PayPal has a strong image as a reliable way to send money online because it started out by letting people pay each other directly. The site has become more important in the global economy. Its credit choices, PayPal Credit and PayPal Mastercard, connect customers to merchants.
One works like a virtual credit line, and the other is a regular credit card. Both have good points for customers, but a closer look at the details makes it easier to know when to choose one over the other.
How every choice works
Synchrony Bank is the company that gives out both PayPal Credit and the PayPal Cashback Mastercard. Once you link it to your PayPal account, you can use PayPal Credit, which is a digital credit line, to buy things anywhere PayPal is accepted. You don’t have to ask for new credit every time you use your current credit line. Instead, you can use it over and over at stores that take part.
You can also buy things on credit with the PayPal Cashback Mastercard, but it works just like a regular credit card. You can swipe or dip your card to pay for things in person, or you can type in your payment information to pay for things online. You can link the credit card to your PayPal account and use it as a way to pay at stores that accept PayPal, just like you can with PayPal Credit.
Where can each choice be used?
The PayPal Cashback Mastercard is a co-branded credit card, so you can use it anywhere Mastercard is accepted. This gives you more ways to use your credit account. Travelers from other countries can use their cards outside of the U.S. without having to pay an extra fee.
Note
Cash advances are a possibility, but you should only use your credit card for cash advances when you have to. The cash advance APR is currently 31.74% (varying), and there is also a cash advance fee.
PayPal Credit, on the other hand, isn’t used as much. Your credit account can only be used at stores that accept PayPal, which may not be the case for many of the things you buy every day. On the plus side, you don’t need a real credit card to make payments, and you won’t have to give an account number at checkout. Your credit card is less likely to get lost or stolen, and your credit information is less likely to be stolen in a data hack.
There were sales.
If you want to pay for purchases over a longer period of time without paying interest, PayPal Credit gives you six months of special credit on purchases over $99. To escape interest, all transactions under $99 must be paid in full. If not, the regular APR will be used to figure out how much you will have to pay in interest.
Note
Even if you make the minimum payment each month, it might not be enough to pay off your amount in six months. Interest isn’t charged right away, so if you don’t pay off your whole amount within six months, interest will be added to your account from the date of purchase.
Easy Payments is a second type of special credit that may be offered at some stores. With Easy Payments, you can make three equal payments on orders over $30.
The PayPal Cashback Mastercard doesn’t have an initial interest rate, which is too bad. In the terms and conditions, it says that the card offers special financing deals and no interest for up to 18 months. It doesn’t say when these deals will be available, though.
There are benefits
The PayPal Cashback Mastercard is a good choice for people who like getting benefits. When you make a purchase, you get 2% cash back, which is about the same as other flat cashback rates on the market. Getting rewards with the PayPal Cashback Mastercard is also nice because you don’t have to keep track of extra categories and you don’t have to sign up to get rewards. Since you can use your card to buy things both online and in person, you have more chances to get benefits.
You can exchange your rewards for any amount, and if you upgrade your PayPal account to the Cash or Cash Plus programs, you can use your rewards from your PayPal sum. If you don’t want to use them that way, you can move them to your bank account.
With PayPal Credit, there are no benefits.
Money Being Sent
For an extra fee of 2.9% plus $.30 per transaction, you can send money to family and friends using PayPal Credit or the PayPal Cashback Mastercard, which is related to your PayPal account.
When you use PayPal Credit to send money, it’s a cash advance, not a normal buy. Even if you spend more than $99, you won’t be able to get special credit. You will also be charged the normal APR for a cash loan. (However, both APRs are the same right now.)
Functions and Safety
All sales made through PayPal are protected, with a few exceptions like real estate, moving cars, credit cards, and goods that are made just for you. When you buy something that is qualified for purchase protection, you get the full amount of the purchase plus shipping costs back.
The PayPal Cashback Mastercard also comes with a few Mastercard perks, such as safety against ID theft, Mastercard Global Services, and Mastercard Airport Concierge.
Interest and Fees
The APR for sales and cash withdrawals on new PayPal Credit accounts is currently 23.99%, but it changes with the Prime Rate. There is no monthly fee, and if you miss a payment, you will be charged a late fee of up to $40. PayPal says that if you are approved, you will start out with a credit line of at least $250, and your credit limit may go up from time to time.3
Depending on how good your credit is, the APR for the PayPal Cashback Mastercard is between 19.74% and 31.74% right now. Like PayPal Credit, there is no monthly fee. However, if you pay late, you will be charged up to $40.
Where Each Choice Stands Out
Many credit cards have an initial rate of 0% on purchases, but this rate is only good for the first few months after you open your account. You can take advantage of the interest-free period as many times as you want with PayPal Credit, as long as your purchases are more than $99.
If you want to make cash-back rewards or use your credit card in more ways, the PayPal Cashback Mastercard is the better choice. You can easily earn flat-rate cash rewards, and there are many ways to earn rewards on purchases.
