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Spread your payments out over time, but watch out for deferred interest.
Updated on September 2, 2024 Reviewed byKhadija Khartit is a strategy, investment, and funding expert, and an educator of fintech and strategic finance in top universities. She has been an investor, entrepreneur, and advisor for more than 25 years. She is a FINRA Series 7, 63, and 66 license holder.
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PayPal Credit gives PayPal users extra time to pay off a purchase through a revolving line of credit. You can even use the service to send money.
Learn more about how PayPal Credit works, how to apply for PayPal Credit, if there are costs involved, and how to make the most of the service.
PayPal Credit gives PayPal users a way to extend the payment period for certain purchases through a line of credit based on their creditworthiness. Synchrony Bank (formerly GE Capital), known for partnering with retailers to offer credit cards, manages the program.
The minimum PayPal Credit credit line is $250.
If PayPal approves your application for the program, you can choose “PayPal Credit” as a payment option for websites that allow PayPal payments.
Once you have a PayPal Credit account, you will be given the option to choose it as a payment method during the checkout process if the merchant offers it. As long as you have enough credit available, your purchase should go through. If you don’t have enough credit, PayPal may allow the transaction to go through by instantaneously increasing your credit limit.
If you shop at an online retailer that accepts PayPal, you should see PayPal Credit as an option. On purchases of $99 or more, you’ll have six months to complete the payments without interest. For purchases that are less than $99, you’ll have to pay the balance in full to avoid paying interest.
As with a credit card, each month you’ll have a minimum payment due, you can set up automatic payments or pay manually through your PayPal account.
If you need to pay someone you know and don’t have the cash on hand, you can use PayPal Credit to send money. Choose the “Pay or send money” option in your PayPal.com account and enter the recipient’s info (their email address or phone number), then change your payment method to PayPal Credit. There is no promotional financing for these transactions, so you’ll have to pay the amount owed in full by the due date, or you’ll be hit with interest.
When you use PayPal Credit to send money, PayPal will tack on a fee of 2.9% plus 30 cents.
PayPal Credit has a variable purchase APR of 29.24% as of September 2024, which is higher than the average credit card interest rate. There is no annual fee. If you miss a payment, you will pay up to a $41 late payment fee if you’ve had a late payment in the past six billing cycles or $30 if you haven’t. There’s also a fee of up to $41 for returned payments.
PayPal Credit has two types of promotional offers:
Though these offers can seem like a great deal, just be mindful that if you owe even $1 the day after the promotional period expires, you’ll pay deferred interest. In other words, you’ll be charged all of the interest you would’ve paid from the date of the purchase if you hadn’t got the promo rate.
If you have a PayPal account, you can log in and apply for PayPal Credit at any time or you may be offered the option to apply when checking out with regular PayPal via an online retailer. The process is quick: Enter your birth date, annual income, and the last four digits of your Social Security number, and check the box to agree to the terms and conditions. PayPal will perform a hard inquiry when it checks your credit during the approval process. In a few seconds, you should have your decision.
If approved, PayPal Credit will be a payment option for all future online checkouts where PayPal is accepted.
PayPal Credit is best for online shoppers who enjoy using PayPal and who, on occasion, would benefit from some extra time to pay off purchases above $99. For smaller purchases or to send money to others, it’s not a great deal, since there are added costs involved. If you only need a couple of months to pay for a purchase, consider using PayPal Pay in 4, a buy-now-pay-later service that doesn't charge interest.
Those with good-to-excellent credit may be better served by opening a credit card that offers 0% APR for at least 12 months. In addition to having a longer period to pay off a large purchase, you’ll avoid deferred interest and possibly earn rewards on your purchase.
PayPal Credit could be good to have in a pinch, but relying on it too much could cost you more if you get hit with APR charges, deferred interest, or fees for peer-to-peer payments.
PayPal doesn’t specify the credit score that is needed to be approved for PayPal Credit. Even those with average credit scores may qualify.
PayPal is a payment option that draws funds from either your bank account or a credit card. You can also keep a balance in your PayPal account and use it for purchases. PayPal Credit is a revolving credit line that allows you more time to pay off purchases but charges an APR if you carry a balance.
There is no minimum purchase amount listed in the PayPal Credit terms and conditions.
The Balance uses only high-quality sources, including peer-reviewed studies, to support the facts within our articles. Read our editorial process to learn more about how we fact-check and keep our content accurate, reliable, and trustworthy.
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