Technology Explained

What Is PayPal Credit and Where Can You Spend It?

Dan Price Updated 30-11-2019

Imagine a world in which you could shop online without ever needing to enter a credit or debit card number; the increased security alone would be a massive boon. No one could look over your shoulder in a public setting, and you wouldn’t be at risk from credit card fraud or physical theft.


Well, that’s exactly what online payment giant PayPal offers in the form of PayPal Credit.

What Is PayPal Credit?

PayPal Credit (formerly called “PayPal Bill Me Later”) is a virtual credit card. It was originally launched in 2008 but was rebranded into its current form in 2015. The service is paper-less, card-less, and built directly into your PayPal wallet.

The integration with your PayPal wallet means you can manage your payments, view your balance, and check your statements through your existing login.

Two other services—PayPal Extras MasterCard and PayPal Smart Connect Card—fall under the PayPal Credit umbrella. However, they offer a physical card so will not form part of this rundown. Learn more about the pros and cons of PayPal’s credit cards.

On the surface, the PayPal Credit works like a traditional credit card; you make a purchase on the card and either pay off any balances immediately or spread the costs over several months—but that’s where the major similarities end.


PayPal Credit vs. Traditional Credit Cards

The biggest difference between PayPal Credit and a bank-issued credit card is how it affects your credit score.

The initial setup is the same; PayPal will make a hard inquiry on your credit report, which may temporarily lower your credit score by a few points.

Thereafter, PayPal will never report any activity to the credit bureaus. This means if you’re late with a payment or default on a balance completely, it will not affect your credit score in a negative way.

On the flip-side, if you’re a good customer and make all your payments on time, you won’t see any benefit in your score.


Beware, just because it won’t affect your credit score doesn’t mean it won’t affect you in other ways—PayPal will charge you up to $27 the first time you’re late, and up to $37 each time thereafter. Debt can build up quickly, and it’s not easy to shake off.

It’s also worth noting that PayPal won’t offer you any of the typical rewards that normally go hand-in-hand with credit card usage—think air miles, reward points, or cash-back deals. Instead, it’ll offer you promotional offers such as reduced interest rates or interest-free periods on certain purchases when you’re checking out of an online store.

At the moment, PayPal is offering zero interest on all purchases over $99, as long as you pay the purchase balance in full within six months.

The variable purchase APR for new customers is 25.74 percent, which is slightly higher than most high street cards. Your credit limit will be at least $250, and you may even get a $10 sign-up bonus. There’s not been an official word from PayPal, but anecdotal evidence suggests the maximum credit limit is capped at $10,000.


Where Can You Use PayPal Credit?

If you’re wondering what stores accept PayPal Credit, the good news is that you can use the service at almost any business that accepts standard PayPal payments, including eBay (though you cannot use it for purchases that fall into the categories of adult, weapons, alcohol, or vehicles). Other participating stores include Walmart, Home Depot, Best Buy, and Overstock.

Some companies have a PayPal Credit option on their checkout screen, others don’t. If you don’t see the option it doesn’t mean you can’t use the service—as long as PayPal is accepted, PayPal Credit will also be accepted.

If you don’t see it on the initial checkout page, just choose to pay by PayPal, then select PayPal Credit as your payment method on the next page.


And don’t worry—if you do not already have an account, you can apply for one at the time of checkout. You’ll be asked to provide your date of birth and the last four digits of your Social Security number, and then to accept the Terms of Service. PayPal will make a decision on your application almost instantly.

Payments on your balance can either be made from your PayPal balance or directly from your bank.

PayPal Security

PayPal offers “zero fraud liability” protection, which is the same protection that most major credit cards offer.

In practice, it means you cannot be held liable for unauthorized charges, and if someone hacks your account and goes on a spending spree you are guaranteed to get all of your money back.

If you use an Android device with the service, make sure to check out our article on how Android malware could empty your PayPal account Warning: Android Malware Can Empty Your PayPal Account Want to know about cybersecurity threats in December 2018? Check these astonishing stories of hackers and malware. Read More .

Is PayPal Credit Right for You?

Now it’s over to you. Have you used PayPal Credit? Would you use PayPal Credit? And what do you think are the pros and the cons of PayPal Credit? You can let your fellow readers know your thoughts in the comments at the end.

