Today we’re going to talk about the PayPal Mastercard Credit Card that gets you 2% cash back on all of your transactions. One of the really big benefits of this card is that there’s no foreign transaction fee. This means that you can use this card when you’re traveling and you’re not going to pay to 3% typical fee for foreign transactions unlike some of the other 2% back options. And since it’s a Mastercard, it is accepted on all kind of stores around the globe.
There are no minimum requirements in order to redeem the two percent, but be aware that this card does not have a signup bonus and you need to see whether that makes any sense for you. For the most part, that’s pretty much it; there’s not really that much meat on the bone.
There are a few other interesting things though, especially if you want to compare it to the Citi Double Cash card. Like with most other credit cards that you’re going to consider, you’re going to get an extended warranty and you’re also going to get price protection. For a lot of people, especially people who have other cards, it’s really hard to get excited about these just because you already have these. But if you are coming from a debit card, then this is a substantial upgrade.
If you’re someone looking for one specific card and you want to be able to use it for travel, this is probably going to be the card for you. Unlike the Double Cash card and a lot of other no-annual-fee cards, there are no foreign transaction fees, meaning that you can pretty much use it anywhere.
Some things to consider
Is a PayPal credit card good? Well, if you are someone who’s born to get credit cards, then this card might not make sense, and we’re going to run through why. There are four reasons why you should double think about getting this card. The first one is that your benefits are going to be significantly worse, so if you run through a lot of the benefit guides, as well as other people’s experience of benefits, Mastercards typically do substantially worse than American Express and Visa.
The main reason is that the coverage is typically lower, timing is typically shorter, and they’re just a hassle to deal with. if you are looking for that all-in-one card, the Double Cash Card makes slightly more sense just because you are actually dealing with Citi and not directly with Mastercard. So even though it is a Mastercard, Citi benefits are typically a lot better than the base ones that you get from Mastercard. For example: for an extended warranty, you’re going to get two years of coverage instead of just one.
Crunching down the numbers
The second reason is the lack of signup bonuses and how that affects your earn-out rate. A really simple example is if we had a card that earns you 1.5% cash back but had to sign up bonus of a hundred and fifty dollars. If you look through the numbers, you can see why the 1.5 percent still might make more sense for you if you’re someone who doesn’t spend a lot of money. With the two percent card, you’re going to need to spend $7,500 before you even earn $150 in cash back. For most people, $7,500 is a lot of money. If you don’t spend up to that amount, then you’re not really going to get the benefits compared to that $150 cash back card.
The $7,500 figure isn’t really fair just because what would happen if you spent the same $7,500 on that 1.5% back card? Once you factor in the opportunity cost, the main difference is going to be that 0.5% and if you consider the $150 cash back you’re only going to break-even and come out ahead at the $30,000 mark! This means that you need to spend thirty thousand dollars before the two percent back with no signup bonus makes more sense.
The third point, thinking ahead long term in terms of what makes the most sense, is that you don’t really have any product change options. So yes, you do have this card but in the future, you don’t know what you’re going to prioritize. If you get the PayPal and your behavior changes in the future, if you don’t really care about 2% back and you care more about optimizing for 5% back or for signup bonuses, then that card’s not really going to get used.
For big issuers like Chase, as well as Citi, you have significantly more downgrade options or product change options, meaning that you can adjust the cards based on your future needs. For example, if you had a Chase Freedom Card and let’s say the categories don’t really make sense for you, what you can do is to do a product change to the Chase Freedom Unlimited Card.
The final point -and this one depends on how you personally use PayPal and the type of transactions you run- but PayPal is very trigger-happy in terms of shutting down people’s accounts.
PayPal Cashback Mastercard fees
Annual membership fee
foreign transaction fee
Variable Purchase APR is 22.24%, 26.24% or 29.24%
Main benefits and perks
|Extend your warranties||Price protection for 60 days||Car rental collision damage waiver insurance|
|Identity theft resolution||Microchip technology||Get rewarded for every purchase|