Building credit in the U.S. for the first time can be tricky. You often need credit to qualify for a credit card or loan---but you also need a credit card or loan to start building credit. It can be frustratingly circular. Fortunately, there are ways past the roadblock.
If you do have a U.S. credit history, Petal can review it while considering your card application, but you can also get approved by linking an eligible U.S. bank account. Petal can then review your account’s history to make a decision on whether or not to approve your credit card application.
The Petal Visa Credit Card might not be the best fit for everyone, but it could be a good option if you’re new to the U.S. and want to build credit. Below, we’ll share some highlights of the card, dive into the details and then share some alternative cards.
Alternative credit cards to consider
In addition to the Petal Visa Credit Card, consider credit card offers from other issuers who work with applicants who are new to the U.S. or want to build their credit.
These cards also appear on our lists of best credit cards for people with no credit history and best American Express cards for U.S. newcomers. Thanks to a partnership between Nova Credit and American Express, if you have a credit history from Australia, Canada, India, Mexico or the UK, you may be able to apply for an Amex card in the U.S. using your international credit history. (Here’s a guide on how to do it.)
American Express Cash Magnet® Card
The American Express Cash Magnet® Card offers 1.5% cash back on all your purchases (from the start) and doesn’t have an annual fee.
New cardholders may qualify for an intro bonus, helping boost your rewards, plus an intro APR offer on purchases and balance transfers. However, the 2.7% foreign transaction fee could make this a less attractive option if you plan to travel outside the U.S. often.
Blue Cash Everyday® Card from American Express
Rather than earning the same cash back rate on all your purchases, this card has a tiered rewards system. You get:
3% cash back at U.S. supermarkets (on your first $6,000 in purchases each year)
2% cash back at U.S. gas stations and select U.S. department stores
1% cash back on other purchases
A Deserve credit card
Deserve also uses cash flow technology to analyze your bank account, determine your creditworthiness and approve or deny credit card applications. The company offers three credit cards that may be a good fit for U.S. newcomers or international students.
Petal Visa Credit Card highlights
Doesn’t require credit history
No security deposit requirement
No annual, foreign transaction or late payment fees
Reports to all three major credit bureaus: Equifax, Experian and TransUnion
Earns cash back rewards on purchases
Potentially high credit limit
Requires an eligible U.S. bank account if you don’t have a credit history
Can still get denied with a poor credit history
Potentially high interest rate
Can’t use the card for cash advances or balance transfers
Where the Petal Visa credit card shines
The Petal VisaCredit Card could be a good starter card if you’re looking to earn rewards and build credit. Here are a few of its main benefits:
Qualify with a bank account
The ability to qualify for a card without a credit report or credit score is certainly Petal’s most important feature if you don’t have credit in the U.S., but there are a few things you should know about the process.
Even if you don’t have U.S. credit, you’ll need to either be a U.S. citizen or legal resident with a Social Security number or ITIN to qualify for a Petal card. You’ll also need to have an eligible U.S. bank account.
While Petal can link to over 14,000 banks, credit unions and other financial institutions, some of them may not work. You can visit Petal’s website to see the current list of ineligible accounts. Additionally, the account can’t be a prepaid account, and you can’t use one bank account for multiple Petal accounts.
The good news is, once you’re approved, your credit limit can range from $500 to $10,000 based on the information from your application and connected account. Because your card will be an unsecured credit card, you won’t need to send Petal a security deposit.
Some products for people who are new to credit, such as secured credit cards, may be loaded with fees. That’s not the case with the Petal Visa Credit Card, which offers:
No annual fee
No foreign transaction fee
No late fees
No replacement card fees
No penalty APR
Some credit cards with annual fees offer additional cardholder benefits or rewards, which makes the fee worth it for some cardholders. However, if you’re looking for a simple, money-saving option, a card without fees may be the way to go.
Earn cash back
The Petal Visa credit card also has a cash back rewards program, another standout feature if you’re comparing it with secured credit cards. Although there are a few secured rewards credit cards, many don’t offer this perk.
With Petal, the cash back rate will increase over time, and you can earn:
1% cash back when you first start using your card
1.25% cash back after you make six on-time monthly payments
1.5% cash back after you make 12 on-time monthly payments
Once the cash back rewards are added to your account, you can redeem them for a statement credit (which lowers your card’s balance) or a check (with a $20 minimum). Your cash back rewards won’t expire as long as your account is open and in good standing, but you’ll lose the rewards one you close your account—so, be sure to cash out the rewards if you’re considering closing your card.
A soft pull to see if you qualify
People with established or limited credit in the U.S. may benefit from Petal as its pre-approval application process begins with a soft credit check instead of a hard inquiry. This means Petal will check your credit to determine if you’re likely to qualify, but the credit check won’t impact your credit scores.
If you get pre-approved and decide to move forward with your application, only then Petal will do a hard inquiry, which may hurt your credit a little. But generally, you can recover from the slight dip within a couple of months.
Drawbacks of the Petal Visa credit card
While the Petal Visa credit card may be a good fit for certain cardholders, it’s not necessarily the best credit card for everyone. Here are a few things to consider before applying.
Carrying a balance can cost you
Your Petal credit card’s annual percentage rate (APR) will depend on your creditworthiness, and you may start with a relatively low rate to a fairly high rate. It’s also a variable APR, meaning it can change in the future, which is common for U.S. credit cards.
If you pay your bill in full every month, you’ll never pay interest charges on your card and won’t need to worry about the rate. However, if you only make a partial payment and carry part of your balance to the next month, interest starts to accrue on that balance and on all new purchases. A high interest rate could lead to credit card debt quickly piling up, particularly if you have a high credit line and use the card for lots of purchases.
You may look for options from other credit card companies if you’re planning on making large purchases and paying them off over time or if you think you may need a credit card for emergency expenses that you can’t afford to pay all at once. Some cards have low rates and could be good emergency-card options. Others have 0% intro APR offers that allow new cardholders pay off a balance over time without accruing interest.
No cash advances or balance transfers
You can’t use Petal credit cards to make a balance transfer or cash advance. Although, that’s not necessarily a bad thing if this is one of your first credit cards and you’re using it to build good credit while avoiding fees.
Balance transfers are when you move debt between credit cards or, sometimes, from a credit card into a bank account. They can be helpful if you have high-interest credit card debt that you want to move to a new card with a lower rate or an intro 0% APR offer on balance transfers. However, there’s also often a balance transfer fee—a percentage of the amount you transfer.
A cash advance is when you use your credit card to withdraw cash from an ATM or bank. Generally, it’s an expensive way to get cash as you’ll need to pay a cash advance fee (a percentage of the amount you withdraw) and a high interest rate on the cash advance balance until you pay it off.
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