on Paypal secure website
If you’re a frequent PayPal user, you’ve probably heard about PayPal’s virtual credit line. Although you won’t be able to add another credit card to your wallet, PayPal’s virtual credit line allows you to stretch your online payments out over the course of several months if the cost is above a certain amount.
For example, online transactions that cost more than $99 can be stretched out over six months if you use the PayPal credit line, which is excellent. But if you go over your credit limit, PayPal might decline your purchase and charge you a high APR rate. The company also doesn't report your credit history to the major credit bureaus, so your credit score won't go up. Is the PayPal credit line right for you? Read on to find out.
PayPal Credit is a virtual line of credit that is more of an installment loan so that you won’t be adding another plastic credit card to your wallet. It is accepted by anyone who takes PayPal as a payment method and can be used along with your existing PayPal account. The credit line is designed to be used throughout your merchant network as sort of a “bill me later” service.
It’s important to note that there the PayPal credit line functions differently than PayPal’s traditional accounts. If you’re not used to managing a credit line, you’ll want to do some homework. According to Robert DeYoung, finance professor at the University of Kansas School of Business, some people who aren’t familiar with how credit works may look at this as an account that is funded like a debit card.
But the problem is that there is a 20 percent increase in the form of interest to everything they buy if it’s not paid in full by the end of the month or whenever the promotional offer period ends. DeYoung notes that potential users should know the difference between a credit and debit card.
All of your transactions are done online through your PayPal wallet. There are no application or annual fees, and missed payments don’t show up on your credit report. The interest rate is higher than average for other credit card companies. Additionally, PayPal doesn’t report your credit activity to the credit bureaus, so it won’t help you build credit. But on the other hand, your credit won’t be affected if you miss a payment.
Comenity Capital Bank is the lender for PayPal credit. Comenity Capital Bank also issues some store cards from various retailers, including Lane Bryant, Abercrombie & Fitch, and Pottery Barn. These cards are also separate.
Customers will not get a credit card in the mail. PayPal Credit is a virtual line of credit, meaning that you will use your PayPal wallet to make transactions. However, PayPal offers a Mastercard through Synchrony Bank as well as a PayPal Prepaid Mastercard. You’ll need to apply for those separately.
PayPal credit is unsecured. The line of credit offered by PayPal credit is unsecured, which means that they are not secured by collateral that a lender can take hold of if you don’t pay. In other words, your credit is based on the promise that you will repay your loans. The Credit CARD Act covers PayPal.
Your payment can be made electronically, through the PayPal app, or online. You can also send a check via snail mail if you’d like.
Standard purchases and cash advances have an annual percentage rate of 19.99 percent. The standard average for credit cards is around 16 percent, so the PayPal credit line is a bit high. However, even if your credit is good, your rate will not go down. You will simply be extended a greater loan.
You can access your bill anytime. Customers can view their statements anytime they want by signing into their account. You can also opt to have emails or notifications sent to you every month when your bill is due if you want. Your statement will include your total balance, the minimum amount due, and how much money you need to pay to avoid interest fees.
There are no penalty rates; however, you will be charged up to $25 the first time you are late on a payment. Any late payments after that are suspect to up to a $35 charge.
PayPal currently has a special offer that includes receiving six months of no interest or payments, which is a longer time than other credit lines. But you will want to make sure you can pay off the entire balance by the time the six months is over.
PayPal Credit set the trend of letting people spread the cost of online purchases, describing themselves as “like a credit card, but without the plastic.”
PayPal Credit PROS
Convenient. Most users are instantly approved for credit and can start using it as soon as they become qualified.
PayPal Credit CONS
You can make payments by using your PayPal account, a bank account or a debit card. To do so, you’ll need to log into your PayPal account and click on “make a payment.” Payments can also be made via phone by calling customer service at 800-368-7155. Your first payment will be due 35 days after you open the account and PayPal will notify you of your monthly invoices to prevent you from missing a payment.
You can expect your payment to be reflected on your credit account the same day that you make it. However, it may take a few days to show on your bank statement. If for some reason you cannot make a payment on time, you can call customer service, and they will do their best to help you.
PayPal suggests logging into your account frequently and viewing your history to help budget for your payments. Once you are logged into your account, you will be able to see your statement history, transactions, the payments you made, your credit limit and available credit, the minimum payment and due date, and your current and least statements.
CreditNervana promises to keep our information as accurate and up-to-date as possible. However, you should always consult a financial advisor for specific questions about personal or business finances and investment opportunities, especially if you are looking in your area. Working with a trained professional who is familiar with your case is a safe and guaranteed way to make the best investment decision possible. Please review our terms and conditions before making any decision based on the information we provide. Financial institutions are constantly changing. Because of this, it’s a good idea to cross check the information you read here with any company you are considering working with.
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