Their credit card was first introduced all the way back in 2001 and has been chugging along ever since. Users are bombarded with its advertisements of it both on the site and even in emails. They changed the name to Paypal Extras MasterCard two years ago and introduced a new rewards program.
Quick summary of why it sucks:
- Rewards program is a joke. The 2x and 3x point categories sound attractive, until you realize how how little the points are worth - i.e. 2,500 points = $15 Applebee’s gift card,15,400 points = $100 travel voucher.
- Interest rates are high. You get either 19.99% or 23.99%... that's a lose-lose scenario for you
- Card issuer. It's issued/manged by GE Capital Retail Bank, who is a notorious purveyor of store credit cards, many of which are lower-end retailers.
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!
But if your credit is only fair or average then here is a program similar to Paypal's except with this one, 1 point = 1 full cent value in cash back. So you're getting a full 2% cash back on the categories.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!
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
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!)
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.
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