A no-fee credit card for those with no credit

For people with no credit history, getting access to credit can be a difficult thing.

In the past, I’ve talked about secured credit cards as a long road toward building credit when you have none. A quicker option is a “fresh start” program at a credit union.

But now there’s a third option coming to the marketplace.

Fintech company Petal is gearing up to offer a no-fee credit card for people with no credit score. The company just completed a $13 million round of fundraising to launch their card, which is largely aimed at millennials.

Instead of using a credit score to make a decision about your credit application, Petal looks at factors like your income, spending and savings.

And Petal only makes money through merchant fees and the interest it charges on balances that are carried over monthto-month. So if you pay off your bill in full each and every month, you’ll never have to deal with a fee of any kind.

That’s the right way to use credit. Even better, because Petal reports to the credit bureaus, it will help you establish a credit history.

At this time, Petal is in a beta launch and accepting applicants by invitation only. Visit PetalCard.com to get on the wait list.

If approved, your initial credit line will range from $500 to $10,000 with an APR of 13.99 percent to 24.99 percent. As you demonstrate a history of paying your monthly balance in full, Petal will increase your available credit.

Company founder Jason Gross told TechCrunch, “We don’t have the same overhead as a Chase or a Bank of America. We’re not burdened by brick-and-mortar operations; we’re able to operate more efficiently.”

Of course, Petal isn’t alone in pioneering new consumerfriendly credit businesses. Similar services exist for people with little to no credit history or those who are fee-averse, but still want the flexibility of plastic.

Among them is Sezzle, which is like a layaway plan that’s available all year-round instead of just at the holidays.

Sezzle allows you to pay 25 percent at the time of the transaction at a variety of participating merchants. The remaining 75 percent is broken out across three additional payments scheduled every two weeks.

If you pay your Sezzle balance in full over four equal installments, there are no fees at all.

However, there two fees you might face if you can’t come up with the money as agreed. The first fee is a $10 failed payment fee if a scheduled payment fails to process. The second type of fee is a $5 rescheduling fee if you need to adjust your next payment date because you’re short on cash.

Unlike Petal, the downside with Sezzle is that it doesn’t yet report to the credit bureaus — so it won’t help you build a credit history at this time.