What is PayPal Credit? How does PayPal Credit work?

What is PayPal Credit? How does PayPal Credit work? PayPal Credit, formerly named Bill Me Later (BML), is a proprietary payment method offered on the websites of many well-known merchants, including those of Wal-Mart, Home Depot, USPS, eBay, B&H Photo Video, Best Buy, Overstock.com, JetBlue Airways, Liquidation Channel, Jewelry Television and Hotels.com. The site, which offers consumers a line of revolving credit through Synchrony Bank, allows purchases to be made online without using a credit card. The company was one of the first recipients of the Red Herring Global 100 Award by the publication Red Herring.

On November 7, 2008, PayPal completed its acquisition of Bill Me Later. It was formerly owned by I4 Commerce  and created by GoPin Inc.

What is PayPal Credit?

PayPal Credit is a line of credit issued by Synchrony Bank. Approved PayPal users can use this virtual line of credit, which functions similarly to a credit card, letting you pay for online purchases in installments rather than upfront.

Note that PayPal Credit is not the same as a PayPal debit or credit card. Despite filling a very similar niche, PayPal Credit is also not the same thing as PayPal’s Pay in 4 feature. You can think of PayPal Credit as closer to a credit card, while Pay in 4 is more akin to POS financing.

With PayPal Credit, you’ll have gone through the vetting process in advance and can utilize your revolving line of credit at will. You also have more flexibility in how and when you pay off your balance. In the case of Pay in 4, the financing decision is approved (or denied) at checkout, after which you’ll have a very structured repayment plan.

READ  Who owns PayPal? What Products Does PayPal Own?

PayPal Credit

How does PayPal Credit work?

Here’s how you can use PayPal Credit to either buy online or send a payment to someone using your PayPal account.

Purchases with PayPal Credit

Apply for a PayPal Credit line of credit, and if you’re approved, it’ll be automatically added to your PayPal account. You can then shop online with your favorite stores and use the line of credit to pay for your purchases. Just select the PayPal Credit option when it comes to time to pay¹.

Sending money with PayPal Credit

To send money with PayPal Credit, simply log into your PayPal account, and when you’re setting up your payment, click on PayPal Credit as your preferred way to pay. It’s that simple².

If you’re sending in USD, you’ll be charged the same as you would be using a credit or debit card, although it’s good to know that this is treated as a cash advance and incurs interest from the point of making the payment. Also, there are currency conversion costs if you’re sending money abroad. We’ll touch on the full fee structure a little later.

How to apply for PayPal Credit

You can apply to PayPal Credit online and get a decision in seconds.

  • Log into your PayPal account and click Apply for PayPal Credit
  • Enter your personal details including date of birth and SSN
  • Check and confirm everything is correct
  • Your account is verified instantly, and you’ll get a decision

If approved, you can start to shop with PayPal Credit immediately.

When does interest start to accrue?

The first point to note is that when interest starts to be charged can vary. The PayPal Credit headline is that you’ll not be charged interest on purchases of 99 USD or more for 6 months. However, there are charges in other cases:

  • Purchases of under 99 USD accrue interest from the date of purchase
  • Send money transactions accrue interest from the date of purchase
  • Interest will be added from the date of purchase if you spend 99 USD or more, but do not pay it off in full in 6 months
READ  How to send Bitcoin from PayPal? What is this PayPal about?

All that said, depending on how you manage your PayPal bills you may not end up needing to pay interest on your PayPal Credit account. Make sure your credit line is paid off in full in every billing cycle to cut your costs overall.

PayPal Credit

PayPal Credit pros & cons

Before you sign up to PayPal Credit, take some time to assess and weigh up the pros and cons. There could be costs to pay for the services on offer – and there are also alternatives out there which may suit you better. More on that in a moment. Here are some PayPal pros and cons.


  • Quick credit decision
  • Extremely easy to use for online shopping
  • Use to send payments to friends and family (not suitable for sending to self)
  • Fee free for 6 months on purchases of 99 dollars or more


  • Can’t be used in stores, no physical card available
  • No interest free period on purchases under 99 USD or cash advances to friends and family
  • PayPal additional costs apply when sending to friends and family, including transfer fee and currency conversion costs

Who is PayPal Credit best for?

If you’re making purchases of 99 dollars or more and know you’ll be able to clear your bills in 6 months, PayPal Credit is a handy tool. It may also be useful if you’re sure you can pay off your bills every billing cycle, as this will cut the costs of interest. However, it is important to note the potential fees with this service – like any other line of credit. Fall behind on your payments and the penalties and interest can accrue quickly.

READ  How long does PayPal hold money? What is this PayPal hold?

Sending payments to friends and family using PayPal Credit also involves extra costs due to the transfer fees, and currency conversion charges if you’re sending overseas. Check out the full range of fees before you sign up.

Does PayPal Credit affect credit score?

Whenever a hard credit check takes place, it is reported to credit bureaus, which can impact your credit score. PayPal Credit is offered through its banking partner, which does share your information with credit bureaus. That can mean that using PayPal Credit may affect your credit history and score.

Depending on your personal preferences and needs, PayPal Credit might be a helpful way to spread the cost of big ticket items across 6 months. However, it’s not the only buy now, pay later service out there, so it’s worth comparing a few if that’s what you’re looking for.

If you just need a handy way to cut the costs when spending online – especially with international retailers – a debit card may suit you better. Take a look at the Wise multi-currency account and card to learn more.

PayPal Credit

Above is information about What is PayPal Credit? How does PayPal Credit work? that we have compiled. Hopefully, through the above content, you have a more detailed understanding of PayPal Credit. Thank you for reading our post.

Related Posts

Leave a Reply

Your email address will not be published. Required fields are marked *