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“Buy Now, Pay Over Time” is a growing trend among credit cards, digital wallets, and online stores. PayPal Credit is one of the flexible payment options you might be able to use for your next big purchase. Here’s a closer look at why you might use PayPal to make purchases.

How PayPal Credit Works

PayPal Credit is a free consumer line of credit that doesn’t require a credit card to qualify. Shoppers can choose a multi-month payment plan instead of paying for an entire purchase upfront.

Who Qualifies for PayPal Credit?

You only need a PayPal account that you use to make an online purchase. The minimum age to join PayPal is being 18 years old.

Does PayPal Credit Affect Credit Score?

This credit account is considered an “open-end revolving credit card account” that reports to the credit bureaus. It’s similar to a store charge card except can be used at any merchant accepting PayPal purchases. You don’t get a physical credit card that earns rewards.

Applying for an account can temporarily penalize your credit score and will show as a credit inquiry similar to applying for a credit card.

Synchrony Bank maintains the account and reports the payment history to the three credit bureaus. Missed payments can negatively impact credit and on-time payments may improve your score.

Participating Stores

PayPal Credit is available at any online store that accepts PayPal payments.

Some of the stores include:

  • Adidas
  • Apple
  • eBay
  • Groupon
  • Home Depot
  • Target

You will see the available payment options, including the minimum monthly payment when at the checkout screen.

Shoppers can click the “Pay with PayPal” button to start the process. The next step is choosing PayPal credit instead of paying from a current PayPal balance or a link payment card or bank account.

At Least $250 Spending Limit

The minimum initial credit limit will be $250 but can be higher. Members will need to undergo a hard credit check as PayPal uses your credit history as a factor to calculate the spending limit. The spending limit links to your PayPal account after approval.

To qualify, you must submit these details:

  • After-tax income
  • Birthday
  • Last 4 Social Security digits

The approval process is almost instant. After getting approved, you will see PayPal Credit as a payment option at merchants who accept PayPal payments.

No Purchase Minimum

There isn’t a purchase minimum, but the order amount can affect the potential interest charges and repayment options. PayPal Credit is currently better for orders of $99 or more. Buyers won’t pay interest if repaying the balance within 6 months of the purchase date.

Purchases of $98.99 or less are subject to interest charges.

It’s possible to use the line of credit for multiple purchases and you don’t have to reapply for credit after each purchase like other “buy now, pay later” programs.

Purchases Can Have 0% Interest

PayPal Credit currently waives all interest charges on $99+ purchases that you fully repay within 6 months of the original purchase date. If you don’t pay off the balance, interest charges apply from the purchase date as a consequence.

This 0% APR promotion isn’t an introductory offer but only applies to single items that cost at least $99.

Purchases $98.99 or less automatically accrue interest until paid off.

Buyer Protection Benefits

Despite taking longer to pay back, PayPal Credit purchases have the same purchase protection benefits as lump-sum payments.

  • Protection against fraud, faulty items, or incorrect shipments (up to 60 days)
  • Refunds or replacements for lost shipments
  • Free return shipping (up to $30 per claim and up to 12 claims per year)

Payment Options

Shoppers can pay for purchases from their current PayPal or PayPal Plus balance on the monthly due date. Another option is making monthly payments from a linked checking account.

Potential Fees

Shoppers might pay some service fees:

  • Interest charges: Varies by purchases (qualifying purchases are exempt)
  • Late fees: Up to $40 per missed payment
  • Returned payments: Up to $29
  • Annual fee: $0
  • Early payoff penalty: $0

The late fee is only $29 when you make the minimum monthly payment for the first 6 months and miss a payment in month 7 or later.

There isn’t an annual fee for PayPal Credit. However, this payment method doesn’t earn rewards points and can influence your credit score negatively or positively.

The most likely fee that shoppers will pay is the purchase APR or a late payment penalty.

