PayPal Credit lets you borrow money to pay for purchases and bills, then repay it over time
PayPal Credit is a line of credit linked to your PayPal account. When you use it to pay for something, PayPal lends you the money upfront, and you repay the balance later—either in full or in installments. You can use PayPal Credit anywhere PayPal is accepted, including online stores, bills, and peer-to-peer transfers. The key difference from a regular PayPal payment is that you're borrowing the funds rather than spending money you already have.
To use PayPal Credit, you must first be approved for an account. PayPal checks your credit and financial history before offering you a credit line. Once approved, you'll see PayPal Credit as a payment option when you check out or pay a bill through PayPal.
Key Takeaways
- PayPal Credit is a line of credit you can use to pay for purchases and bills through PayPal, and you repay the balance over time.
- You must be approved for PayPal Credit before you can use it; approval depends on a credit check and your financial history.
- At checkout, select PayPal Credit as your payment method instead of a debit or credit card linked to your account.
- Interest charges apply unless you pay the full balance within the promotional period, which varies by offer.
- You can view your balance, payment due date, and interest rate in your PayPal account under the Credit tab.
How to select PayPal Credit at checkout
When you're ready to pay for a purchase or bill, log into your PayPal account and proceed to checkout as usual. At the payment method screen, you'll see a list of ways to pay. Look for the option labeled PayPal Credit and select it. PayPal will show you the credit line amount available to you and any promotional offer currently attached to that purchase (such as no interest if paid in full within a set number of months).
Review the offer details before confirming. PayPal displays the promotional period, the interest rate that applies after the promotion ends, and the minimum monthly payment you'll owe. Once you confirm, the payment goes through immediately to the merchant or biller, and the amount is added to your PayPal Credit balance.
Understanding promotional periods and interest rates
Many PayPal Credit purchases come with a promotional period—typically 6, 12, or 24 months—during which you pay no interest if you pay the full balance by the end of that period. The exact promotion depends on the merchant, the purchase amount, and current PayPal offers. Not every purchase qualifies for a promotion; smaller purchases or certain merchants may not offer one.
If you don't pay the full balance before the promotion ends, PayPal charges interest on the remaining balance at the rate shown at checkout. This rate varies based on your creditworthiness and current market conditions. Interest accrues daily on any unpaid balance after the promotional period closes. You can always pay more than the minimum monthly payment to reduce the balance and lower the total interest you'll owe.
Making payments on your PayPal Credit balance
Log into your PayPal account and go to the Credit tab to view your balance, due date, and payment options. You can pay your balance in three ways: from your linked bank account, from your PayPal cash balance, or from a debit or credit card linked to your PayPal account. Select the payment method you prefer and enter the amount you want to pay.
PayPal requires a minimum monthly payment, which is shown on your account. If you pay only the minimum, interest will accrue on the remaining balance after any promotional period ends. To avoid interest charges, pay the full balance before the promotional period expires. You can set up automatic monthly payments through your PayPal account settings, which ensures you never miss a due date.
What happens if you miss a payment
If your payment is late, PayPal reports the missed payment to credit bureaus, which can lower your credit score. A payment is considered late if it arrives after the due date shown in your account. PayPal may also charge a late fee, though the amount varies. Repeated missed payments can result in PayPal freezing your credit line or closing your account.
If you know you'll miss a payment, contact PayPal before the due date. They may be able to work out a payment plan or adjust your due date. The sooner you reach out, the more options you'll have. Once a payment is reported as late to credit bureaus, it stays on your credit report for seven years, even if you pay it later.
Viewing your PayPal Credit activity and statements
Your PayPal Credit account shows all transactions, payments, and interest charges. Go to the Credit tab in your PayPal account to see your current balance, available credit, and transaction history. Each purchase or payment appears with the date, merchant name, and amount. You can also download a statement for your records or for tax purposes if you're using PayPal Credit for business expenses.
PayPal sends a monthly statement to your email address on file. This statement lists all activity for that billing cycle, your minimum payment due, the due date, and the interest rate applied. Review your statement each month to catch any unauthorized charges and to track how much interest you're paying. If you spot an error, report it to PayPal within 60 days of the statement date.
Frequently Asked Questions
Can I use PayPal Credit to send money to friends or family?
Yes, you can use PayPal Credit to send money to other PayPal users through the "Send Money" feature. However, not all peer-to-peer transfers may have access to for promotional interest rates, so check the offer details before confirming. The amount will still be added to your PayPal Credit balance and subject to the same repayment terms.
What's the difference between PayPal Credit and a credit card?
PayPal Credit is a line of credit managed through your PayPal account, while a credit card is a separate account issued by a bank or card company. PayPal Credit can only be used through PayPal, whereas a credit card works anywhere that accepts that card brand. Both appear on your credit report and affect your credit score if you miss payments.
Can I increase my PayPal Credit limit?
PayPal may automatically increase your credit limit over time if you make on-time payments and maintain a good payment history. You can also request a credit limit increase through your PayPal account settings. PayPal will review your request and may perform a hard credit inquiry, which temporarily lowers your credit score by a few points.
What happens if I pay off my balance early?
Paying off your balance early is always allowed and encouraged. If you pay the full balance before the promotional period ends, you owe no interest. Early payment does not penalize you or close your credit line; PayPal simply reduces your balance to zero and keeps your account open for future use.
Does using PayPal Credit hurt my credit score?
Opening a PayPal Credit account results in a hard credit inquiry, which may lower your score by a few points temporarily. Using the credit line and making on-time payments can actually help your credit score over time by showing lenders you manage credit responsibly. However, missed payments or high balances relative to your credit limit will lower your score.