Petal (backed by WebBank) has a reputation for offering one of the best credit cards for newbies. It recently updated its credit card program with two no-annual-fee cards designed for those building credit from scratch and maybe even consumers who want to rebuild their credit.
These two cards give consumers with no credit a chance to build their scores and earn cash back. The Petal 1 "No Annual Fee" Visa® Credit Card is designed for those with either no credit or a non-prime credit score. The Petal 2 "Cash Back, No Fees" Visa® Credit Card is meant for consumers with no credit or good credit.
Cardholders who have the Petal Visa card are automatically upgraded to the Petal 2 card. They will get the new card design when their cards expire, or if they ask for a reissue.
Below, CNBC Select breaks down the basics of each card, including rewards, added perks and fees, so you know which is the best pick for you.
The Petal 1 card is for borrowers with no credit history or a non-prime credit score. When you apply, Petal looks at your banking history, which shows proof of your income and on-time bill payments, and creates a "Cash Score" to evaluate your creditworthiness when your credit score doesn't tell the whole story.
When you apply for a Petal 1 card, you may qualify for a higher credit limit and/or better rates if your bank statements show evidence of responsible financial habits.
You don't have to have a credit history to be approved for the Petal 2. However, if you have at least one loan and/or a credit card in your name, your credit score will be factored into your application. Applicants need either no credit or good credit to qualify for the Petal 2 card.
Both the Petal 1 and the Petal 2 cards make it a little easier for people with no credit history to apply. If you have non-prime credit, Petal 1 could be an accessible choice to help you improve your score.
The Petal 1 card does not have a standalone, flat-rate cash back program. However, Petal 1 cardholders are automatically enrolled in the Petal Perks program, allowing them to earn between 2% and 10% cash back at participating merchants. Simply activate your Petal 1 card, download the app and share your location. Then, Petal Offers near you will pop up onto a map to show you where you can save money.
You can redeem your cash-back points in the billing period after you earn them, either for a statement credit, electronic transfer or check.
The Petal 2 Visa Credit Card offers a tiered cash-back rewards program that motivates users to make their monthly payments on time. Follow the rules, and you can earn between 1% and 1.5% on all eligible purchases according to the following schedule:
Cardholders are automatically enrolled and can redeem cash back as a statement credit, electronic transfer or check.
From time to time, bonus cash back points may be available on certain purchases, helping you earn as much as 2% to 10% cash back at select merchants.
The Petal 2 card offers more straightforward value, with automatic 1% cash back and the ability to earn up to 1.5% after 12 months. However, both cards reward users with 2% to 10% cash back offers at participating merchants if you're willing to share your location on the Petal app and keep up with bonus opportunities through Petal Perks.
The Petal 2 is the clear winner in this category, with no fees whatsoever. The Petal 1 has no annual fee or foreign transaction fee for using your credit card abroad, but you could get dinged with a late payment fee and/or returned payment fee if you don't make your payments on time.
All Petal cardholders are automatically enrolled in the Petal Perks program, which allows them to earn cash back on eligible transactions and limited-time discounts through Petal Offers.
Petal also offers a handy mobile app that helps credit card newbies track their spending, automate payments and easily manage their money.
Card issuers are not required to report your behavior to the credit bureaus, but Petal reports your activity to all three major credit bureaus (Equifax, Experian, TransUnion). Using your card responsibly will help you improve your credit score over time.
It's a tie; both cards come with automatic enrollment in the Petal Perks program, allowing cardholders to earn both cash back and Petal Offers for qualifying transactions at participating merchants.
The credit limits for the Petal 1 range from $500 to $5,000. Meanwhile, the credit limits for the Petal 2 start at $500 and go up to $10,000. Your credit limit is determined by your creditworthiness.
Petal 2 has a higher possible credit limit, but both cards begin at $500. If you have no credit history, your first credit limit will probably be around $500. You're not guaranteed a $10,000 limit just by applying for the Petal 2.
The two cards are designed for people with no credit, but they differ in that the Petal 2 card requires good credit for anyone who already has a credit history.
Petal 1 evaluates new applicants based on a combination your credit score (if applicable) and a "Cash Score" based on your bank statements and bill pay history.
The Petal 2 comes with the most cash-back value, at up to 1.5% after 12 months, plus 2% to 10% on select transactions. However, the Petal 1 is a great credit-builder card that delivers occasional cash back and other perks.
Both are an excellent alternative to secured credit cards for new card users, since there are no fees or deposits required to open the cards, and you can earn cash back right away.
1% cash back on eligible purchases right away and up to 1.5% cash back after making 12 on-time monthly payments
12.99% to 26.99% variable
See our methodology, terms apply.
Up to 10% cash back from select merchants
19.99% to 29.49% variable
Fair, Poor, No Credit
See our methodology, terms apply.
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.
Petal cards are issued by WebBank, Member FDIC.