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PayPal’s new PayPal Cashback Mastercard®, launched Aug. 30, is packed with features that pin it head to head with the current highest no-fee flat-rate cash back credit card on the market.
The PayPal Cashback Mastercard® is a no-fee rewards card that offers users a flat 2 percent cash back upfront on all eligible purchases made using the credit card. The offer is a step up from the current leading cash back card, the Citi® Double Cash Card – 18 month BT offer, which credits 1 percent upfront and another 1 percent on what cardholders pay off each billing cycle.The digital and mobile payment company partnered with Synchrony Bank to launch the Cashback Mastercard, which grants users benefits exclusive to PayPal and Mastercard members.
Although it boasts a generous cash back offer, the PayPal Cashback Mastercard® has its drawbacks.
“The 2 percent cash back rate is a solid offer. But the PayPal Cashback Mastercard® falls short in three main ways: no sign-up bonus, high APR and no 0% introductory period,” says Chris Mettler, president of CompareCards.com, another LendingTree company.
How the PayPal Cashback Mastercard® works
PayPal is clearly targeting PayPal users with this new cash back rewards card. The application for PayPal’s new credit card is only open to existing PayPal customers. Access to the application is granted after users submit a username and password to log in to a PayPal account.
They are then redirected to an application on the Synchrony Bank website. After filling in sensitive information, applicants have the option to set the card as a default payment option in their PayPal wallet and purchase Synchrony Bank’s card security program before submitting the form.
If approved, customers are charged 21.49% - 28.49% Variable APR based on creditworthiness and other factors like income. PayPal doesn’t charge cardholders an annual fee.
Cardholders Get 2% cash back every day, every time you use your card. The cash back rewards are credited directly to the user’s digital wallet on PayPal. The money stored on PayPal wallet can be used to make purchases where PayPal is accepted, sent to peers, or cashed out to a bank account.
Cardholders don’t need to wait for a physical card to show up in the mail before they can start earning rewards. Users have immediate access to the line of credit through their PayPal account. The PayPal Cashback Mastercard® will show up right away in their PayPal wallet, where it can be used to make purchases or pay bills online.
How to qualify for the PayPal Cashback Mastercard®
Borrowers with good or excellent credit scores are most likely to qualify for the PayPal Cashback Mastercard®, but those working to better a poor credit score may qualify for a card, too.
Applicants are approved for one of three interest rates, based on creditworthiness and other factors – from 21.49% - 28.49% Variable APR.
What we like about the PayPal Cashback Mastercard®
2 percent cash back on all eligible purchases
The PayPal Cashback Mastercard® is now the highest, no-fee rewards card on the market. The 2 percent cash back feature is the greatest value to credit card users who want a simple, straightforward way to earn rewards. This cash back card is ideal for users who make most of their everyday purchases on a credit card and pay off the card’s balance each month.
Cardholders will Get 2% cash back every day, every time you use your card.
Automatically added to PayPal Wallet
The credit card is automatically linked and added to the PayPal wallet, a digital wallet that lets users pay for purchases online with linked bank accounts, credit and debit cards, or money on the account balance. That means users opening the card to make a purchase can gain access to the line of credit and earn rewards for spending right away.
Redeem cash rewards to PayPal balance
To use any cash back earned, users must transfer the money to their PayPal balance. Once in the digital wallet, that money can be used to complete online purchases, pay bills, or send money to peers all over the world.
No cash back restrictions
PayPal doesn’t cap the amount of cash back users can earn or set a minimum on the amount of cash back a user can redeem. Plus, cash back rewards won’t expire, so users aren’t pressured to use the money or lose it by a certain date.
PayPal Cashback Mastercard® users also gain exclusive Mastercard cardholder benefits. They include doubling the length of warranty coverage on purchases up to one year, 60-day price protection, and Mastercard’s identity theft protection service.
What we don’t like about the PayPal Cashback Mastercard®
For PayPal customers only
You must have a PayPal account in order to apply for a PayPal Cashback Mastercard® account and keep the account open to maintain the credit account.
If your PayPal account is closed, or you unlink the card from your PayPal account, your card account will be closed. If you have cash back available, you won’t be able to redeem those awards, and they will be forfeited.
