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Key takeaways
- You can link your accounts, including credit cards, to PayPal to easily send and receive money.
- Using a credit card on PayPal might seem convenient, especially if you’re looking to score some credit card rewards; however, that convenience comes with rates and fees.
- PayPal charges fees when you use a credit card to make a transfer, and your card issuer might categorize such transactions as cash advances. Different from a regular purchase, a cash advance comes with a higher interest rate that starts accruing immediately.
Whether you’re sending money to loved ones or paying for goods and services, PayPal is a popular choice for online money transfers. And if you’re after credit card rewards, you might question whether using your credit card to send money with PayPal can help you boost your rewards earnings. Let’s look into the pros and cons of using a credit card with PayPal, and whether the rewards you earn can be worth the high transaction fees.
Should I use a credit card to send money on PayPal and earn rewards?
You can use a credit card to send money from your PayPal account to friends or family. PayPal secures transactions on its platform through encryption, reducing the likelihood of identity theft. And depending on your credit card issuer or card, you may also earn rewards — like cash back, points or miles — for transactions processed through PayPal, just as you do for other credit card purchases.
But watch for transaction fees on money transfers that can eat into any rewards you might earn. When you use a credit card to send money with PayPal, you pay a processing fee equal to 2.9 percent of the amount you’re sending, as well as a fixed 30-cent fee on each transaction. International fees may be even higher, depending on where your recipient lives and conversion rates. If your credit card offers 1.5 percent or 2 percent cash back, you may end up losing money to the fees alone.
To add to that expense, a person-to-person cash transfer might be coded as a cash advance to certain card issuers, attracting higher APRs and fees than a typical transaction. Plus, those high APRs apply from the moment the cash advance is processed — no grace period. If the transaction is coded as a cash transfer, what you spend may not even count toward the minimum for any bonus on your card.
Unless you’re working toward a hefty welcome bonus or using a card that earns boosted rewards for PayPal, it’s not the cheapest way to send money.
How much will I pay for using a card to send money through PayPal?
PayPal allows you to send money to other PayPal recipients for no additional fee when you pay from your PayPal account balance or a linked bank account. It’s when you use a credit card to send money that things can get expensive.
Let’s say you need to send $500 to a loved one. That $500 transaction will attract both a 2.9 percent processing fee and a fixed fee of 30 cents.
| Transaction fees | |
|---|---|
| 2.9% processing fee | |
| $0.30 fixed fee | |
| Total amount to your credit card |
If that same charge is considered by your card issuer to be a cash advance, you might pay an additional 3 percent to 5 percent in transaction fees on your card statement — adding $15 to $25 more to the total. And that total would immediately trigger a high cash advance APR, typically 24.99 percent to 29.99 percent.
How to send money on PayPal using a credit card
If you’ve weighed the costs against the convenience of using PayPal to send money with a credit card and still want to continue, you should be able to do so pretty easily.
Simply create or sign in to your account and take these six steps:
- Link your credit card. Select or tap Wallet and add your debit or credit card to your account.
- Request to send money. Go to Send and Request on the PayPal site or tap Payments from the app.
- Enter your recipient’s details. Add the person’s name, PayPal username, email address or mobile number and click or tap Next.
- Indicate the transfer amount. Enter the amount you’re looking to send, choose the currency and add any notes for your records. For international transactions, pay special attention to the additional fees.
- Choose your payment method. Select the credit card linked to your PayPal account.
- Confirm and send your payment. Carefully review details and fees, and click or tap Send Payment Now.
Credit cards that offer bonus rewards for PayPal transactions
If you frequently use PayPal, consider a card that offers bonus rewards for PayPal transactions.
Cards with rotating 5% bonuses on PayPal transactions
While you might not be able to find a credit card that consistently offers higher rewards on PayPal purchases than the PayPal Cashback Mastercard. However, certain cards might offer excellent rates in this category — periodically.
The bottom line
While PayPal can be convenient, it’s among the most expensive ways to send money if you’re using a credit card to fund the transaction. Expect to pay hefty fees that will eat into any card rewards you stand to earn. Your card issuer may also treat the transaction as a cash advance, which comes with steep fees and APRs — with no grace period.
If you’re a frequent PayPal customer, look into a credit card that offers boosted rewards on PayPal transactions. And learn about other ways to send money with your credit card, including lower-cost alternatives.
*Information about the PayPal Cashback Mastercard® and Chase Freedom Flex® has been collected independently by Bankrate. The card details have not been reviewed or approved by the card issuer.
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