards on the market is the way that the company evaluates your creditworthiness.

While traditional credit card issuers evaluate you primarily by looking at your credit report and credit score, the Petal Card takes a non-traditional approach and measures other things that can indicate your level of financial responsibility.

“We use more data than credit history to make credit decisions,” Jason Gross, co-founder and chief executive of Petal, told TechCrunch. “They’re common sense metrics about your finances: how much you make, save and spend every month.”

This analysis is possible thanks to relatively new federal regulations that let your banking history follow you from institution to institution, kind of like a credit history.

Petal’s access to this data has allowed it to evaluate a new measure of creditworthiness that it calls a “Cash Score.”

For people who have little to no credit history, that’s potentially a big improvement in making a case for access to credit.

It keeps people from having to seek credit in the form of a secured credit card, which Clark says should be “the last place you should ever go” for a credit card due to poor terms, high fees and interest rates.

Better Starter Situation Than Secured Credit Cards?

The traditional alternative to a Petal Card for new credit seekers is a secured credit card.

Secured credit cards are used for building or repairing your credit. They allow borrowers to make a security deposit in exchange for a credit line that will be reported to the credit bureaus.

For example, you may be required to make a $300 security deposit in order to get a card with a $300 credit limit.

You’re essentially borrowing against your own money to prove that you’re fiscally responsible in hopes that it will lead to a higher credit score and ultimately a better credit card in the future.

Many of the top card issuers in the United States offer secured credit cards. Team Clark has reviewed them and has a list of the best on the market.

Clark says the Petal Card is preferable, though, because there are no “gotcha fees,” and there’s no security deposit required.

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Petal® 1 “No Annual Fee” Visa® Credit Card vs. Petal® 2 “Cash Back, No Fees” Visa® Credit Card: What’s the Difference?

You may have noticed that Petal has two different no-annual-fee credit card options.

card_name appears to be designed as a beginner-level card, while the card_name seems to have a more advanced approach with higher spending limits and a better rewards program.

When you apply for the Petal Card, you’ll be assessed for both cards.

Here’s a quick look at some of the key factors of each version of the Petal Card.

Card Characteristic	Petal 1	Petal 2
Annual Fee	None	None
Deposit Required	None	None
Credit Limit	Between $300 and $5,000	Between $300 and $10,000
Rewards Program	Limited purchases at select merchants can qualify for between 2-10% back.	At least 1% back on all purchases, with up to 1.5% back if you pay on time.
Late Payment Fees	Yes	No

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Card Specs and Perks

Now that you have a better understanding of the differences between the Petal 1 and Petal 2, here’s a quick look at some of the perks you can expect.

Top Cardholder Benefits

• Cash Back Rewards Opportunities: Both cards offer a form of cash back rewards, which is nice for a starter card. The Petal 2 appears to have a more steady opportunity with 1% back on all purchases that can be extended to 1.25% and then eventually 1.5% with a solid payment history. Petal 1 does not have a consistent cash back model and instead offers special promotions called “Petal Offers” that reward spending at certain local businesses. Petal 2 cardmembers also have access to Petal Offers.
• No Foreign Transaction Fees: Not only will these cards not ding you with annual fees, but they also don’t charge foreign transaction fees for spending abroad.

Credit Building

Using the Petal Card app, which is available both on Apple’s App store and Google’s Play Store, can unlock some key features to help you build your credit:

• Credit Reporting: Petal reports your payment history to all three major credit bureaus, which will help you grow your credit history and increase your credit score.
• Credit Monitoring: Though this card tries to avoid the use of credit reports for application approval, it does acknowledge the importance of growing your credit. The Petal app will help you track your credit score with Experian scores built-in.

Budgeting Tools

The app also houses some useful budgeting tools aimed at helping you get on the right financial track:

• Subscription Monitoring: If you use your Petal Card for auto-renewing subscriptions, you’ll receive some guidance to make sure you aren’t spending too much. The card’s app will automatically highlight popular subscriptions being charged to your Petal Card and show you how to cancel what you don’t use.
• Set a Monthly Budget and Spending Limit: The app lets you set a budget for your spending each month and track your progress. It will alert you when you’re pacing ahead of your planned spending, and you can even “shut the card off” at a certain level of spending to keep yourself within your financial means.
• Payments Calculator: The app also lets you plug in a potential payment amount and then see the impact that has on how much interest you’ll owe on your balance. It’s a good way to get a clear understanding of the financial implications of your payment decisions.

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Why Clark Howard Recommends the Petal Card

If you are a new credit seeker, money expert Clark Howard says that the Petal Card is a great place to start.

The Petal Card has no annual fees or junk fees, which Clark views as a major plus when compared to some of the other credit-building cards on the market.

“It is a good bridge for people to get into the traditional credit system,” Clark says.

“And at the same time, it’s a fantastic starting point because you don’t have to do those deposits with a secured card, and you don’t have to deal with the sleazoids who try to charge you an application fee and then endless fees after that.”

And Clark says that the recent addition of the Petal 2 card, which has a higher credit limit and better rewards platform, is a sign that Petal is making a play for more of the market share than just entry-level credit users.

That makes it a potentially attractive long-term option for borrowers.

“Having the ability to graduate to a card with higher credit limits and more rewards allows Petal to capture more customers moving forward instead of just being a stepping stone for somewhere else,” Clark says.

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Final Thoughts

Are you considering adding the Petal Card to your wallet? Let’s review some of the major pros and cons of the card before you make your final decision:

Pros and Cons

Pros	Cons
Non-traditional evaluation of creditworthiness	You may be subjected to a low spending limit initially.
Cash back rewards opportunity	No introductory APR periods for new purchases
No annual fee and no security deposit required	No welcome offer

Bottom Line

The Petal Card is a smart place to start if you’re searching for your first credit card.

Petal’s innovative way of analyzing your creditworthiness through the use of the “Cash Score” may open doors that your credit report alone won’t.

And it could help you skip the secured credit card market altogether.

With a straightforward approach that avoids fees and security deposits, this card platform carries Clark’s recommendation for new borrowers.

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Have you or someone you know used the Petal Card? We’d love to hear how it may have impacted credit scores among cardholders. You can share your experiences in the Clark.com community.

Article Updates

• March 2024: Updated content to include mention of the Petal 1 Rise card, and updated with current details on the Petal Card offerings.