Using a Credit Card to Send Money via PayPal: Is It Worth the Fee?

If you've recently applied for a credit card that offers a welcome bonus after a certain amount of required spending, you might be wondering if it makes sense to use PayPal to send money to another person using your credit card. In 2020, Chase included PayPal in its cash-back calendar during Q4 (October through December), and the Chase Freedom Flex℠ has historically included PayPal in the bonus cash back offering.

Categories earning bonus cash back change quarterly and have earning caps before their base rate earnings of 1% apply. Some credit cards, such as the Chase Freedom Flex℠, offer rotating categories where cardmembers can earn 5% cash back. Credit Cards With Rotating 5% Bonus Categories

Despite the fee PayPal charges, there are a few cases where you could come out ahead after the credit card fee. However, one of the biggest drawbacks of using a credit card to send money to another person via PayPal is the processing fee. This fee can quickly eclipse any credit card rewards you might earn.

PayPal charges 2.9%, plus a fixed fee of 30 cents to process a person-to-person money transfer using a credit card. This means that if you're sending $100, for example, you'll be charged $2.90 in fees (2.9% of $100) and an additional 30 cents, making the total fee $3.20.

In contrast, banks are also changing the way these transactions are processed, which might subject you to additional fees. Generally, the fees PayPal charges for sending 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.

After all, your credit card earns rewards – why not earn additional cash back or transferable points when sending money? As of 2022, 209.3 million people worldwide use PayPal to send money to friends or acquaintances, making it a convenient way to send money to a friend or family member. However, if you're looking for the best way to send money, it's worth considering other options.

In conclusion, while using a credit card to send money via PayPal may seem like an attractive option at first glance, the processing fee charged by PayPal can quickly outweigh any potential rewards earned through your credit card. It's essential to weigh the costs and benefits before deciding which method is best for you.

Paypal transaction fee checking account