The PayPal Mastercard goes further than most flat-rate cards by offering not only a flat cash back rate on general purchases, but also bonus cash back for purchases made through your PayPal account. If you do a lot of online shopping or you frequently shop at stores that let you pay with PayPal, this could give the PayPal card enough long-term value to make up for its lack of a sign-up bonus or intro APR offer.
If you’re not a PayPal user, you may prefer a more versatile rewards card like the Chase Freedom Unlimited®. Its flat rate is slightly lower than the PayPal card’s, but it also earns rewards in a variety of popular bonus categories that could help you overcome that difference. The card also has a range of benefits you won’t get with the PayPal Mastercard, including a sign-up bonus, intro APR offer on purchases and balance transfers and a complimentary DashPass subscription.
Earning cash back
On top of its impressive 2 percent flat cash back rate on all purchases, the PayPal Mastercard offers a bonus rate of 3 percent cash back on PayPal purchases (including at stores that let you pay using the PayPal app). Depending on how often you pay using PayPal, this could be a powerful combination of rewards.
Most flat-rate rewards cards — like the Wells Fargo Active Cash Card and the Citi Double Cash Card — only offer a flat rate on general purchases, with no additional bonus categories. This can keep things relatively simple and hassle-free, but it means you may miss out on a higher rate in your biggest spending categories.
Meanwhile, a number of bonus-category cards earn 3X points or more in select categories, including the Capital One SavorOne Cash Rewards Credit Card (which earns 3 percent cash back on groceries, dining and entertainment) and the Wells Fargo Autograph℠ Card (which earns 3x points at gas stations and on travel, restaurants and more). But these cards, like most other bonus category cards, only earn 1 percent back on general purchases.
By pairing a flat 2 percent rewards rate on general purchases with 3-percent cash back on PayPal purchases, the PayPal Mastercard makes a good effort at trying to combine the best features of flat-rate and bonus-category cash back cards. However, there are a few caveats to keep in mind.
To earn 3 percent cash back you have to be the primary cardholder, as authorized users will only earn 2 percent cash back at all times. You also have to make purchases through your PayPal account. This can be done online or in-store as long as the merchant accepts PayPal as a form of payment. If the store doesn’t accept PayPal, you’ll earn 2 percent cash back.
If you’re already a PayPal user and have a good idea of the stores that let you use your PayPal account, this card could be a good fit — especially if you don’t already have a card that earns three percent cash back or more at these locations.
For everyone else, it won’t be easy to find out where PayPal is accepted. PayPal lists some merchants, such as Walmart, Best Buy, and Home Depot, but it doesn’t offer a full list of merchants. And some merchants are selective in how they accept PayPal. For example, Target only accepts PayPal on Target.com and the Target app. If you’re not already familiar with the merchants that accept PayPal, you’ll likely have an easier and more rewarding experience if you use the PayPal Mastercard to cover general purchases and pair it with another rewards card that earns bonus points in your top spending categories.
Redeeming cash back
To receive cash back, you must have a PayPal Cash account, PayPal Cash Plus account or a standard PayPal account with a linked debit card or bank account.
Even then, your PayPal credit card cash back isn’t automatically added to your balance. You must log into PayPal and transfer the cash rewards to either your PayPal balance or your linked debit card/bank account. Luckily, you can redeem any amount of cash back you choose from your rewards balance.
This probably isn’t a big deal if you’re considering a PayPal credit card in the first place, but creating an eligible account and the extra steps might not be worth it if you prefer another digital wallet program or simply want direct cash back.