Paypal Credit Card Review: The Ugly Side Exposed

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CreditCardGuru
 
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Paypal Credit Card Review: The Ugly Side Exposed

Postby CreditCardGuru » Sat Aug 10, 2013 10:11 am

In 2013 do not apply for a Paypal credit card without seeing this review! Here’s why the Paypal MasterCard rewards program is a horrible idea.

man on computer
Paypal MasterCard Review 2013
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:
  1. 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.
  2. Interest rates are high. You get either 19.99% or 23.99%... that's a lose-lose scenario for you
  3. 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.
Best alternatives in 2013 and beyond:
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!

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.

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


xrperry
 
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Paypal Extras Mastercard interest rate is unfair

Postby xrperry » Sat Aug 10, 2013 1:19 pm

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!!!

bob.w
 
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OK, but other features lack

Postby bob.w » Sat Aug 10, 2013 3:52 pm

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.


bob.w
 
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My mistake...

Postby bob.w » Sat Aug 10, 2013 4:13 pm

bob.w wrote: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. :mad:

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.

kanikedude03
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Postby kanikedude03 » Sun Aug 11, 2013 9:21 am

First of all, if you use this card to make all of your purchases, the rewards aren't that great. However, if you are selective on what you use this card for, the rewards are actually just as good or better than other cards.

For the examples below, remember that 6000 points = $50 cash

For example:
Say you buy $2000 worth of gas. You get 3 points per dollar, resulting in 6000 points. This means you are getting 2.5% cash back! My other cards aren't that generous (except for Chase Freedom on certain months)

Say you buy, $3000 worth of merchandise through paypal. You get 2 points per dollar resulting in 6000 points. This means you are getting 1.66% back on those purchases! My other cards only provide me with 1% cash back on "other purchases".

I have several credit cards and I don't leave a balance on any of them between statements. I label my cards as to how much I get back in each category and I use them accordingly. If you wish to get the most back from your credit cards, I recommend that you do the same.

MemberSince99
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Postby MemberSince99 » Sun Aug 11, 2013 6:48 pm

kanikedude03 wrote:First of all, if you use this card to make all of your purchases, the rewards aren't that great. However, if you are selective on what you use this card for, the rewards are actually just as good or better than other cards.


Except that last time I looked, about a month ago before I cancelled (to cash out my points) 6000 points got you a 25 dollar gift card (5800 points) which comes out to only about 1.25% (with 200 extra points whatever that value adds). Not terrible but not as good as some other options out there, for example Discover offers a rotating 5% on gas, Amex BCP gives you 3%, etc.

So, you have to look at not just the points but at what rate you can get things using the points to see the true return value.

kanikedude03
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Postby kanikedude03 » Sun Aug 11, 2013 11:55 pm

MemberSince99 wrote:Except that last time I looked, about a month ago before I cancelled (to cash out my points) 6000 points got you a 25 dollar gift card (5800 points) which comes out to only about 1.25% (with 200 extra points whatever that value adds).


You are correct about the gift cards. That's why I use the "Paypal Cash" option and that's why I used it in the example above. You get $50 in your paypal account which you can transfer to your bank account or use when you make a purchase using paypal at a later date. You could even transfer it to your bank account and go out and buy a $50 gift card somewhere. I'm just trying to make people aware that if you know how to use the rewards most efficiently, this is not a bad card. With most credit card reward programs, you get less if you redeem your rewards for cash. With this credit card, you actually get more rewards by redeeming your rewards for cash. The only bummer is that you have to wait until you have 6000 points and you can't use it in any increments other than $50 increments.

Right now I use this card for all of my gas and dining purchases because I cannot receive 2.5% cash back on any of my other cards. Chase has the rotating specials and when I can receive 5% cash back with my freedom card, I use it during those months.


MemberSince99
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Postby MemberSince99 » Tue Aug 13, 2013 10:34 am

kanikedude03 wrote:I'm just trying to make people aware that if you know how to use the rewards most efficiently, this is not a bad card. With most credit card reward programs, you get less if you redeem your rewards for cash. With this credit card, you actually get more rewards by redeeming your rewards for cash. The only bummer is that you have to wait until you have 6000 points and you can't use it in any increments other than $50 increments.


