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PayPal Credit Card Review: Get 2% Cashback and More

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PayPal recently introduced a cashback credit card to their lineup. They’re hoping to attract more customers, but does the new PayPal Cashback MasterCard deserve a place in your wallet?

Once just the banking arm of eBay, PayPal is working hard to become your go-to electronic payment system. With its impressive earning potential and easy cashback redemptions, the new PayPal Cashback MasterCard is their latest step in achieving this goal.

I’m going to focus on the new PayPal Cashback credit card and compare it to the better known PayPal Extras MasterCard. After giving you a rundown of their similarities, differences, perks and benefits, I’ll tell you which one can earn you the most rewards.

PayPal Credit Cards: What Do They Have in Common?

The two PayPal credit cards share a lot of the same features and benefits. To start, neither charges an annual fee and both are issued as MasterCards.

While neither comes with a sign-up bonus, they both offer some attractive benefits. In addition to earning rewards for every purchase, you’ll get handy cardholder perks, such as price protection, an extended warranty and rental car insurance.

The Most Important Features of the PayPal Credit Cards:

  • There are no annual fees.
  • You’ll earn rewards on every purchase.
  • You can use them anywhere MasterCard is accepted. They are not limited to places that accept PayPal.
  • You’ll get MasterCard benefits, such as price protection, extended warranty and car rental coverage. I’ll cover these benefits in more detail below.

Note that the rewards you earn with either card will expire after 24 months of inactivity. However, any purchase or reward redemption qualifies and extends the life of your rewards.

What the New PayPal CashBack MasterCard Has to Offer

The best thing about the PayPal Cashback MasterCard is that you’ll earn a bonus for every purchase. You’ll get 2 percent cash back for everything you buy. It’s that easy. There are no special bonus categories to worry about and no limits on how much you can earn.

What You’ll Earn With the PayPal CashBack Credit Card:

  • 2% cash back on all purchases

When you’re ready to cash in, your rewards are deposited straight into your PayPal account. From there, you can use that cash balance toward future PayPal purchases or transfer it to your checking account.

Unlike other cards, you always get 2 percent back on every purchase. You don’t have to sign up for rotating bonus categories regularly. You won’t have to juggle different cards to use at different stores, either.

What You’ll Earn With the PayPal CashBack Credit Card

This card gets 2% back everywhere. That’s better than most cashback cards and among the best rates in the industry.

So if you buy groceries, you’ll get 2 percent back. If you take your mom out for Mother’s Day brunch, you’ll get 2 percent back. Doing a little online shopping? You’ll get 2 percent back there, too. Easy, right?

What to Watch Out for With the PayPal CashBack Credit Card

No one card can do it all, and this card is no exception. Your PayPal cashback credit card can’t zip you around the world like travel rewards cards can. It doesn’t come with loads of travel perks, either.

How Does the PayPal Extras Credit Card Compare to the Cashback MasterCard?

The PayPal Extras card earns points on every purchase. Those points can be used for more than just cash back. You can use the rewards for gift cards, travel and merchandise.

Flexibility Is Nice

The difference between the cards is the rate at which you earn and redeem your rewards. Unlike the PayPal Cashback card, you’ll only earn a bonus for certain purchases with the Extras credit card. You’ll earn three points per dollar spent at gas stations and restaurants, two points per dollar on PayPal and eBay purchases, and one point per dollar everywhere else.

What You’ll Earn With the PayPal Extras Credit Card:

  • 3 points per dollar at gas stations and restaurants
  • 2 points per dollar for PayPal and eBay purchases
  • 1 point per dollar for everything else

What You’ll Earn With the PayPal Extras Credit Card
Seems easy enough, but let’s examine this a little closer.

Earning one point per dollar on everyday spending isn’t the greatest benefit. Getting double points on PayPal purchases—including any online purchase where you check out using PayPal—is pretty good, though. Unfortunately, not every online merchant takes PayPal.

The best category, which is for gas and dining out, earns three points per dollar. But more and more cards offer this, too. Most importantly, not all triple point cards are created equal.

The Problem With the PayPal Extras Credit Card

Perhaps the biggest problem with the PayPal Extras credit card is that your points aren’t worth a cent each. With the PayPal Cashback card, you know you’re earning 2 percent (or two cents) back on every dollar you spend. With the Extras card, though, the value of the points depends on how you use them.

If you redeem 6,000 points, you can get $50 in cash deposited into your PayPal account. That’s just .83 cents per point.

For all other redemptions, the amount of points needed varies. You have to call an 866-number or go online to find out how many points you need. It’s safe to assume that your points are worth less than one cent each across the spectrum of these options.

So while earning more points for certain purchases and redeeming for different reward options may sound great, looking at the Extras card little closer shows that the rewards aren’t as lucrative as they seem.

The PayPal Credit Card You Should Get

The PayPal Cashback credit card is the better option because it earns 2 percent on every purchase. In fact, that return on spending makes it one of the best cashback cards on the market. Plus, the card is free to hold because it doesn’t have an annual fee.

However, if you plan to primarily use a PayPal credit card to dine out and buy gas, the Extras card effectively earns roughly 2.5 percent back for those purchases. You’ll get three points per dollar at gas stations and restaurants, and points are worth .83 cents each.

For example, if you spend $600 on gas during the year, you’ll earn 1,800 points with the Extras card. If you redeem those points for cash, you’ll get $14.94 back. With the Cashback card, you’d only get $12.00. But for all other purchases, you will earn less with the Extras card.

