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Petal 2 'Cash Back, No Fees' Visa Credit Card review: One of the best no-fee cards for building credit

This cash-back card offers an alternative to secured cards for credit newcomers. CNBC Select breaks down the rewards, benefits and fees of the Petal 2 "Cash Back, No Fees" Visa Credit Card to help you decide if it's right for you.

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The Petal® 2 "Cash Back, No Fees" Visa® Credit Card tops our list for best credit building credit cards. You don't have to have a credit history to be approved for credit limits beginning at $500, there's no annual fee and it comes with a decent rewards program.

This card is just right for Gen Z consumers, who have proven in recent years to be active credit card users, with credit scores trending higher than millennials had at their age.

With the Petal 2 card, younger consumers and qualified applicants can build their credit scores while earning cash back. The card offers a cash-back program that rewards good credit behavior: When you first open the card, you get 1% cash back on eligible purchases right away. That increases up to 1.5% after you've made 12 on-time monthly payments. Cardholders also earn 2% to 10% cash back from select merchants.

The Petal 2 card also has a helpful app that breaks down your monthly spending, sends payment reminders and helps educate cardholders about how credit cards and APR work. With these tools in place, newer consumers can learn early how expensive it can be if they only pay their credit card minimums each month.

Below, CNBC Select breaks down the rewards, benefits and fees associated with the Petal 2 "Cash Back, No Fees" Visa Credit Card to help you decide if it's the right card for you.

Petal 2 "Cash Back, No Fees" Visa Credit Card review

Petal® 2 "Cash Back, No Fees" Visa® Credit Card

On Petal's secure site
  • Rewards

    1% cash back on eligible purchases right away and up to 1.5% cash back after making 12 on-time monthly payments; 2% to 10% cash back from select merchants

  • Welcome bonus

    None

  • Annual fee

    $0

  • Intro APR

    None

  • Regular APR

    12.99% to 26.99% variable

  • Balance transfer fee

    None

  • Foreign transaction fee

    None

  • Credit needed

    Fair, Good, No Credit

See our methodology, terms apply.

Pros

  • No credit history required (if you do have a credit history, that does factor into the credit decision)
  • No fees whatsoever
  • 1% cash back on eligible purchases right away and up to 1.5% cash back after making 12 on-time monthly payments; 2% to 10% cash back from select merchants
  • Credit limits range from $500 to $10,000

Cons

  • Card isn't for rebuilding credit, but it's good for building credit
  • No special financing offers
  • No welcome bonus
  • Estimated rewards earned after 1 year: $249
  • Estimated rewards earned after 5 years: $1,577

Petal 2 "Cash Back, No Fees" Visa Credit Card rewards

You don't need any credit history to start earning rewards with the Petal 2 "Cash Back, No Fees" Visa Credit Card. It uses a tiered cash-back rewards program to encourage you to build good habits and make all of your monthly payments on time. 

Follow these rules, and you'll earn up to 1.5% on eligible purchases according to the following schedule:

  • Upon card activation: earn 1%
  • After 12 on-time monthly payments: earn up to 1.5%

Your cash back will automatically accrue and become available to redeem during the next billing period. There's no expiration date and no limit to how much cash back you can earn as long as your account remains in good standing. You can redeem your cash back in the form of a credit statement, an ACH transfer, or a paper check when your balance hits $20 or more.

Latest: Petal cardholders can win up to $500 by paying more than their minimum balance

CNBC Select calculated how many rewards the average American can earn if they optimize the way they use their Petal 2 card. We worked with the location intelligence firm Esri, who provided us with a sample annual spending budget of $22,126.

The budget includes six main categories: groceries ($5,174), gas ($2,218), dining out ($3,675), travel ($2,244), utilities ($4,862) and general purchases ($3,953).

