Last week, the fintech company Petal added a new credit card to its portfolio, the Petal 1 card. Like the original Petal Visa Card—now referred to as the Petal 2—the new card is for people with less-than-stellar credit. However, some of the terms are less appealing than the Petal 2's, and the company has also made it more challenging to get approved for the older card.

Key Takeaways

  • Petal has launched the Petal 1 card for people who want to build credit but have low to fair credit scores and cash flow.
  • The card offers opportunities to earn cash back, but not on all purchases.
  • The older Petal Visa Card (known as Petal 2) is now aimed at people with fair to good credit or cash flow.
  • While the Petal 1 isn’t as impressive as the company’s first credit card, it’s still head and shoulders above much of the competition.

How the Petal 1 Card Works

The new Petal 1 card is designed for people who have low to fair credit scores or cash flow. The card has no annual or foreign transaction fees, but it may charge late or returned payment fees. 

The Petal 1 also offers cash back rewards, but only with select merchants through the Petal Offers feature. These merchant offers are automatically added to your account, and once you meet the requirements, you’ll earn between 2% and 10% back. That said, you won’t get an ongoing rewards rate on other purchases you make.

The card comes with credit limits of from $500 to $5,000, depending on your ability to pay, previous credit limits, credit history, and other variables.

Most importantly, the Petal 1 doesn’t require a security deposit, which is common with many credit cards for bad credit. So if you’re just starting to build credit or you’ve made some mistakes in the past, the Petal 1 could be an excellent and economical choice.  

Petal 1 vs. Petal 2

Petal made a huge splash in the credit card industry in 2018 when it launched its first credit card. The Petal Visa Card—now the Petal 2—made it possible for people with no credit or a limited credit history to get approved based on how they manage their money.

During the application process, people link their bank account to Petal to show their income and expenses, which Petal then uses to create a “cash score.” The company relies on this information alongside (or without) your credit score to make a decision.

Unlike many cards for people with lower credit scores, the original Petal card also offered an impressive array of features, including up to 1.5% cash back and no fees whatsoever. 

The Petal 1 card has taken its place in terms of that target audience, while the Petal 2 card is now targeted at people with fair to good credit scores or cash flow. That will make it harder for some people to get. 

The good news is that Petal 1 cardholders can graduate to the Petal 2 after they show responsible card use over time. Until then, the Petal 1 is still a solid credit-building alternative to credit cards that charge high fees or require upfront security deposits.