Thread: Paypal Credit Card Review: The Ugly Side Exposed

Do not apply for a Paypal credit card without seeing this review! Here’s why the Paypal MasterCard rewards program is a horrible idea.

Paypal Credit Card Review
Their credit card was first introduced all the way back in 2001 and has been chugging along ever since. It is heavily promoted by the company; users are often bombarded with its advertisement both on the site and even in emails. They changed the name to Paypal Extras MasterCard for 2011 and introduced a new rewards program.

Interest Rate
Surprisingly when I went to the official Paypal credit card application page, I saw no mention whatsoever of interest rates. After I clicked on the “Apply Now” I discovered why they weren’t exactly shouting the APR… it’s extremely high! No wonder it was hidden in the fine print! At the time of this review, they had two different interest rate tiers and the one you get depends on your credit score, but both are high. You either get 19.99% or 23.99% APR for purchases.

If you don’t qualify for the credit card, they will automatically consider you for “Paypal Smart Connect” instead. This is not a credit card but rather a small line of credit which can be used on eBay purchases, etc. Unfortunately the APR on this is even higher, coming in at a staggering 26.99% APR at the time of this review!

Rewards
Being that the interest is outrageously high, I was hoping that the rewards would be at least one redeeming quality on the card. Here's how the new Paypal credit card rewards program works:

• 1 point per dollar on regular purchases
• 2 points per dollar on Paypal and eBay
• 3 points per dollar on restaurants and gas

Sounds good, right? It won't after you dig a little deeper...

When I first saw this, I said to myself "It looks like they improved their credit card rewards." It is an improvement, but still a lousy deal. Here's why...

When I clicked "Apply For Paypal Credit Card" I didn't see any information about how much much my points would be worth. They said you could get gift cards, cash back, merchandise and travel, but I didn't see any examples of how many points those things would cost.

After speaking to their outsourced customer support (her accent was so thick, I had to ask her to repeat things several times) I was provided the following examples for rewards:

• 2,500 points = $15 Applebee’s gift card (This equals out to measly $0.006 per point!)

• 6,000 points = $50 cash back on Paypal account (That's a pitiful $0.0083 per point!)

• 15,400 points = $100 travel voucher (You're only getting $0.0065 per point!)

Verdict
At first glance the Paypal MasterCard looks like a good idea but after reviewing the rewards and doing the math, you realize what a crappy deal it actually is. It's an especially bad deal for regular purchase because based on the above examples, you would be earning far less than 1% on that spending. If you were thinking of using the Paypal credit card to finance a purchase, you need to turn around and run because the APR is absolutely outrageous.

A Better Alternative: Get a High Cash Back Credit Card (sponsored offer)
There are plenty of reward cards on the market that give you a much better deal than the Paypal MasterCard. Compare the best cash back credit cards and you will see what I mean!



Paypal Company History: Now a subsidiary of eBay, Paypal started out in ’99 as one of the first online payment systems that could be used by both individuals and businesses. They grew exponentially (some say in part to the $10 they used to give years ago to new users to signup) but with the success also came quite a bit of controversy. There were countless reports of Paypal accounts with money in them being permanently frozen without apparent reason. In turn the company took a lot of heat from state regulators and some, Like Louisiana, outright banned them altogether. The company eventually patched things up and made amends to pave the way fro their IPO in 2002. Ebay acquired them later that same year. Their credit card was introduced in 2001 as the Paypal Plus MasterCard. Starting in late 2010/early 2011, it was changed to the Paypal Extras credit card.

I applied for one of these cards. I was accepted. 4 days later I got a letter, part of it said they didn't give me the best interest rate for my credit score. I called them and asked what the interest rate was (I haven't received the card yet) and they said 23.99% !!crap!!

I have a 760 beacon score, a 752 FICO score and have never been late or have missed a payment!!!! WHAT A JOKE!!! When I do get the card I am not going to activate it, i am going to cut it up in little pieces and send it back. I have a visa that has never been maxed out, payed off every 3 months and it's 14% and I thought that was high. THIS CARD SHOULD BE AVOIDED!!!

I hear about the high interest, but I pay my cards off each month...Always. Most I setup to have the full amount due taken from my bank account each month and haven't had a problem, so I'm not worried about high interest rates.

Even the point rewards are on par with what Citibank and others charge when redeeming low amounts (e.g. 2500 points for $15 gift card). Higher redeemed amounts (e.g. 10000 points) are met per penny (10000 points for $100 gift card).

What I don't like is the fact that there is no way to download your credit card transactions to any financial program (e.g. Quicken). They do have a Download history option on PayPal, but it downloads all online history, even if you sell something on eBay that isn's associated with the card, and it doesn't download transactions you make offline, like you pay for lunch. This is the biggest reason why I will be cancelling my card. I like the points for paypal purchases, but it's not worth the trouble.

I can do almost as good with Citibank or Chase.

Originally Posted by bob.w

Even the point rewards are on par with what Citibank and others charge when redeeming low amounts (e.g. 2500 points for $15 gift card). Higher redeemed amounts (e.g. 10000 points) are met per penny (10000 points for $100 gift card).

Never mind....your right. The rewards aren't worth it.

11500 points for a $100 gift card when everyone else has it for 10000 points. They're giving you a bonus with the extra points, but then nullifying them when you want to redeem them.

I'll be ahead going with a full service card (Citibank/Chase/etc) and not have to deal with GE Capital. Guess it's time to get what I can with my points and cancel this sucker. Bye Bye GE Capital and Paypal Extra Cheap Rewards.