Monthly Fee Impact for Some Credit Card Users by Petal 1, Amounting to $8
The Petal 1 Visa Credit Card, known for its low-cost approach to credit building, has undergone significant changes as of mid-June 2023. These changes include the introduction of a monthly fee and an expansion of what counts as cash-like transactions.
The monthly fee, amounting to $8 per month or $96 annually, is a new cost for cardholders, adding an ongoing charge that was not part of the card's original no-fee structure. This means cardholders now pay regularly just to keep the card active, which can impact the overall value proposition, especially for those who use the card sparingly or for small purchases.
The expansion of cash-like transactions means more types of transactions—such as money transfers, cryptocurrency purchases, and possibly ATM withdrawals—are classified under this category. These transactions typically do not earn rewards and might incur additional fees or be excluded from cashback programs. This affects cardholders who frequently engage in such transactions, reducing the benefits they receive and possibly increasing their costs.
Affected cardholders can opt out via the app or by contacting the company before July 2023. However, opting out will result in account closure, which could negatively impact credit scores by shortening the length of your credit history and/or increasing your credit utilization ratio. It's important to note that cardholders should redeem any accumulated cash back before opting out, as rewards are forfeited if the account is closed.
The Petal 2 Visa Credit Card, on the other hand, remains unchanged. However, it's worth mentioning that the Petal cards have been replaced with Tilt cards from the same issuer, which could suggest a shift in terms and features including fee structures and transaction policies. Existing Petal cardholders are not immediately affected by the replacement, but this rebranding indicates a transition that might bring further changes later.
For those looking for alternatives, credit cards for those new to credit or looking to mend it will generally be cheaper to hold than the $96 annual fee for the Petal 1 Visa Credit Card. The Petal 1 Rise Visa Credit Card, which is easier to qualify for and costs less to hold (an annual fee of $59), cannot be downgraded from the Petal 1 Visa Credit Card.
Petal did not specify why terms are changing for certain cardholders. Cash-like transactions will incur a fee for all Petal 1 Visa Credit Card holders starting in July 2023. The fee will be either $10 or 3% of the transaction amount, whichever is greater. The Petal's terms indicate that cash-back rewards are forfeited if the account is closed.
In summary, the main impact of these changes for Petal 1 cardholders is higher costs due to the monthly fee and potentially reduced rewards or increased restrictions on certain transactions considered cash-like. Cardholders may want to review their usage and consider these factors, especially with the impending transition to the new Tilt cards.
- The monthly fee imposed on Petal 1 Visa Credit Card users currently amounts to $8 per month or $96 annually, which can impact the value proposition for those who use the card sparingly or for small purchases.
- Frequent engagement in cash-like transactions, such as money transfers or cryptocurrency purchases, can now be subject to fees or exclusion from cashback programs due to the recent classification change.
- Petal 1 cardholders who opt to close their accounts to avoid the new monthly fee might experience a negative impact on credit scores due to shortened credit history and increased credit utilization.
