Can you add money on paypal with a credit card

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PayPal is a convenient way to send money to a friend or family member and was probably the largest force in changing the way we send money to other people. In 2020, 44% of survey respondents in the U.S. had used a service like PayPal to send money to friends or acquaintances in the prior 12 months.

Naturally, you might wonder if you should use a credit card to send money to another person using PayPal. After all, your credit card earns rewards—Why not earn additional cash back or transferable points when sending money?

Generally, the fees PayPal charges to send money to another person using a credit card are greater than the rewards you will earn, making it unattractive to use a credit card to send person-to-person money transfers through PayPal. There are some exceptions to this, but banks are also changing the way these transactions are processed, which might subject you to additional fees. Read on for more details.

PayPal Is Much More Than Person-to-Person Payments

PayPal checkout is integrated onto many websites and many smaller merchants use PayPal to invoice and accept payment for goods and services. Those types of transactions have a separate fee structure and are processed differently than person-to-person transactions. This article specifically covers using PayPal to send money to another person, not to pay for a purchase.

The Deal Breaker: Transaction Fees

One of the biggest drawbacks of using a credit card to send money to another person using PayPal is the processing fee. PayPal charges 2.9%, plus a fixed fee of 30 cents to process a person-to-person money transfer using a credit card. This fee can quickly eclipse any credit card rewards you might earn.

PayPal does not charge this fee for person-to-person money transfers using either your existing PayPal balance or a money transfer from your checking account.

Why Using a Credit Card Might Still Be Attractive

Despite the fee PayPal charges, there are a few cases where you could come out ahead after the credit card fee.

Credit Cards With Rotating 5% Bonus Categories

Some credit cards, such as the Chase Freedom Flex℠ and the Discover it® Cash Back offer rotating categories in which cardmembers enroll to earn 5% cash back. Categories earning bonus cash back change quarterly and have earning caps before their base rate earnings of 1% apply. Both of these cards have historically included PayPal in the bonus cash back offering.

• Discover included PayPal in its 2021 cashback calendar for Q3 (July through September).
• In 2020, Chase included PayPal in its cashback calendar during Q4 (October through December).

Welcome Bonus Spending

If you have recently applied for a credit card that offers a welcome bonus after a certain amount of required spending, it might make sense to use PayPal to send money to another person using a credit card.

Beware The Cash Advance Fee

In 2020, the New York Times reported on a change in the way that money transfer transactions are coded and processed through Visa and Mastercard. This change means that banks can now charge cash advance fees for things like person-to-person money transfers through services like PayPal and Venmo.

Since this change has been implemented, some credit card users have reported being charged a cash advance fee when sending money using PayPal. In addition, Chase has been reported to be sending notices to existing cardmembers updating their terms and conditions to include person-to-person money transfers in the list of transaction types where they charge a cash advance fee.

Bottom Line

Generally, it is not advantageous to send money to another person using PayPal and a credit card.

Unless you are using a credit card that earns 5% back on transactions at PayPal or completing a welcome bonus spending requirement, you will usually pay more in fees than you earn in rewards. In addition, with banks starting to charge cash advance fees for person-to-person payments, there is a chance that your person-to-person payment may end up costing a lot more than the 2.9% fee.

If you are looking to send money to someone using PayPal, send money using your PayPal balance or linked checking account. For PayPal alternatives, consider the five best ways to send money.

If you’re using PayPal, you might choose to hold a balance within your account. This can be handy for sending money to friends and family, or for paying for goods and services online.

But before you use your PayPal balance for payments, it’s a smart idea to check out the fees first. PayPal isn’t always the cheapest option, especially if you need to make international payments.

In this guide, we’ll show you exactly how to put money into PayPal, ready for when you need it. We’ll also cover the fees PayPal charges, so you can work out the cost of payments using your balance. And we’ll even look at an alternative that could save you money - the Wise multi-currency account.

How to add money in PayPal

The first thing to know is that you don’t actually need funds in your PayPal account in order to pay for things online¹. If you’ve linked a bank account or debit card to your PayPal account, you can still use PayPal for online purchases. The money will be debited straight from the bank account or card.

But if you’d rather hold a PayPal balance to cover your purchases, you can add funds using a bank transfer.

How to transfer money from a bank to PayPal

PayPal recommends linking your bank account with your PayPal account, so that you can make payments quickly and simply. To add money from a bank account, simply follow these steps:¹

1. Login to your PayPal account.
2. Go to your ‘Wallet’.
3. Select ‘Transfer Money’.
4. Select ‘Add money to your balance’.
5. Provide your bank information, by following the on-screen instructions.

How to add money to PayPal from a debit card

You don’t need to add money directly to your PayPal balance using a bank card to pay for purchases or send money to a friend. Rather, the next time you make a transaction, PayPal can debit the money from your card.

This means if you link a card to your PayPal account, you won’t need a balance to send money to people or pay for things.

To link a card to your account, follow these easy steps²:

1. Login to your account.
2. Go to your ‘Wallet’.
3. Go to ‘Link a debit or credit card’.
4. Follow the on-screen instructions.

When linking a card to PayPal, you may also be required by your bank to complete 3D secure or biometric authentication processes.

Receiving money from friends and family into your PayPal account

Of course, another way to top up your PayPal balance is to receive payments from friends and family. It’s free to receive personal payments into your PayPal account³ provided that the sender uses a bank account, debit card or their PayPal balance, and as long as no currency conversion is involved. You can even send a money request or invoice.

How to add money into the PayPal app

If you’re topping up your balance using the PayPal app, you can simply tap your balance and select ‘Add Money’¹. Then, follow any instructions on-screen, such as selecting a bank account to fund the payment and entering the amount you want to transfer.

What are the PayPal fees for adding money?

How do I add money to PayPal for free?

The good news is that it’s free⁴ to add money to your PayPal balance from your UK bank account, provided the money is in GBP.

But are there any other costs you need to know about? Here are some of the other PayPal fees to bear in mind:

Spend in any currency, and send money with ridiculously low fees

Need to pay for goods and services abroad, or send money to friends and family overseas? Wise can help.

Wise specialises in international payments, to make it simple and cheap to send and spend all over the world, just like a local.

Get a Wise multi-currency account and you can send and spend in 50+ currencies - all with the real, mid-market exchange rate, so there are no hidden fees to worry about.

It could be as much as 6x cheaper⁵ than leading UK banks when it comes to making international payments. You can even receive money for free with your own local account details, for the US, UK, EU, Australia, New Zealand, Singapore and many more countries and currencies worldwide.

Get started and save when you spend in any currency.

Join Wise today

That’s pretty much everything you need to know on how to put money into PayPal and top up your account. After reading this guide, you should be all set to transfer from your bank account in just a few clicks, or taps if you’re using the PayPal app.

But if you prefer, you can always just link a bank account or debit card and let PayPal debit payments automatically - without the need to add money to your PayPal balance. It’s completely up to you.

Sources used for this article:

1. PayPal - how do I add money to my PayPal balance
2. PayPal - how do I link a debit or credit card to my PayPal account
3. PayPal - the fees to use PayPal
4. PayPal - PayPal consumer fees
5. Wise

Sources checked on 27-September-2021.

This publication is provided for general information purposes only and is not intended to cover every aspect of the topics with which it deals. It is not intended to amount to advice on which you should rely. You must obtain professional or specialist advice before taking, or refraining from, any action on the basis of the content in this publication. The information in this publication does not constitute legal, tax or other professional advice from TransferWise Limited or its affiliates. Prior results do not guarantee a similar outcome. We make no representations, warranties or guarantees, whether express or implied, that the content in the publication is accurate, complete or up to date.