Plus, if like to keep it simple by using one card for everything, the PayPal Cashback card is the clear winner.

More Benefits With PayPal Credit Cards

In addition to earning rewards, credit cards are a useful alternative to cash or debit cards because of the extra benefits they have built in. Through MasterCard, both PayPal credit cards offer some nice perks, including:

  • Extended Warranty: Using your PayPal credit card extends the life of your warrantied purchases by up to one year.
  • Price Protection: Say you buy that new watch you’ve been saving up for, and then it goes on sale next month. With Price Protection, you can be reimbursed if an item’s price drops within 60 days of your purchase.
  • Identity Theft Resolution: Data breaches are scary and sadly quite common these days. With MasterCard’s ID Theft Protection, they’ll help with all aspects of regaining control of your financial life after an incident.
  • Chip Card: It’s good to know that PayPal is including chips with their cards for greater security and acceptance.

The PayPal Credit Card’s Fine Print

The fine print can be boring, but here are the most important details you should know:

  • Many cards come with a sign-up bonus you can earn when you first get your card, but neither PayPal card has this perk.
  • Interest charges will apply if you don’t pay your bill in full and on time. The minimum interest charge is $1.50.
  • Speaking of interest, the rates on these cards are high.  If you don’t plan to pay off your card each month, you’re probably better off with a card with a lower rate. Check out our reviews here.
  • Unlike some cards, neither PayPal card has a low or 0% APR period for purchases or balance transfers.
  • You must be 18 to apply.

Questions Before You Apply for a PayPal Credit Card

Want to know more about the PayPal credit cards? We’ve got you covered.

Do I have to have a PayPal account to get one of the PayPal cards?

Yes. This is a requirement of the card, so it shouldn’t be much of an issue since PayPal accounts are free. But if you’ve run into trouble in the past with PayPal, you won’t be eligible for one of their credit products.

Can I get both cards?

Nope. You can only get one. But if your significant other is interested, you both could get one of each.

What if my PayPal account gets hacked? Am I on the hook for the charges?

Definitely not. You have no liability for unauthorized transactions, regardless of how the thieves get your info. You have to report it to the card issuer, Synchrony Bank, within 60 days of the charge showing up.

I like to redeem my points for gifts for my family. Do you recommend this?

Kudos to you for using your points selflessly. While a lot of banks offer credit cards where the points can be converted to gift cards, it’s rarely a good deal. That’s because the points will essentially be worth just fractions of a penny each when you redeem this way.

In most cases, you’d be better off redeeming your rewards for cash, then buying that gift card yourself. Plus, you’ll earn more rewards, too!

Getting 2 percent cash back seems like a great deal! Is there any reason I shouldn’t get the PayPal Cashback card?

Indeed, cash back is always a solid reward choice. The biggest downfall of this card is that it doesn’t have a sign-up bonus. Many cashback cards do.

Granted, you only earn the sign-up bonus once, but you could be leaving up to a few hundred bucks on the table by choosing this card over a competitor.

What are the minimum number of points I need for an award?

It’s simple with the PayPal Cashback card. You can redeem your rewards as cash into your PayPal account at any time with no minimums.

With the PayPal Extras card, you need to reach a certain threshold before you can redeem. Gift cards start at 800 points, merchandise starts at 3,000 points, cash starts at 6,000 points and travel vouchers cost at least 15,000 points. Remember, these are the starting prices which could go up depending on what you’re getting.

Can I use my PayPal credit card at the ATM?

Technically yes, but I don’t recommend it. You’ll be charged a fee for doing so and will also pay cash advance interest right away. Use your regular ATM or debit card to get cash from your bank account first. Use your credit card only as a last resort.

What is a net purchase and why should I care?

A net purchase is the final price you pay for something. If you buy a burger from your favorite fast food chain, chances are the net purchase is the final price. But if you go shopping at your favorite clothing store, the net purchase amount may be different if you return any of your items.

How does this affect you? Rewards are calculated based on your total net purchases. For simplicity, let’s say you charged $500 on the cashback card last month. You would normally earn 2 percent or $10 back in rewards.

If you returned $100 worth of merchandise, though, your net purchases are only $400. So you’ll only get $8 in rewards. Simply put, you only earn cash or points based on this amount, not the total sum of all purchases.

Other Cashback Credit Cards

Sure, you may hear that the Sapphire is all the rage these days or your friend’s credit union credit card earns 3 percent back, but those cards aren’t without their faults, too. If you’re considering other cards, be sure to check out our extensive reviews.

While both PayPal credit cards have a lot going for them, in no way are we suggesting these are the only cards worth considering. Check out our reviews of other popular credit cards. No one credit card does it all, so if you prefer a dedicated travel rewards card or low interest rates, you’re probably better off with a different card.

Bottom Line

Either PayPal credit card can work for the right consumer. If you spend a lot on gas and dining, the PayPal Extras card will earn a bit more than the PayPal Cashback card. Remember, though, that you’d be better off with the PayPal Cashback card for all other purchases.

You can’t get both PayPal cards, though. So if you’re looking for a simple, straightforward card that has a great return on all purchases, the PayPal Cashback card is the clear winner. It’s a worthy contender compared to any cashback card on the market. You don’t even have to be a regular PayPal user.

Editorial Disclosure: Opinions expressed here are author's alone, not those of any bank, credit card issuer, hotel, airline, or other entity. This content has not been reviewed, approved or otherwise endorsed by any of the entities included within the post.

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