If you’re trying to decide whether a PayPal Credit account is right for you, remember that it’s not free money. As with any credit line, you need to be financially responsible and ensure it’s the best fit for your needs.

Of course, PayPal isn’t the only online payment method you can use. If you want to learn more, read our article about the best PayPal alternatives The 8 Best PayPal Alternatives for Making Online Payments PayPal is the biggest online payment provider, but it's not the only one. Here are the best alternatives to PayPal you can try. Read More .

Related topics: Credit Card, PayPal, Personal Finance.

Affiliate Disclosure: By buying the products we recommend, you help keep the site alive. Read more.

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  1. will
    December 18, 2019 at 4:31 am

    PayPal credit is TERRIBLE. You cannot use it anywhere. Anywhere that accepts PayPal? - No. Not sure what this author was smoking. You can't even use it on EBay most of the time. There are a VERY limited number of merchants who will accept PayPal credit and if you are lucky enough to find one that does - you are likely to have your legitimate purchase denied due to 'security measures'. Then you waste hours of your life trying to get help from PayPal's TERRIBLE customer service - who will bounce you back and forth between PayPal credit customer service and regular PayPal customer service - each attempting to blame the other. Don't waste your time! Cannot say strongly enough - this is NOT a credit card! It is TERRIBLE !!!!

  2. Anna
    September 8, 2019 at 7:52 pm

    As of June 2019, Paypal credit line payments are reported to Transunion, & other major credit reporting bodies. I'm fairly new to it, & have been paying down my balance in very short order. Very pleased with it thus far, as well as the customer service agent when I had to call about the status of my first payment (weak signal here causes problems). Only negative was the hard slap to my 700 score in getting the account - dropped like a brick to 620. Ouch. However, it has been ticking upward inch by inch.

  3. Ray
    August 20, 2019 at 9:32 pm

    This article is misleading. PayPal Credit is not accepted if you only see PayPal. The amount owed will be deducted from your bank account/debit card. I lost almost $100 in overdraft fees because of this distrustful con. The first time it happened and I called PayPal, they told me to remove my account information and PayPal Credit would work. So when I made purchases for gifts for my family, again it went into my bank account even with the information removed from my PayPal Credit. Customer service lied and after wasting days working with my bank and merchants to ask for refunds and making returns, I will never use PayPal Credit. A huge scam!

  4. sarah
    June 20, 2019 at 4:58 pm

    you cant use the credit anywhere paypal is accepted....ask the stranger that had to kindly buy my lunch at subway the other cant use it at walmart...ask me, who ran out of gas two days ago in their parking lot because that's all the money i have. getting this "card" was the WORST of all my horrible ideas and it WILL be cancelled this week...after i pay off the one thing i was able to buy online. this is NOT a real credit card, more like a card satan set up to laugh at our misery while we starve, standing in line at subway, starving while on the phone with a customer service agent that knew about as much as i did. i cant convey enough (without profanity) how badyl this card sucks. do yourself a favor and just go throw your money in the trash. its quicker and WAY less stressful than dealing wiht this debacle of a "card."

  5. Mike Mesmer
    May 4, 2019 at 1:31 pm

    If find Paypal credit to be a crock and most of the comments here seem to be posted by employees of Paypal! I have yet to find anybody who accepts Paypal Credit...stores, etc. And the prime reason I ever had a credit account in the past was to purchase on Ebay. Can't do that anymore, either. Whoever wrote this is on some kind of drug ..I have attempted to use it on Ebay several times not for guns, which you can't sell on ebay anyway, or anything illegal and have been told PPC is not accepted for purchase so BS that you can use it on Ebay!!! Display cases, stamps, etc. are illegal to Paypal??? And whe I attempt to contact Paypal via email about this...looking for human interaction...I'm sent to electronic reply hell! Take a hike Paypal Credit, you are useless!

  6. Jon
    March 12, 2019 at 10:02 pm

    As a PayPal credit user, this was a great read. There were things I did not know about PayPal's credit accounts but always wondered. Thank you for putting the time in to write the article. The only questioned information I could give insight on is the PayPal credit limit being capped at $10,000. The credit limit is higher, for my credit account with PayPal has a higher limit than 10k and that's not a business account.

