PayPal has been one of the most reliable payment option for online payments and money transfer for years. It has made online payment and withdrawal so simple by providing currency conversing facilities which benefits the freelancers to work for clients from abroad without going through the hassle of currency conversion. PayPal Credit acquired PayPal in 2008.
Bill Me Later was the former name of PayPal Credit and it is a payment option offered on online shopping sites such as Best Buy, Walmart, eBay, Channel, etc. It facilities the shopper to complete the purchase without using a credit card. Bill Me Later was initially owned by I4 Commerce, later was acquired by PayPal on November 7, 2008 and was renamed as 'PayPal Credit'.
How to use PayPal Credit?
PayPal Credit is quite different from other bank credit cards that we own like VISA, eBay, MasterCard and other cards. There is no physical existence of a credit card under this as one might expect. Instead it is as simple as an online payment and can only be used in shopping sites.
There is also PayPal Cashback MasterCard which can also be used online. It is unique as it has PayPal in its name unlike other bank credit cards. It is not the same as PayPal debit or credit cards.
PayPal Credit can only be used to make the payment only if PayPal is available in the payment methods. However this shouldn't be a major concern as many big names like Macy's, Walmart, Best Buy, Channel, Target, etc have PayPal under their payment methods. Also do note that PayPal is not available on Amazon. If you are a frequent shopper, you can enjoy a lot of benefits from PayPal Credit especially if you are already using PayPal.
Let us see the step by step procedure to use PayPal Credit:
- While making a purchase on any shopping site, we have to choose a payment option. Select PayPal as your method of payment.
- Once you select PayPal, click on PayPal Credit and then select Continue.
- Simply set PayPal Credit as your default payment option. Some merchants automatically gives a suggestion of paying through PayPal Credit when you select PayPal option. But just to be on the safer side, change your default settings for preferred payment option as PayPal Credit.
- After it is complete, PayPal will take you to the review page. Re-check everything and if there are no changes required, submit the order.
- You will be able to check the balance amount to be paid to PayPal in your account. You can pay it within the given timeline to avoid late payment charges.
- If you tend to spend more on shopping then PayPal Credit could be the best choice for you.
- You can also use PayPal Credit to send money to someone under 'Cash Advance' feature very similar to sending money through PayPal wallet. However you cannot send cash to yourself.
It is as simple as that. PayPal Credit could very turn out to become the new face of credit cards as it is promoting card-less transactions.
How does PayPal Credit work?
Annual Percentage Rate
It is credit option given to the users by Synchrony Bank which allows you to make the purchase first and pay the amount over time. The Annual Percentage Rate of PayPal credit is 25.99% as of Jan 2019 for online purchases and cash advances. This however fluctuates based on the market and is clearly defined in the credit agreement. The minimum amount that is charged is $2.
Purchase amount larger than your wallet?
It is just another payment option in the checkout page is you already own a PayPal account. PayPal Credit helps you make a purchase of higher value even when your available balance in the account is lower. This is reusable facility that is added into the main account (PayPal account). You can either pay it in one shot or over a period of time.
Steer Clear of the interest
We already know that interest rate here is 25.99% which is actually high. We can say this is one similarity between PayPal and other credit cards, its interest rates! So be wise enough to pay off the balances before six months no matter how high they are. That way you can steer clear of the interest and still enjoy the benefits. However the best thing about this is there are no other annual charges or hidden fees involved so you can enjoy the benefits tension free as long as you are paying them in time.
It gives you a lot of perks and makes life easier however it is a requirement of the company that you make the monthly payments even if full payment is not made within six months. If you do, then the interest will not be charged but still monthly payments are non negotiable and has to be done. The late payment charges are as high as $25 for the first month and increases up to $35 for repeated late payments. I suggest, pay on time or the advantage can turn a major disadvantage for you.
Yes! That's right. PayPal Credit does offer Interest-free loan but it comes with a catch. The catch is, you get interest-free loan if you pay off the amount within 56 days or if you spend more than $99 on a single transaction/payment you get interest free loan for six months. You only have to pay the minimum amount every month as installment with no interest and pay off the whole amount within six months which is a great money saver. If not, you will be charged interest post four months.
How do you qualify for PayPal Credit?
This is the only credit line that literally takes seconds to get approved. The process of approval for PayPal is swift because there is necessity for physical approval and everything is online. You do not even have to wait for card to arrive on mail. All you have to do is submit an online application for it and instant approval will be done based on your credit history in PayPal and the credit score.
Credit score is very important
You also need to enter your personal information, social security number and date of birth. After the application is submitted, you will receive an answer about the status of the account approval almost instantly or in a few seconds.
The mandatory requirement is that you should have a PayPal account already and the credit score should be good. Once it is approved you will automatically get PayPal Credit option as soon as you select PayPal in payment methods. If not, set it as a default mode of payment.
There is no particular guideline to get approval and PayPal has not disclosed the criteria required for getting approval but you need to have an active PayPal account with good transaction history and good credit score. This will increase the chances of getting the approval. After you apply, you will know if the account is approved or not in seconds and receive an intimation through Email.
You can start using it as soon as you are approved and need not wait for 7-10 days which is the case for other credit cards.
The credit limit for PayPal Credit is low compared to other credit cards.
Terms and Conditions
- The monthly installments has to be paid without fail. You can make payment of any amount higher than the minimum amount due within the due date or even pay the full amount.
- Annual Percentage Rate is 25.99% on both cash advances and purchases. This however fluctuates based on the market with prime interest rate.
- They are currently is offering its users interest-free loan credit for six months on purchase of $99 and above in single transaction. However it should be paid in full within six months if not interest will be levied on the amount.
- Using 'Cash Advance' is useful to send money but you will be charged 2.9% + $0.30 US dollars each transaction as fee. This is same as the fee you pay for send money using debit or credit card on PayPal.
- PayPal has Purchase Protection feature which will ensure the safety of your money in case the online purchase have not arrived or does not match the description. PayPal Credit will refund your balance with shipping charges.
Frequently Asked Questions
PayPal Credit or Credit Card. Which is better?
PayPal Credit is good option for college students as it has interest free option for six months based on the amount spent however if you are someone who spends more. Then this might not be a good option for you as the credit limit is lower compared to other credit cards.
Is it safe?
PayPal is a reliable company and is one of safest modes of payment and PayPal Credit being in conjunction to it, is perfectly safe.
What are the penalty for late payment?
There is no exact penalty rate however there is fixed fine of $25 for first late payment and $35 for consecutive late payments.
Is there is any fee associated to use the service?
There is no application fee or annual fee for the service. There are no hidden costs as well as long as you pay the monthly installments in time.
How do I know how much I owe?
You will get both an E-mail and physical mail from PayPal with monthly statements.
Is it possible to withdraw money through PayPal Credit?
You can use a feature called 'Cash Advance' to send money to others but you cannot use to send money to yourself or withdraw cash.
Can your customers pay you through PayPal Credit?
Yes. As long as they have it and can send you money through the same for the services/product received.