PayPal Credit Card Adds Broad Three Percent Cash Back Category

PayPal Credit Card Adds Broad Three Percent Cash Back Category

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Bankrate has partnerships with issuers including, but not limited to, American Express, Bank of America, Capital One, Chase, Citi and Discover. SHARE: Antonio_Diaz/Getty Images April 08, 2022 Checkmark Bankrate logo How is this page expert verified? At Bankrate, we take the accuracy of our content seriously. "Expert verified" means that our Financial Review Board thoroughly evaluated the article for accuracy and clarity. The Review Board comprises a panel of financial experts whose objective is to ensure that our content is always objective and balanced. Their reviews hold us accountable for publishing high-quality and trustworthy content. Ted Rossman is a senior industry analyst at Bankrate.com. He focuses on the credit card industry and helps consumers maximize rewards, get out of debt and improve their credit scores. Mariah Ackary is a personal finance editor who joined the Bankrate team in 2019, excited by the opportunity to help people make good financial decisions. Send your questions to Bankrate logo

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Cards that give more than 2 percent cash back broadly

For example, the gives 2.5 percent cash back on up to $10,000 in qualifying purchases per billing cycle (then 1.5 percent cash back). To earn the 2.5 percent rate, cardholders also need to have an Alliant High-Rate Checking account with an average daily balance of at least $1,000 throughout the previous quarter. The gives an unlimited 3 percent cash back on every purchase, but it has a notoriously difficult approval process. The also gives 3 percent cash back on everything, but the promotion expires at the end of 2022. Lastly, the card awards an effective 3 percent cash back on everything in a cardholder’s first year. It gives 1.5 miles on every purchase and those are doubled at the end of the first year (and each mile can be worth one cent when redeemed as a statement credit). However, in year two and beyond, that rate is cut in half without the introductory mile-doubling bonus.

What qualifies for PayPal s 3 percent category

PayPal is accepted by 29 million merchants, . This includes more than 700 of Internet Retailer’s 1,000 largest online retailers, . Unfortunately, there are some notable omissions, such as Amazon.com. Still, there are a lot of ways to pay with PayPal. It has been possible to use as a workaround when PayPal is not directly accepted online, although that’s about to change. on April 20, 2022. There are limited opportunities to use PayPal in person. Walmart, CVS and 7-Eleven are among a select group of retailers that accept PayPal in stores via QR codes. Hopefully, this program will grow, but for now, PayPal Cashback Mastercard holders should expect to rack up most of their 3 percent rewards online.

Should you get this card

The PayPal Cashback Mastercard used to be more on par with cards such as the and the . These are cards that give 2 percent cash rewards on purchases (in the case of the Double Cash, technically 1 percent when a cardholder makes a purchase and another 1 percent when they pay it off). The PayPal card gives new cardholders $100 off their first $500 in purchases. The Active Cash is a bit more generous, awarding $200 in cash rewards after new cardholders spend $1,000 in their first three months. The Double Cash currently offers $200 cash back after spending $1,500 on purchases in the first 6 months of account opening. Beyond the introductory bonus, the PayPal Mastercard is now a more lucrative card than these other two, given the introduction of the 3 percent PayPal category. Cards such as these serve two main purposes. One is for someone who wants to keep things simple. They don’t want to be bothered with rotating categories or annual fees or remembering which card gives the best rewards on certain types of purchases. This is actually a surprisingly lucrative strategy. Because while other cards may tout four, five or six percent cash back on certain purchases, they often give a meager 1 percent cash back on most other buys, and they frequently have spending caps on their top-earning categories. If you use one of those cards broadly, your average rewards rate could end up well below 2 percent. This brings us to the other scenario: Using a card such as the PayPal Mastercard as a foundation guarantees you’ll get no less than 2 percent cash back on any purchase. You could layer in other cards with more generous rewards on certain types of spending while maintaining that elevated floor. It’s a bit more complicated, but mathematically, it’s worth it. You just need to be willing to put in the effort of juggling different cards for different types of purchases.

The bottom line

The more you use PayPal, the more your PayPal Cashback Mastercard’s rewards rate will outpace the 2 percent benchmark that has historically been the high end of the mainstream cash back market. I’m seriously thinking about getting this card. To gauge the potential upside, I will focus on how many of my purchases I could make via PayPal. Have a question about credit cards? E-mail me at and I’d be happy to help. SHARE: Ted Rossman is a senior industry analyst at Bankrate.com. He focuses on the credit card industry and helps consumers maximize rewards, get out of debt and improve their credit scores. Mariah Ackary is a personal finance editor who joined the Bankrate team in 2019, excited by the opportunity to help people make good financial decisions. Send your questions to

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