  7. Helen
    November 21, 2017 at 12:14 pm

    I'm in the UK, but made a purchase online through paypal, choosing my paypal credit account as the funding source..... only, they took the money off my debit card instead, emptied my bank account and made me overdrawn causing me bank charges. Paypal were completely disinterested. I spent 5 hours solid from 8am on a saturday morning trying to resolve it. They can't change the funding source apparently. They said cancel the order with the retailer. The retailer said, tough sh*t basically, we've been paid and delivered the goods anyway.
    Now I notice that retailer don't even have paypal credit as a possible funding source when you chose the pay by paypal option. I've noticed a few online retailers don't, and you can only use paypal with your credit or debit card..... so what exactly is the point of paypal? If you can't use your paypal credit account or any funds you have in your regular paypal..... it's just become another merchant services.
    I'm so angry, I've been banging my head against a brick wall for 4 days trying to resolve this. I can't even buy groceries or put fuel in the car.... they've cleaned me out.

  8. Robert DuVernet
    July 21, 2017 at 3:16 pm

    What a complete waste of time PayPal credit is. 5 transactions with Best Buy...all have "failed Authorization". Best buy customer svc agent told me "I tried to re-run the authorization and it is saying the transaction has completed...but they aren't sending the money". The PayPal supervisor, who likes talking over people told me "the payment isnt authoizing due to built in security measures as intended." I argued "so your system "intends" to deny legitimate transactions?" She tried very hard to explain the inexpiable, but I'm not stupid so it frustrated her. She then said to me to try and do the transaction again, but this time "don't spend so much...try just $300 or so and see if that works." I laughed stating "either I have $1250 available or I don't...PayPal credit is a joke, basically all I accomplished was dropping my credit score by a few points by applying. I cant buy anything with it and no one at PayPal gives a rats A$$. lol To the trolls in here saying how great it're full of it...

  9. AF
    March 26, 2017 at 5:36 pm

    This article sucks and while there may be 1 good piece of information you NEVER answered the promise in the title. Where besides Ebay can I use buyer credit. I already know what to look for in the cart. This is a perfect example why CONTENT is not king. Your Content did not add any value to solving my problem when I did the Google Search. #lamo

  10. Sharon Crosby
    January 30, 2017 at 7:16 pm

    I don't want this PayPal Credit Card. How can I cancel it?

  11. Sheri McDaniel
    January 9, 2017 at 4:19 pm

    would love the option of being able to have a credit card if want to opt in to have plastic and virtual use

  12. willie
    December 7, 2016 at 9:32 pm

    i would love for PayPal credit to convert to a plastic credit card myself

  13. Jody
    November 11, 2016 at 7:11 pm

    I was excited to be approved for PayPal credit and have faithfully made my payments ( and above) to repair my credit score and instead it did nothing but lower it with the hard request. I don't think I would have gotten it had I known it can't help my credit score.

  14. Lawrence Chase
    September 30, 2016 at 4:35 pm

    This site is wrong. I set up my pay pal credit as my primary form of payment. I clicked on pay pal for transaction payment method. It came out of my secondary payment method. After calling to figure out why pay pal informed me if the merchant doesn't give you the pay pal credit icon it won't use pay pal credit. Thanks for the misinformation I now have overdraft fee's.

    • Mint
      October 3, 2016 at 1:10 am

      Paypal credit is very misleading! The same exact thing happen to me! I select PayPal credit for method of payment and it was withdrawn from my bank account. When I called PayPal credit customer services alll the representative say the same thing. That merchant don't accept PayPal credit. ? So why advertise these stores on there website. It only works for EBay! Clearly

    • Momlife
      November 4, 2016 at 8:32 am

      This happened to me. I figured out that I needed to change my default payment method each time I ordered
      From a website.
      When you get to the pay pal login from the merchant site, you have to change the method of payment on the paypal site. Don't just accept charges. It will say paypal payment method. Click that and it will let you select any option you have linked to your PayPal account. I.e bank, credit cards, paypal credit.
      If you do not change the default payment method each time it will default to your bank account as that was most likely how you set up your PayPal to begin with.

