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Key takeaways
- Both the Discover it® Secured Credit Card and the Petal® 1 “No Annual Fee” Visa® Credit Card are solid cards for building credit.
- With the Discover it® Secured Credit Card, you can earn cash back on every purchase.
- On the other hand, the Petal 1 card does not require a credit history or a security deposit to open.
- Depending on what you need, either card could be a good fit for you.
Using credit cards isn’t the only way to build your credit from scratch or bounce back from a credit misstep, but it can often be the easiest option. There are several credit cards that are specifically designed to help consumers who find themselves in these situations, and they don’t have to cost an arm and a leg. To be clear, some subprime credit cards do include a number of fees, but the two cards we’re going to talk about here — the Petal® 1 “No Annual Fee” Visa® Credit Card* and the Discover it® Secured Credit Card — don’t even carry annual fees.
That said, be aware that both the Petal 1 and Discover it® Secured have lofty variable APR rates — 28.99 – 33.99% Variable for the Petal 1 and 27.24% Variable APR for the Discover it® Secured Credit Card — so these cards are less than ideal for cardholders who tend to carry their balances.
Main details
| Cards | Petal® 1 “No Annual Fee” Visa® Credit Card | Discover it® Secured Credit Card |
|---|---|---|
| Welcome bonus | N/A | Cashback Match: Discover will match all cash back earned in your first year as a cardholder |
| Rewards rate | N/A |
|
| Intro APR | N/A | N/A |
| Annual fee | $0 | $0 |
| Foreign transaction fee | N/A | N/A |
Petal 1 vs. Discover it® Secured highlights
Welcome bonus winner
-
Neither card offers a traditional welcome bonus (where you’ll earn bonus points or cash back after meeting a card’s spending requirement within a specific timeframe), but Discover will match all of the cash back you earn during the first year. For example, if you earn $150 in cash back during the first year of card membership, you will receive another $150 from Discover at the end of the year, for a total of $300 in cash back.
Rewards rate winner
-
While the Petal 1 doesn’t offer a traditional cash back program, the Discover it® Secured does. Cardholders will get 2 percent cash back at gas stations and restaurants (on up to $1,000 in combined purchases per quarter, then 1 percent) and 1 percent cash back on all other purchases.
However, note that the Petal 1 has a limited cash back program called Merchant Offers. Through this program, cardholders can earn 2 percent to 10 percent cash back at select merchants, but this is a much weaker offer than earning cash back on all purchases.
Intro APR winner
Annual fee winner
-
Neither card carries an annual fee.
Foreign transaction fee winner
-
Neither card charges a foreign transaction fee. That said, Discover cards tend to have more limited acceptance abroad than Visa cards, so Petal 1 may be more useful to cardholders traveling abroad or shopping online in foreign currency.
Which card earns the most?
The Discover it® Secured Credit Card includes a traditional cash back rewards program, while the Petal 1 only includes a limited Merchant Offers program. This means that the Discover it® Secured Credit Card would earn more rewards for the average consumer.
Petal 1 vs. Discover it® Secured Credit Card spending example
The Discover it® Secured card offers:
- 2 percent cash back at gas stations and restaurants (on up to $1,000 in combined purchases per quarter, then 1 percent back)
- 1 percent on all other purchases
Let’s see how much you’d earn if you maximized your rewards by reaching your spending cap each quarter and also used the card for other purchases. We can break that down to be $12,000 per year total:
- $4,000 spent at restaurants and gas stations ($1,000 quarterly)
- $8,000 on other purchases
| Spending category | Total yearly spend | Cash back | Cashback Match during first year |
|---|---|---|---|
|
Restaurants and gas stations |
$4,000 |
$80 |
$80 |
|
Miscellaneous purchases |
$8,000 |
$80 |
$80 |
|
Total |
$12,000 |
$160 |
$160 |
If you spend $12,000 per year total, broken down into $4,000 spent at restaurants and gas stations ($1,000 quarterly) you’ll get $80 in cash back, plus another $80 in cash back for the $8,000 in miscellaneous purchases. So, you’ll earn $160 in cash back for the year, and, thanks to Cashback Match, your total cash back haul for your first year will be $320.
The Petal 1, with its limited cash back program at select merchants, would not be able to beat the cash back you can earn from the Discover it® Secured Credit Card (in most cases). Although you may be able to snag a solid cash back offer, these offers are for specific merchants and are inconsistent.
Why should you get the Petal 1?
Unlike the Discover it® Secured Credit Card, the Petal 1 is a traditional unsecured credit card. If you don’t want to put down a minimum security deposit, and if you don’t care much about the Discover it® Secured Credit Card’s cash back program, you may find the Petal 1 more appealing. Also, the Petal 1 doesn’t require you to have an established credit history, although it may look into your banking history (besides your credit score) to establish your creditworthiness. With that said, select cards in the Petal family have had their already limited benefits downgraded — so keep that in mind prior to choosing the right card for you.
Why should you get the Discover it® Secured Credit Card?
For all the advantages of the Discover it® Secured Credit Card, its main disadvantage is in the name — it’s a secured credit card. That means you’ll need to put down a security deposit (from a minimum of $200 to a maximum of $2,500) to open an account, which will be equal to your credit limit.
In terms of building or rebuilding credit, secured cards work the same way as unsecured cards. But if you like earning steady cash back and don’t mind a security deposit, you may prefer the Discover it® Secured Credit Card to the Petal 1 — since the former offers a traditional cash back program and Discover Cashback Match.
The bottom line
Both the Petal 1 “No Annual Fee” Visa Credit Card and Discover it® Secured Credit Card are solid, low-cost cards for consumers looking to build or rebuild their credit. Since both cards have no annual fees, the card you should choose comes down to what you value most. If you’re looking for cash back, choose the Discover it® Secured Credit Card. On the other hand, if you’re interested in an unsecured card, pick the Petal 1. Remember, though, that your path from a secured card to an unsecured card with Discover can be as short as seven months, provided you use your credit responsibly.
However, keep in mind that, while the Petal 1 and the Discover it® Secured Credit Card are among the best credit cards for bad credit, they aren’t the only ones. Before you make a decision, you should check out other options to make sure you find the best fit for you.
*Information about the Petal 1 “No Annual Fee” Visa Credit Card has been collected independently by Bankrate. Card details have not been reviewed or approved by the issuer.
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