There were more than 254 million active paypal users worldwide in the third quarter of 2018. It seems that people don't know or just don't care that there are several online payment processor alternatives to paypal that are safer and better.
Unfortunately, convenience and availability tend to trump everything else.
And that goes for the paypal credit card as well. Despite mixed reviews, many people have and use a paypal credit card. Should you start too? Here's what you need to know to make an informed decision.
How the paypal credit card works
Paypal offers three different types of credit:
- Paypal credit (formerly called bill me later)
- Paypal extras mastercard
- Paypal smart connect card
As we learned in our review of paypal's customer services, paypal credit is not a credit card. It's simply a line of credit that is part of your online account and comes with some benefits. The smart connect card is similar, except you get a physical card.
When people talk about paypal credit card, 99% of the time they are referring to paypal extras mastercard, this is an actual credit card provided by synchrony bank. That's what we'll focus on for the rest of this article.
Here's a quick overview of what you get with a paypal extras mastercard:
- There is no annual fee for this card.
- 3 points per $1 spent at gas stations and restaurants.
- 2 points per $1 spent on paypal and ebay.
- 1 point for every $1 spent anywhere else, online or offline.
- Redeem points for rewards. (see more below.)
- Mastercard's built-in protection against a variety of drawbacks, including identity theft, fraudulent purchases and price drops within 60 days.
How to get a paypal credit card
To get a paypal credit card, you must voluntarily apply for one, be at least 18 years old, and live in the U.S. Application approval must be approved by synchrony bank.
Depending on your credit score and history, synchrony bank will determine whether you get the paypal extras mastercard (21.99%, 25.99% or 28.99% APR) or the smart connect card (26.99% APR and no rewards program). Even if you apply specifically for the paypal extras mastercard, there's no guarantee you'll get it.
However, after you've used the paypal smart connect card responsibly for a while, paypal may decide to upgrade your account to a paypal extras mastercard. This can take anywhere from 12 to 18 months, depending on your credit score.
Should you get a paypal credit card??
Meanwhile, the paypal extras mastercard probably seems like a great deal. There are no fees for use, you earn reward points no matter what you buy, and you get the same protection you would get from any other mastercard credit card.
But should you apply for it?? There are good reasons to do so, of course, but there are just as many reasons why you should not do so. Depending on your answers to these five questions, you will know whether you are in your best interest or not.
1. Do you already have consumer debt?
If you're already swimming in debt, grabbing another credit card is one of the last things you should do. Even if the debt you have is so called "good debt"-B. A mortgage loan or student loan, you should be careful about taking on more debt.
It's easy to tell yourself you're responsible with a new credit card, but the only way to be sure is to be honest with yourself and your current credit situation. Are you responsible for your current finances? If not, you probably won't have any new debt.
In 2014, paypal's VP of credit pointed out "[consumer spending] increases 30% after a customer accepts a paypal credit instrument," citing previous studies at the company. This was true regardless of whether the credit vehicle was paypal credit or a paypal credit card.
2. What is your personal credit score??
Each time you apply for a new line of credit, synchrony bank wants to know your credit history before approving or denying your application. This means a hard credit inquiry that stays on your credit report for two years.
This means you should not apply if you are not sure you will be approved. If you pull a credit request on your report and fail the approval process, you will be in worse shape than before.
Of course, no one knows the exact criteria, but the general consensus seems to be a minimum score of 600 for the paypal extras mastercard. Keep in mind that nothing is guaranteed and you may be declined for other reasons unrelated to creditworthiness.
3. Can you get a better credit card??
The rewards program for the paypal extras mastercard is pretty good, but there are other credit cards with better rewards programs. If you qualify, you can also shoot for it instead.
The blue cash preferred card from american express is one of the most sought-after cards for rewards seekers. There's a $95 annual fee, but you get 6% cash back at supermarkets, 3% cash back at gas stations and department stores, and 1% everywhere else.
The discover card it's another good thing to earn 5% cash back on select categories that change every three months, including gas stations, restaurants, amazon, wholesale clubs, department stores and others. There is no annual fee.
On the other hand, if you keep a month-to-month balance (which you should NOT do if you can help it), then a low interest rate option like the barclaycard ring mastercard might be better, which has a variable APR of 13.99% and no annual fee.
You may decide that the paypal extras mastercard is still best for you. Just make sure you find out what else is out there first.
4. Turn the rewards to you?
The only reason to choose a paypal extras mastercard over another credit card is if you prefer the rewards program, especially if you frequently shop at paypal and/or ebay.
In fact, many don't realize that paypal has its own shopping portal and directory where you can find a number of deals that you may not find elsewhere. In addition, you get 2x loyalty points for every $1 spent on the paypal shopping portal (and ebay)..
Of course, this only matters if you really care about the content you can redeem with your paypal loyalty points. Here are some of the most interesting things you can get:
- At 800 points, you can get gift cards to restaurants, gas stations, retail stores and more.
- At 3.000 points, you can get direct merchandise of various kinds, including household goods, kitchen appliances, sporting goods, electronics, gadgets and more.
- At 6.000 points, you can get a direct cash back reward by transferring your money directly to your paypal balance.
- At 15.000 points, you can get travel vouchers for hotels, airline tickets, and rental cars.
5. Do you support paypal's business practices??
Just because it's popular and used by millions around the world doesn't mean paypal is doing things right – at least in terms of ethics and trust.
It's no secret that thousands of people have been burned by paypal in one way or another: frozen money, lost transactions, closed accounts, and inadequate customer support. Maybe you were okay so far, but you could be the next unsuspecting victim.
In a more abstract sense, you need to decide if you are willing to do business with paypal while knowing that they do not treat their customers as well as they could be. Do you want your hard-earned money to go to a company like this one??
Maybe you don't care, and that's fine too. This is a personal decision and only you can make it work, but for many, justifying boycotts against paypal has been bad enough.
Is a paypal credit card worth??
I have a paypal debit mastercard tied to my paypal balance, but I haven't used it in years. I would never personally consider the paypal extras mastercard-but only because there are better credit cards available to me within my credit score range.
When would I consider a paypal credit vehicle? If the only cards available to me had annual fees (like capital one's quicksilverone rewards) or those with weak or no rewards (like most student-level credit cards).
And for what it's worth, I've never had a problem with my paypal accounts. How should scammers target your paypal account and how to never fall for it? Accounts you have online. Don't get me wrong, I'm not a big paypal fan, but when it comes to your money, you don't want to mess around. While… Read more .
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