The Petal Card Now Has a Cash-Back Rewards Program
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When we first profiled the Petal Card back in December of 2018, the card was no more than a decent option for those who might have trouble being approved for a more traditional credit card. However, Petal recently introduced a rewards program that makes the card far more enticing.
For a little background, the Petal Card is aimed at helping people build and repair their credit. Petal connects to your bank accounts to get a sense of your digital financial record for approval purposes (an interesting approach we’ve seen in other segments of the credit card market). The company then looks at your income and the bills you pay to determine your credit line (anywhere from $500 to $10,000) and your interest rate.
About Petal Rewards
Starting this month (May 2019), all Petal card holders will begin receiving 1% cash back on all purchases. Your cash-back rate increases to 1.25% after 6 months of on-time payments and then increases to 1.5% after another 6 months of on-time payments. There is no sign-up bonus.
Missing a payment only counts if you fail to pay the minimum payment on time — carrying a balance does not count as missing a payment. Interestingly, your on-time payments don't need to be in consecutive months, and your cash-back multiplier won't reset even if you miss (several) payments or carry a balance. However, it's important to note that cash-back redemptions don't count toward your minimum payment as they do with some other cards like the Discover it Student Cash Back.
You receive your cash back once a month at the end of each billing cycle. While your cash back is technically available as either a statement credit or in check form, you'll need at least $20 in available cash back in order to request payment by check — it makes far more sense to just redeem as a statement credit. Your cash back never expires, so long as your account is open and in good standing.
This move by Petal certainly helps make the card a far more attractive option for those new to credit cards or trying to rebuild their credit scores. While lots of low-level/beginner cards require a deposit (secured credit cards) and only offer minuscule credit limits with no rewards, Petal is aiming to provide a viable alternative to the more traditional route.
It’s true that cards like the Discover it Secured, the Credit One Bank® Unsecured Visa® for Rebuilding Credit and the Official NASCAR® Credit Card from Credit One Bank all offer rewards and are available to people with low or no credit. However, none of them provide higher credit limits with no annual fees on an unsecured card like Petal does. Both Credit One cards have high APRs, significant annual fees and only 1% cash back. While the Discover it Secured carries no annual fee, it too has a higher APR than Petal. And although you’ll earn 2% cash back at gas stations and restaurants on up to $1,000 in combined purchases each quarter, 1% cash back on all other purchases, and first year cash-back match with Discover, the 1.5% unlimited cash back you can earn with Petal is likely a better deal in the long run.
It's true that the value of any rewards card increases the more you use it, and most cards try and entice you to spend as much as possible with sign-up bonuses, elite status waivers and more. While you'll certainly earn more cash back the more you spend on the Petal card, the company is continuing to encourage good financial habits. With the "set your own spending plan" feature, you can easily set a monthly limit to avoid overspending and stay in line with your money goals. Missing a payment goes against commandment number two of TPG's ten credit card commandments, and Petal wants to help users avoid this and similar pitfalls of credit card usage.
For people who have never used credit and people who need help rebuilding their credit, credit cards are a touchy and often taboo subject. Petal wants to change that narrative, and its new rewards program is the next step in an ongoing evolution for the card company that wants to help people achieve financial health while still earning rewards and building credit.