What Is PayPal Credit and Where Can You Spend It?
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We shop online more than ever. Recent figures suggest that one in three of all purchases are now made via the web, with US-based consumers expected to spend $398.78 billion online in 2015 alone.

It’s a trend that’s not going to slow down. Experts predict that online sales in Europe will grow a staggering 18.4 percent in 2016, with the United States not far behind at 13.8 percent growth.

With the explosion in online shopping, it should come as no surprise that countless online payment services Making Online Payments - 5 PayPal Alternatives to Consider Making Online Payments - 5 PayPal Alternatives to Consider Is PayPal the best and most secure method of making online payments? We look at 5 PayPal alternatives that you should consider. Read More have popped up. PayPal was arguably the original, but it now faces stiff competition from all quarters.

As a result, PayPal has had to branch out and offer new services. One such service is the recently rebranded “PayPal Credit“.

What is PayPal Credit?

PayPal Credit – formerly called “Bill Me Later” – is best described as a virtual credit card. It’s paper-less and card-less, and since the rebrand it’s built directly into your PayPal Wallet.

It’s the integration into PayPal Wallet 8 Things You Probably Didn't Know About Digital Wallets 8 Things You Probably Didn't Know About Digital Wallets Digital wallets are billed in most tech circles as the future of real-world payment technologies. Read More that the firm hopes will entice new users. That means you can manage your payments, view your balance, and check your statements through your existing login.

In a recent interview, Steve Allocca (PayPal’s Vice President of Credit) said that “the changes are part of the company’s larger efforts to bring credit more to the center of PayPal”, and that the company’s figures showed that “[consumer] spending goes up 30 percent after a customer adopts a PayPal credit vehicle”.

The service has actually been under the PayPal umbrella since 2008 when the company bought it from I4 Commerce, but it sat as a relatively dormant and underused feature until its rebrand in the middle of last year.

On the surface it 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.

What Makes It Different to a Traditional Credit Card?

The biggest difference between PayPal Credit and a bank-issued credit card is how it affects your credit score How to Improve and Monitor Your Credit Score by Using Technology How to Improve and Monitor Your Credit Score by Using Technology Your credit score can have a huge influence on your financial life. We explain how it's calculated and and how you can improve it. Read More .

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 3 Tips to Beat the Debt Collectors When Facing Bankruptcy (Or Late With Bills) 3 Tips to Beat the Debt Collectors When Facing Bankruptcy (Or Late With Bills) Serious financial problems are among the most stressful situations a person can encounter. Follow these tips to let technology take away some of the burden. Read More 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 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 $25 the first time you’re late, and up to $35 each time thereafter. Debt can build up quickly How to Get Rich: The Fastest Way to Get Out of Debt How to Get Rich: The Fastest Way to Get Out of Debt Imagine being debt free. No overdrawn balances or unpaid bills. There is a foolproof way of getting yourself out of debt. It starts with a plan and some discipline. Let's visit the other ingredients. Read More , 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 rates on certain purchases when you’re checking out of an online store.

The standard APR is 19.99 percent, which is slightly higher than most high street cards (though some “preferred customer” cards can see rates as low as 6 percent). Your credit limit will be at least $250, and you may even get a $10 sign-up bonus.

Where Can You Spend It?

You can use PayPal Credit at almost any store that accepts standard PayPal payments How to Use PayPal on Amazon (And Other Sites) How to Use PayPal on Amazon (And Other Sites) Have a hefty PayPal balance and want to spend it on Amazon or other sites that don't accept PayPal? Here are some workarounds that actually work. Read More , including eBay (though you cannot use it for purchases that fall into the categories of adult, digital goods, weapons, alcohol, and vehicles).

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.

If you don’t 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 4 digits of your Social Security number, and then to accept the terms of service. A decision on your application will be made almost instantly.

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


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

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.

Would You Use A PayPal Credit Card?

Have you used PayPal Credit? Would you use PayPal Credit? What do you think are the pros and the cons of PayPal Credit?

Is this the future of credit cards, or should lines of credit be avoided at all cost for discretionary items?

As ever, we’d love to hear your thoughts and feedback. You can let us know your opinions in the comments section below.

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  1. 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.

  2. 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 is...you're full of it...

  3. 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

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

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

  5. 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

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

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

  7. 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.

  8. 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

  9. 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. ;)

  10. 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.

  11. 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.


  12. 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.

  13. 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.