PayPal Credit Pros

Here are the positives of PayPal Credit:

  • Interest-free payments on $99+ purchases paid within 6 months
  • No annual fee
  • Can use for multiple purchases
  • Can be easier to qualify for than a credit card
  • Qualifies for PayPal buyer protection benefits

PayPal Credit Cons

These are the downsides of PayPal Credit:

  • Interest rates rival most credit card purchase APR
  • Interest charges on all purchases smaller than $99
  • Purchases larger than $99 and not paid within 6 months incur interest charges
  • Purchases don’t earn rewards points
  • Late payments have late fees and can hurt credit score

PayPal Pay in 4

As PayPal Credit charges interest for small purchases, PayPal’s Pay in 4 can be a better option for purchases smaller than $99. This extended payment plan doesn’t charge interest payments.

This service only requires a soft credit check to qualify for financing and won’t hurt your credit score like PayPal Credit might.

However, this tool currently isn’t available in New Mexico, North Dakota, South Dakota, Missouri, Wisconsin, or the U.S. territories. Not every applicant will qualify for credit but the approval odds can be easier to be approved than for a credit card or store charge card.

How Pay in 4 Works

Pay in 4 is for purchases between $30 and $600. Each purchase qualifies for the same buyer protection benefits as other PayPal purchases do. The payment frequency is 4 interest-free payments with a payment every 15 days. You pay the full balance in 6 weeks.

The first payment is a down payment due when you make a purchase.

There isn’t a prepayment penalty if you pay back the balance early.

Participating Merchants

The Pay in 4 features is available at millions of merchants, according to the digital wallet.

Some of the participating retailers include:

  • Best Buy
  • Bose
  • Ebags
  • Samsonite
  • Target

These purchases won’t earn rewards points. It’s worth paying for these purchases if you can pay off the credit card statement balance (and avoid interest charges) as credit cards only have a slightly shorter payment window than the Pay in 4 feature.

Potential Fees

There are zero application fees, account service fees, or interest charges. The one potential fee is a late fee for missed payments.

The late fee can depend on the purchase amount and PayPal doesn’t disclose a minimum or maximum late fee in the Pay in 4 FAQs. Shoppers will see the loan terms and conditions when approved for a specific purchase.

PayPal Pay in 4 Pros

These are the benefits of PayPal Pay in 4:

  • Interest-free payments
  • No hard credit check
  • Purchases qualify for buyer protection benefits
  • No application fee

PayPal Pay in 4 Cons

Here are the negatives of Pay in 4:

  • Only for purchases between $30 and $600
  • Must repay the balance within 6 weeks
  • Purchases don’t earn rewards points
  • Late fees may apply


PayPal Credit can be a good option if you can make $99+ purchases that avoid the interest charges. However, the interest rate is as high as credit cards and you should either try to pay with cash or a rewards credit card to maximize your spending power. You may even want one of the best credit card offers to help get more value out of your purchases.


Is PayPal Credit a good deal?

PayPal Credit can be a good option for purchases that are at least $99 but can be paid off within 6 months to qualify for 0% interest.

Other purchases incur interest charges similar to what credit cards charge meaning PayPal Credit is expensive. These purchases include any purchases $98.99 (even if paid off in 6 months) or below and any purchase greater than $99 that takes longer than 6 months to pay in full.

Is applying for PayPal Credit a hard inquiry?

Yes, PayPal Credit requires a hard credit check like a credit card during the application process. PayPal also reports the monthly payment history to the major credit bureaus which may positively or negatively affect your personal credit score on an ongoing basis.

The PayPal Pay in 4 feature can be a better option for purchases between $30 and $600. No hard inquiry is required and the payments are interest-free but the entire balance must be repaid within 6 weeks.

Does PayPal Credit send you a card?

No, PayPal Credit is an online-only line of credit for PayPal purchases. Users won’t get a physical credit card and the credit line cannot be used at stores that don’t accept PayPal.

What can you use PayPal Credit for?

It’s possible to use PayPal Credit for any PayPal purchase when you decide to pay with your PayPal account instead of entering your account information for a credit card, debit card, or checking account.

PayPal states that millions of online stores accept PayPal Credit payments. Some examples can include clothing, electronics, travel, and merchandise. Shoppers will see a PayPal Credit button as a payment method at participating online stores.

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