If your PayPal account is suspended for any reason, you won’t be able to redeem cash back to your PayPal balance until the account is back in good standing.
No sign-up bonus
The PayPal Cashback Mastercard® misses an opportunity to offer users even more value by omitting a sign-up bonus. If users are looking to earn a boost in credit rewards after a few months of use, they may have more luck with a cash back card like Chase Freedom®, which you can Earn 5% cash back on up to $1,500 in combined purchases in bonus categories each quarter you activate. Enjoy new 5% categories every 3 months. Unlimited 1% cash back on all other purchases. You also Earn a $150 Bonus after spending $500 on purchases in your first 3 months from account opening.
No interest-free period
The card’s benefits also exclude an interest-free period. So while users can make a purchase with the line of credit immediately after opening the account using the PayPal wallet, they should avoid making large purchases as interest will begin to accrue right away.
Credit users should instead use a credit card with an interest-free period like the Discover it® Cash Back credit card, so they have more time to pay off the balance of the purchase before interest kicks in.
A high APR
Cardholders should be careful not to carry a balance on this card to avoid getting hit with interest charges. The card charges 21.49% - 28.49% Variable APR, which trumps any 2 percent cash back earned that period. To avoid paying interest and make the most of the Cashback Mastercard, cardholders should make sure to pay off the card balance each period.
3 percent foreign transaction fee
It costs cardholders 3 percent to swipe the PayPal Cashback Mastercard® overseas. Even with 2 percent cash back, users end up paying 1 percent to make foreign purchases.
Who the PayPal Cashback Mastercard® is best for
The PayPal Cashback Mastercard® is best for existing PayPal customers who want a straightforward way to earn cashback on all of their everyday purchases.
If a cardholder is a heavy online shopper, the Cashback Mastercard may also be a good choice because they can easily earn cash back from using the card as a payment option when they pay online using PayPal, then credit the cash back to their PayPal balance for future purchases.
Alternatives to the PayPal Cashback Mastercard®
PayPal Extras MasterCard
If you prefer to earn credit card rewards in points instead of cash back, you can apply for PayPal’s other no-fee credit rewards option. This card has a traditional points reward structure. It awards cardholders three times points on each dollar spent at gas stations and restaurants, double points on purchases made through PayPal or eBay, and one point per dollar spent everywhere else.
Unlike the cash back card, rewards earned on the PayPal Cashback Mastercard® are erased within two years if unused or if no purchases are made using the card for one year.
Citi® Double Cash Card – 18 month BT offer
PayPal’s 2 percent Cashback Mastercard is only for PayPal account holders. If the benefits and 2 percent cash back upfront aren’t enough to rope you into creating a PayPal account, the Citi® Double Cash Card – 18 month BT offer is a good alternative.
The card rewards 2 percent cash back on all purchases, but not all at once like PayPal Cashback Mastercard® does. Cardholders Earn 2% cash back on purchases: 1% when you buy plus 1% as you pay., instead of awarding the entire 2 percent upfront. The Citi® Double Cash Card – 18 month BT offer also omits an interest-free period for purchases and a sign-on bonus. However, it does offer an introductory 0% for 18 months on Balance Transfers, (13.99% – 23.99% (Variable) APR, thereafter).
The information related to Chase Freedom® and Citi® Double Cash Card – 18 month BT offer has been independently collected by MagnifyMoney and has not been reviewed or provided by the issuer of this card prior to publication.
PayPal Cashback Mastercard® FAQ
Cardholders receive 2 percent cash back on all eligible purchases made at Paypal.com, eBay.com and anywhere Mastercard is accepted using the PayPal Cashback Mastercard®.
No, cash back rewards don’t expire and can be redeemed to your PayPal balance at any time.
If you are unable to pay off your statement balance in full, you will be charged a APR of 21.49% - 28.49% Variable on purchases made in the billing period and be required to make a minimum payment.
Cardholders can redeem cash back by transferring the cash back balance to their PayPal account balance. The funds can then be used to make purchases anywhere PayPal is accepted or transfer money to peers using PayPal.
Use a cash back credit card that fits your day-to-day spending needs best, pay your bill in full each month, and spend only what you can afford to pay off.