    • Whitbey
      December 4, 2016 at 9:08 am

      Same here

  15. Basictek
    August 27, 2016 at 9:29 pm

    I've been using paypal credit since it was called bill me later. I absolutely love that I can make paypal purchases to virtually anyone (including direct email addresses). They say it increases consumer spending by 30% I'd say in my case it increases my spending by a couple 100%. If I can't afford something right away I just make sure it's over $100 and use paypal credit, now I have 6 months to come up with the money. This provides huge incentive for me to actually pay the bill in 6 months and after years of making some rather large purchases I have yet to pay a dollar in interest. Paypal is excellent about telling me when interest is due (or I can check for myself in the paypal credit section. I have a bunch floating right now and I have been scheduling the 6th month payment just days before the interest comes due. Then using paypal credit for new purchases starting the clock all over again. I love the system and paypal has implemented it beautifully. I hop that others (like normal credit cards) follow suit. The important thing is to make sure you have a plan to actually pay the whole balance off in the 6 months because not will it start charging you 19.99% but you will be back charged from the original date. With great power comes great responsibility. ;)

  16. Elayne
    June 15, 2016 at 9:53 pm

    I have information good and bad on paypal credit. I initially got paypal credit when I financed a nordictrack workout machine online. I paid off the machine within the 18 month and no interest was charged as promised. I was even given a credit raise on the account. Then I had to create a paypal account in order to access the paypal credit that was available for additional purchases should I choose to do so. It was bill me later when I initially got started. So I opened a paypal account to connect to the bill me later account and had $2700 of available credit. At the time I needed to purchase some items for my job, I am a teacher. I read through all the paypal credit information and it said you can pay anywhere that took paypal and use your paypal credit balance to check out. It also said you could do other things, such as send money, or withdraw money etc. So, I was looking for specific items and I went to eBay. I went to check out and it showed and option for paypal credit. I selected the button and was denied! I kept trying over and over and finally my order went through! But then I looked and only part of my order had gone through? So I went back to my basket and tried to process the rest of the basket. Denied, denied, denied and I could just go on and on. This went one for another day and I finally called customer service. They couldn't help me. They gave me some pat answers about waiting 24 hours to let the blocked purchases clear the system and then try again. So I did. Same thing happened. I called. Same thing. I waited. Same thing. I tried for a week. I got online and started looking around for answers and they were easy to find. This is a problem with paypal credit since they became paypal credit. Thousands of customers for over a year or longer have been having the same problems. I guess paypal makes enough money so they aren't concerned about the ones that they can't make money off of. In the long run there is only two sites that I can successfully make a purchase from. I am unable to use any of the other features that the site clearly says you can use with paypal credit. Nothing else works. I can't send money. I have sent almost 12 emails over the past month and I get pat answers. Customer service reps are clueless as to what is going on. They make an hourly wage and are trained to send pat emails with pat answers that don't resolve anything. Paypal credit, it might work and it might not.

    • Donna
      September 22, 2016 at 1:01 am

      I am having the same problem with my PayPal credit...i have called multiple times and they keep saying wait 24hrs,48hrs, or 72hrs and try again...ughhhh...if PayPal is gonna give me credit limit then damnit let me use it...I've had PayPal for years and now in the last 2 weeks it sucks...

      • Carisa
        November 14, 2017 at 10:01 pm

        I absolutely agree with all the statement about the hassle and repetition of getting denied!! I’m still stuck on where can I use this damn thing?? And why on earth do I get the same run-a-round EVERYTIME I call... “it’s out internal security system” so why did it approve me for $1800 but doesn’t let me spend it!! My sanity level is reached and my questions are all still unanswered!! Plus Irea all these different reviews on the web and everyone suggests making larger purchases, and even customer service rep said the same thing, well come to find out whatever purchases PayPal credit has let me make it’s only allowed no more than $45!! Wow!! When I call about this I’m told the system is learning to slowly trust you!! WT* does that mean?? Come on let’s get real...PLEASE!!!

    • Nona T
      December 11, 2016 at 2:22 am

      I just opened a PayPal Crefit report and am having the same issues. Absolutely cannot use it for any thing. Very disappointed with PayPal's customer Non-service.