Assuming you make each payment on time for your first twelve months, here's a breakdown of how much cash back you could earn in every category:

  • Groceries: $58 in year one; $78 after
  • Gas: $25 in year one; $33 after 
  • Dining out: $41 in year one; $55 after
  • Travel: $25 in year one; $34 after 
  • Utilities: $55 in year one; $73 after
  • General purchases: $45 in year one; $59 after
  • Total: $249 in year one; $332 after

Based on the annual spending budget from Esri, the average American can earn an estimated $249 in the first year of card membership and $1,577 over five years. This assumes that cardholders are redeeming cash back for a typical value of 1 cent each. Extreme optimizers might be able to achieve more value, and you may earn a higher or lower return depending on your spending habits.

Additional benefits

Cardholders are automatically enrolled in Petal Offers where they get 2% to 10% cash back from select partner merchants. Unlike some credit cards, you don't have to enroll in any limited-time offers.

Fees

This card charges no annual fees, no foreign transaction fees, no late fees and no fees for going over your limit.

The Petal 2 Visa Credit Card's standard variable APR is 12.99% to 26.99% variable, based on creditworthiness. You cannot transfer existing balances onto this card as it is primarily for credit newcomers.

If you don't have great credit, but you're still looking to transfer debt you might consider a balance transfer card like the Aspire FCU Platinum Mastercard®. This card gives applicants with fair credit a chance to tackle their debt faster by paying no interest for the first six months (after 9.65% to 18.00% variable).

Bottom line

The Petal® 2 "Cash Back, No Fees" Visa® Credit Card is an appealing card for new-generation consumers who want to manage their money responsibly. It is designed for people without credit or with little credit, but it comes with up to 1.5% cash back that can be redeemed at any time with no limit and no expiration.

The Petal 2 card is an excellent alternative to secured credit cards for new consumers since there are no fees or deposits to get started, plus you can earn cash back right away.

But if you already have good credit, you may want to consider a cash-back card that lets you earn more in specific categories, such as the Discover it® chrome. This credit card earns 2% cash back at gas stations and restaurants on up to $1,000 in combined purchases each quarter, then 1%. Plus, cardholders earn unlimited 1% cash back on all other purchases automatically.

Our methodology

To determine which credit cards offer the best value, CNBC Select analyzed 234 of the most popular credit cards available in the U.S. We compared each card on a range of features, including rewards, welcome bonus, introductory and standard APR, balance transfer fee and foreign transaction fees, as well as factors such as required credit and customer reviews when available. We also considered additional perks, the application process and how easy it is for the consumer to redeem points.

CNBC Select teamed up with location intelligence firm Esri. The company's data development team provided the most up-to-date and comprehensive consumer spending data based on the 2019 Consumer Expenditure Surveys from the Bureau of Labor Statistics. You can read more about their methodology here.

Esri's data team created a sample annual budget of approximately $22,126 in retail spending. The budget includes six main categories: groceries ($5,174), gas ($2,218), dining out ($3,675), travel ($2,244), utilities ($4,862) and general purchases ($3,953). General purchases include items such as housekeeping supplies, clothing, personal care products, prescription drugs and vitamins, and other vehicle expenses.

CNBC Select used this budget to estimate how much the average consumer would save over the course of a year, two years and five years, assuming they would attempt to maximize their rewards potential by earning all welcome bonuses offered and using the card for all applicable purchases. All rewards total estimations are net the annual fee.

While the five-year estimates we've included are derived from a budget similar to the average American's spending, you may earn a higher or lower return depending on your shopping habits.

Information about the Aspire FCU Platinum Mastercard® has been collected independently by CNBC and has not been reviewed or provided by the issuer of the card prior to publication.

Petal 2 Visa Credit Card issued by WebBank, Member FDIC.

For rates and fees of the Discover it® chrome, click here.

Editorial Note: Opinions, analyses, reviews or recommendations expressed in this article are those of the Select editorial staff’s alone, and have not been reviewed, approved or otherwise endorsed by any third party.