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The two credit cards issued by Petal, at first glance, may seem almost identical. The VisaÂ® PetalÂ® 1 “No Annual Fee” credit card and the VisaÂ® PetalÂ® 2 “Cash Back, No Fee” credit card have an annual fee of $ 0, no foreign transaction fees and are payable. aimed at those looking to create positive credit. the story. Both cards are issued by WebBank, FDIC member.
But the Petal 1 and Petal 2 cards have subtle but important differences. Which one is right for you? Forbes Advisor explains what to know about each card.
The VisaÂ® PetalÂ® 1 âno annual feeâ credit card is ideal for:
No credit score required
The Petal 1 card may be available for those with limited or not so good credit. If you are new to credit, your banking history can be used to generate a âCash Scoreâ to determine your creditworthiness. This places it in a rare category of cards that are available for those who don’t have a lot of credit.
No security deposit
Not only is the Petal 1 available to qualified applicants working on their credit, there is also no security deposit requirement. This puts it in the rarefied category of unsecured credit cards aimed at those with no credit history.
Rewards at certain merchants
Finding an unsecured card when you don’t have the most impressive credit score can be a challenge, but finding one with rewards is even more difficult. The Petal 1 card allows you to earn rewards at certain merchants via Petal’s Cash offers. The winning rate is between 2% and 10% cash back at some traders. Merchant offers are automatically loaded into your Petal account, so there is no work on your part to earn them.
A path to an increase in the credit limit
According to Petal, cardholders who make payments on time and keep their credit scores within a certain range may benefit from an increase in their credit limit. This can be a huge boon for those who are just beginning their credit journey and started with a low credit limit. A higher limit means that you are less likely to maximize your available credit on a purchase.
For example, if you are approved for a limit of $ 500 on your Petal 1 card and make a purchase of $ 250, you have used up 50% of your available credit. The more you use your available credit, the higher your credit usage, which in turn can negatively impact your score, which can make it difficult to achieve meaningful improvements.
The VisaÂ® PetalÂ® 2 âCash Back, No Feeâ credit card is ideal for:
A good rate of rewards
The Petal 2 is for those with fair to excellent credit or cash flow and as such offers better rewards than local offers on the Petal 1. The Petal 2 earns 1% cashback cash back on qualifying purchases immediately and up to 1.5% cash back on qualifying purchases after making 12 one-time monthly payments. Plus, get 2% to 10% cash back at select merchants. Once you hit the 1.25% milestone, with six more months of one-time payments, you’ll earn up to 1.5% cash back on qualifying purchases.
No late fees or over limit fees
Petal 2 offers a more lenient policy than Petal 1 when it comes to an occasional missed payment or you haven’t calculated the amount of a purchase against your available credit limit. Unlike the Petal 1, you won’t be charged any penalty fees when this happens.
A potentially high credit limit
The Petal 2 offers a line of credit ranging from $ 500 up to $ 10,000. For those who qualify, a limit of $ 10,000 is a good way to help build a score by keeping your credit usage low. And it never hurts to have more credit available than you think you need for urgent spending.
An APR range that won’t break the bank
Unlike many other credit cards aimed at those who don’t have very good credit, the APR range of the Petal 2 card is a reasonable variable APR of 12.99% to 26.99%. Those who qualify for the low end will find it hard to beat compared to other cards in this category.
Neither the Petal 1 nor the Petal 2 is the best when:
You filed for bankruptcy within the past 48 months
Petal states that you will not be eligible for either card if you have filed for bankruptcy within the past 48 months. If so, one of your best options may be to apply for a secure card, such as the Discover itÂ® Secured Credit Card. For a minimum opening deposit of $ 200, up to a maximum of $ 2,500, the Discover itÂ® Secure Credit Card has a $ 0 annual fee and 2% cash back at gas stations and restaurants up to $ 1,000 in combined purchases each quarter. Plus, get unlimited 1% cash back on all other purchases. Plus, at the end of the first year as a cardholder, Discover will match any cash back rewards you’ve earned, doubling your first year rewards.
You don’t want to link your bank account
If you don’t log into your bank account, you may not have enough history to be approved for the card. Your banking history can be used to examine your cash flow and banking history to determine if you can afford more credit and, if so, how much credit you can extend.
Higher rewards are important to you
If you think your credit is better than bad, you may want to consider a card that offers 1.5% cash back right away, without having to show 12 months of good payment behavior first. A card like the Capital One QuicksilverOne Cash Rewards credit card that earns 1.5% cash back on every purchase could do the trick. But be aware that it comes with an annual fee of $ 39.
If you are trying to choose between the Petal 1 or Petal 2 card, be aware that it is ultimately Petal’s choice which to grant you based on your creditworthiness as determined by them. If you qualify for the Petal 2, you’ll get a card that brings in some pretty decent rewards, once you hit the 12-month mark. If you do not qualify for the Petal 2, you will automatically be considered for the Petal 1, which can be a good stepping stone to using credit responsibly.
If Petal denies you a card, you will not be able to apply for 30 days after receiving your last decision. If so, consider a card for those who are rebuilding their credit who typically have more relaxed underwriting restrictions as many require a security deposit on the line of credit issued to you.