What is PayPal Credit?
PayPal Credit (previously known as Bill Me Later) is a special payment method through PayPal where you can enjoy special financing offers like NO PAYMENTS + NO INTEREST for 6 months on your purchases. Sound too good to be true? I’m here to tell you that it’s not, and that you can benefit from it too.
PayPal Credit is a line of credit offered by Comenity Capital Bank. When you are checking out with PayPal-enabled merchants at thousands of stores and online stores or eBay, you simply select PayPal Credit as how you would like to pay for the purchase, as long as your purchase is at least $99. Many of the websites that offer PayPal as a standard payment method also allow you to use PayPal Credit to check out. Some websites may even have a logo such as the one pictured to the right to show you that PayPal Credit is an option.
How does it work?
When you choose PayPal Credit for the first time, you’ll provide your date of birth and your SSN. You’ll receive a decision within seconds and your limit (at least $150) will be immediately displayed to you. However, if you do not pay the purchase balance within the 6 months, then you will have to pay all of the interest from the posting date (a few days after the purchase date.) The APR for most standard purchases is 19.99% with a minimum interest charge of $2.00. Again, if you pay the full purchase price by the 6 month promotional expiration date that you are given, you will pay NO interest. You can see the full terms of PayPal Credit here and find out more about PayPal Credit in their FAQ here.
What are the benefits of PayPal Credit?
Some of the many benefits include:
- There is no annual fee to use PayPal Credit
- You can manage PayPal Credit just as you have managed PayPal right from your computer or mobile device
- While PayPal Credit is a line of credit, one of biggest benefits is that PayPal does not report your credit activity to any credit bureaus (after the initial set up inquiry), so your credit score is not affected
- If you are trying to make a purchase that is greater than your current limit, PayPal will instantly see if you qualify to have your limit increased
- PayPal will remind you when your promotional financing is close to expiring so that you can make your payment before having to pay any interest
- PayPal provides the same “zero fraud liability” protection provided by most major credit cards
- Purchases are covered under PayPal Purchase Protection program
- You can send money with PayPal Credit just as you would with any other payment method on PayPal
The very first time that I used PayPal Credit was actually to purchase a laptop* during the summer my sophomore year of undergrad. I was in the market for a new laptop and this time I wanted a custom laptop. I wanted to pick all of the parts and have it built to my specifications by a professional computer manufacturer. I had set aside the money for the purchase, did some extensive research and ended up making a final decision on a company. When I got to the actual checkout page, I was planning on using PayPal and saw the option for PayPal Credit. It looked interesting so I did some research and found it to be a suitable option for me. Because of PayPal Credit, I was able to use the laptop for about 5 whole months BEFORE the money left my account which was pretty amazing!
One Final Thing!
One additional thing that I would like to point out is that it is not a good idea to use PayPal Credit to make purchases for things that you cannot afford. If you are only using PayPal Credit because you don’t have the money now, don’t make the assumption that you will somehow find the money in 6 months. This is a quick way to get into debt and is not a smart way to deal with your finances. Have a plan BEFORE using PayPal Credit on exactly how you will pay off the full price before the 6-month promotional period ends to avoid any interest or other financial trouble. When I use PayPal Credit, I like to use it when I currently have the money but would benefit from being able to keep the funds for an additional 6 months. This was really useful when I paid for my plane ticket to Spain on American Airlines as I booked it several months in advance and did not want to essentially “say bye” to the money until closer to the actual time of my trip.
Click here to head to the PayPal Credit website. Please post any comments and questions you may have below!
*If you need some advice on choosing a laptop or device for school, shoot me a message or leave a comment and I’d be happy to offer my expertise 🙂