Cardholders of Petal 2 faced downgrades, now subject to additional fees
Petal 2 Visa Credit Card Users Face Changes as Petal Introduces Monthly Fee
Petal, the financial services company known for its credit cards aimed at users with fair-to-good credit, has announced changes to its Petal 2 Visa Credit Card. Certain holders of this card will now be downgraded to the Petal 1 Rise account, which includes an $8 monthly membership fee.
The Petal 1 Rise card is intended for users with poor-to-fair credit, as well as some Petal 2 cardholders who may not meet certain criteria or have different risk profiles. The shift from the original no-fee structure of the Petal 2 card to the Petal 1 Rise card, which charges an $8 monthly fee (equivalent to $96 annually), is effective starting July 2023.
Petal has not disclosed the exact criteria for this change, but it appears to be part of the company's risk management and product restructuring strategy. By introducing a monthly fee on the Petal 1 Rise card, Petal aims to offset losses and better align revenue with customer risk.
The Petal 2 Visa Credit Card, designed as a no-annual-fee, credit-building card with cash back rewards up to 1.5% after consistent on-time payments, will remain fee-free for new users who meet the qualifications. The card offers perks like no late or returned payment fees, budgeting tools, and credit bureau reporting.
For those who decide to keep the Petal 1 Rise card, they can continue to use the same login information. Cash-back rewards will be kept by cardholders who transition to the Petal 1 Rise, according to Petal's FAQ page. However, opting out will result in the loss of cash-back rewards if not redeemed before account closure.
It's important to note that account closure can reduce the age of active credit accounts and increase the credit utilization ratio, both factors in credit scores. Cardholders should consider applying for a new, lower-cost credit card before opting out or transitioning to Petal 1 Rise.
The new Petal 1 Rise card is expected to be in mailboxes by Aug. 1, 2023, the same date the monthly membership fee goes into effect. Affected cardholders will have their Petal 2 account replaced by a Petal 1 Rise account.
| Card Type | Fee Structure | Target Users | Reason for Change | |-----------------|--------------------|--------------------------------------|-------------------------------------------| | Petal 2 | No annual or monthly fee | Credit builders with stronger profiles | Original product with perks, no fees | | Petal 1 Rise | $8 monthly membership | Some downgraded Petal 2 users | Risk management; fee to cover costs |
Petal continues to monitor credit health, requiring customers to maintain certain VantageScore drops below threshold levels to avoid negative impacts or to qualify for credit increases. These ongoing credit quality controls may influence which card product is appropriate for a given user.
Users are advised to monitor their accounts for such changes and make informed decisions based on their financial situations.
- Some Petal 2 Visa Credit Card users, who may have poor-to-fair credit or not meet certain criteria, will be downgraded to the Petal 1 Rise account, which comes with a monthly fee of $8.
- Petal's aim in introducing a monthly fee on the Petal 1 Rise card is to offset losses and better align revenue with customer risk, aligning with their risk management and product restructuring strategy.
- Users with the Petal 1 Rise card can still continue to enjoy cash-back rewards, but opting out without redeeming rewards may lead to their loss, as account closure can negatively impact credit scores by reducing the age of active credit accounts and increasing the credit utilization ratio.