I agree with you it's not a bad card not at all. GE treated me very well, to be honest, they gave me a big CLI without my asking for one at 4 months. The rewards are decent or even good in my view and you have a lot of options as to how to use them.

hellocredit
 
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Postby hellocredit » Tue Aug 13, 2013 6:11 pm

kanikedude03 wrote:Say you buy $2000 worth of gas. You get 3 points per dollar, resulting in 6000 points. This means you are getting 2.5% cash back! My other cards aren't that generous (except for Chase Freedom on certain months) Say you buy, $3000 worth of merchandise through paypal. You get 2 points per dollar resulting in 6000 points. This means you are getting 1.66% back on those purchases! My other cards only provide me with 1% cash back on "other purchases".


I signed up for this card simply because of the points for purchases with Paypal/Ebay and based on what kanikedude03 above said. He makes a good point. I make ALL my business purchases out of my Paypal account, and I buy a lot from Ebay as well. I hate to think of all the money I've spent and didn't get a single reward for. (Well over $50K!!) so I figured I might as well sign up and get something.

Up until now, I was using either the Paypal Business Debit card (you get 1% back on all purchases) or funds directly from my Paypal account to pay for business purchases.

I'm excited to have this card now. I only use this card for Paypal or Ebay purchases. Nothing else. There is no point really to use it for anything else since the rewards are about the same AND this company & their service sucks so I want to avoid them as much as I can. If you sell online and accept Paypal payments, you probably have funds in your account. So you can just pay your credit card balance with the funds right out of your Paypal account.

Wanted to share my recent experience with Paypal and GE: I got approved for $1000 credit line. I noticed my "spending power" was still at $200, even though I had made my $800 payment in full 3 days prior. I called Paypal to see what was going on. If you've dealt with Paypal in the past, you probably know the customer service is a complete JOKE. After 15 minutes of holding as the representative tried to figure out why my credit limit hadn't reset, she comes back and just tells me she isn't sure and I have to speak with GE about it. So just to clarify, I ask, I've waited 15 minutes and she doesn't know why the credit amount hasn't reset? With a whole lot of attitude, she just replies no, I need to speak with GE. Ok, fine. I should have called them from the start. She says she'll transfer me to GE. Does she transfer me though? Nope. She transfered me right back to the Paypal Customer Service. So incompetent, it's ridiculous. So after re-entering all my information and another 10 minutes later, I am finally on the line with GE. GE proceeds to tell me my account is on a 12 day hold and there is nothing they can do to reset my credit line. Okay, but the payment of $800 has been taken out of my account and cleared. What the heck? That is the most absurd thing I've ever heard.

Side note: I called Chase about 15 minutes before as I literally had this same issue with another credit card (my account was on hold for some reason as they waited for the payment to clear) and their service is amazing. They called my bank for me to verify the funds had cleared and removed the hold that second! You speak with real people who are helpful and you know they just strive for excellent customer service. You won't get any attitude from them. Such a difference, it's amazing.

To be honest, I am surprised Paypal has lasted all this time and it's really too bad they own the market for online payments. Can't believe no one else or tried to start anything to take them on. I've used them probably since '99, and their service is and has always been terrible. They don't care about their customers, they haven't updated the user interface since they started! It's still not user friendly, difficult to navigate, and hard to search for transactions. What a joke. They partner with GE for their credit card (why not use chase?) which is this crap credit card company who outsources their customer service. Someone please join me in my rant.

Ok, so to summarize, Tip #1 - If you do a lot of buying directly from your Paypal account, this is a good card for you.

Tip #2 - If you sign up for this card, just know you're going to get crap customer service and probably speak to a lot of overseas reps.

Tip #3 - Pay your balances off in FULL to avoid the fees.

Tip #4 - Call GE direct with any issues, forget Paypal. But also be warned that GE has pretty bad customer service as well.

But after all my complaining, I'll still use this card. Why? Because I want 2xpoints on my paypal and ebay purchases! ;)

DeliXX
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Some questions about the PayPal Extras MasterCard

Postby DeliXX » Wed Aug 14, 2013 11:09 am

The question is for someone that has or had access to the PayPal Extras MasterCard (credit card)

Please, Provide how many points would I need for:
1) $50 paypal cash deposited into my paypal account
2) if any of these gift cards available for redemption at Walmart, Sam's Club, Amazon or eBay

I wasn't able to find it anywhere. I'm thinking of maybe applying for this because I make a lot of eBay purchases. And there's 2x points for those.



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