  17. Anonymous
    August 26, 2015 at 7:51 pm

    PAYPAL Credit .......let ME tell you about PAYPAL Credit. Many times in the past few years Paypal would send me an email that stated: If Approved, I would pay NO Interest if I paid off the balance within 6 months. I never responded until one day when my desktop computer died. Went to my wife and 'begged' [ ;) ] her to allow me to purchase a refurbished computer off of Ebay. She gave me the go ahead after I assured her that there wouldn't be any interest charges if we paid the charge off within 6 months.

    So, I clicked on the link in the email and followed the instructions, got approved, and then made my Ebay purchase. I immediately, and I mean IMMEDIATELY, went to the calendar on my fridge and wrote 'Paypal' 5 days ahead of the due date payment to insure we would pay off the balance before 6 months.

    So then the statements started coming monthly and my wife pointed out to me that there were interest charges being applied to our balance. I told her not to worry about it because I figured that after paying off the balance in 6 months PayPal would credit my account with the interest charges.

    Fast forward a couple of months - again my wife pointed out the interest charges and so I called the toll-free (thankfully) number on the statement to get some clarification as to the interest charges being credited back to me after 6 months. The guy I talked to at "Paypal Smart (NOT) Connect" said there was no such thing as an 'interest free' offer and that he had no idea what I was talking about. He told me that anything relating to 'No Interest' fees was between me and Paypal. I then said: "Aren't you PayPal?' He told me that I was talking to a bank and they had nothing to do with PayPal other than using the name 'PayPal'! After a few minutes of me ranting about the deception of the email, he transferred me to a customer service agent for PayPal.

    That connection was the best I had that day. The young lady I talked to was in the Philippines and when I explained to her the problem I was having, she was very empathetic to my problem. That young lady should get a promotion but she's probably getting screwed by PayPal just as I am. She then transferred me to some customer service guy at PayPal.

    I explained the problem to this guy and he told me it was ALL MY FAULT because I didn't 'READ' the fine print. I asked him what 'fine print' did I NEED to read for replying to an email offer from PayPal offering interest free on a purchase made and paid for in 6 months. He kept saying over and over and over and over again that it was all my fault for not reading the 'fine print'. He told that to me over 20 times! I was imagining him laughing his ass off at me through the entire conversation! What a "punk" he was and if he represents customer service of PayPal, he upholds and defends the deceptive email that they sent to me.

    I say 'deception' because email offer after email offer from PayPal offered me no interest if I paid off in 6 months. What type of deceptive company offers that and then hooks you up with a credit card charging you 27 freaking %? 27%? 27%!!!!!! At the end, I must admit that I rudely told the guy what he could do to himself. Shouldn't have done it, but his 'customer service' was more than insulting when he kept on saying: "It's all your fault because you didn't read the fine print.".

    I kept saying to him that we were talking about approximately $15 and would PayPal go broke reimbursing me for their truly deceptive email offer!!! Be aware of any credit offers from PayPal. Deceptive, deceptive, deceptive they are!

    My wife paid off the remaining balance and cancelled my BARGAIN 27% credit card.


  18. Anonymous
    August 18, 2015 at 10:20 pm

    I use to work for Bill Me Later several years ago.
    Unless their policy has changed, if you don't pay your bill they will eventually sell it to a collection agency which probably will report to the credit agency the debt.

    • Dan Price
      August 18, 2015 at 11:41 pm

      Hi gcat. Thanks for the heads up, that's very important for people to know.

  19. Anonymous
    August 18, 2015 at 4:42 pm

    I've used PayPal Credit for years (when it was still Bill Me Later), I love the fact if the purchase is over a certain dollar amount I have a certain time to pay it interest free (the interest still accrues and if you don't pay it off in time you will be charged that accrued interest). An example would be if your order is over $99 you have 6 months interest free. Another note is that most major US airlines also accept PayPal to purchase your airline tickets. On a downside note is that for your promotional purchase (when you have a certain time interest free) when you make payments you can't choose where the payment is applied. The only time PayPal applies your payment to the promotional amount is the month before it's due. But you can call in & request them to apply your payment to the promotional amount.