Whether or not you use it, PayPal is a household name. This e-wallet has become a global favourite for sending and receiving funds, online shopping and e-commerce in general. But online money transfers are not the company’s only focus now. Today, you can also opt for PayPal Credit.
If you use PayPal, you have likely already heard of this credit alternative, as the brand has been quite vocal about it since its release in 2016. Though this credit system is now seven years old, many users still wonder what this credit product is and how it works.
Keep reading to learn more about the PayPal credit card alternative and whether it is the right product. Scroll down for more.
PayPal Credit is a line of credit available to approved PayPal users. This credit is issued by Synchrony Bank and it works similar to a traditional credit card, allowing you to pay for online purchases in several instalments rather than in one go.
Don’t confuse PayPal Credit with the PayPal Pay in 4 feature. The credit option works more like a typical credit card, while Pay in 4 is closer to point-of-sale financing.
When you use PayPal Credit, you must go through a vetting process before accessing the funds. You are also given more flexibility in how and when you pay off your credit balance. In contrast, when you opt for Pay in 4, you are either approved or declined at checkout. If you are approved, you receive a very structured repayment plan.
When you have been approved for one of the PayPal credit accounts, you can use them wherever a store accepts PayPal as a payment method. This includes online stores and brick-and-mortar stores.
The PayPal Credit product works similar to a credit card. You are approved for a credit limit that you can borrow against. Then, as you repay your balance, you can borrow more up to your credit limit again. However, PayPal’s line of credit is lower than most credit cards. Limits tend to range from £250 to £1,000.
Currently, PayPal offers a four-month interest-free period when you make purchases over £99. The company’s interest rate is 23.9% pa (variable) once this period ends. Remember, plenty of other retailers have interest-free payment periods (e.g., Argos), so shop around before you commit to one loan alternative.
Note these factors before applying for a PayPal credit account.
PayPal Credit is convenient for PayPal users, as it allows you to use your virtual wallet to make large purchases and pay them off over time. However, like all credit products, you should look at the pros and cons to see if the product is right for you. You will incur fees if you cannot repay the amount you borrowed at the end of each month. Don’t take this decision lightly, as picking the wrong credit option can sometimes worsen your financial situation.
See more personal finance content on the Polar Credit Info Hub now.