Yes, you can pay with PayPal using a credit card as your funding source
PayPal lets you link a credit card to your account and use that card to fund your PayPal payments. When you send money through PayPal or pay a merchant, you can choose which funding source to use — your PayPal balance, a linked bank account, or a linked credit card. The credit card charges you the same way it would for any other purchase, and PayPal processes the transaction between you and the merchant or recipient.
This setup is useful if you want to earn credit card rewards on PayPal purchases, if you don't have a bank account connected yet, or if you prefer not to keep a PayPal balance. However, there are fees and limits you should understand before you rely on this method.
Key Takeaways
- You can link any major credit card to PayPal and use it to fund payments to merchants or other people.
- PayPal charges a fee when you send money to another person using a credit card, but not when you pay a merchant.
- Your credit card company may treat PayPal transactions as a cash advance rather than a purchase, which triggers higher interest rates and fees.
- You can set which funding source PayPal uses by default, or choose a different one each time you pay.
- Some credit cards block PayPal transactions or flag them as suspicious, so contact your card issuer if a payment fails.
How to link a credit card to your PayPal account
Log into your PayPal account and go to the Wallet section. Select "Link a card" and enter your card number, expiration date, CVV, and billing address. PayPal will verify the card by charging a small amount (usually under $1) to it, then crediting that amount back. You'll see the charge appear on your statement within a few days.
Once the card is linked, you can use it when ready. PayPal stores the card information securely and does not share your full card number with merchants — instead, merchants see only that you paid through PayPal. You can link multiple cards and switch between them, or set one as your default funding source.
Fees when you use a credit card on PayPal
PayPal's fee structure depends on whether you're paying a merchant or sending money to another person. When you pay a business or online store through PayPal, there is no fee from PayPal — your credit card company may charge you a small fee (usually 1 to 3 percent), but that's their standard rate for any purchase, not specific to PayPal.
When you send money to another person using a credit card, PayPal charges a fee of 2.2 percent plus $0.30. This is higher than the fee for sending money from a bank account (which is free for domestic transfers in the US). If you're sending $100 to a friend, the fee would be $2.50. For this reason, most people use a bank account or PayPal balance to send money to other people, and reserve the credit card for merchant payments.
Cash advance fees and interest rates
Some credit card companies classify PayPal transactions as cash advances rather than purchases. A cash advance is when you borrow money directly from your credit card's cash reserve, and it carries different terms than a regular purchase. If your card treats PayPal as a cash advance, you'll pay a cash advance fee (usually 3 to 5 percent of the amount) and a much higher interest rate (often 20 to 30 percent) that starts accruing when ready, with no grace period.
Whether your card treats PayPal as a cash advance depends on your specific card and issuer. Call your credit card company before you use PayPal regularly and ask: "Does my card treat PayPal transactions as a cash advance or as a regular purchase?" If the answer is cash advance, you may want to use a different funding method or a different card. Some cards never classify PayPal as a cash advance, while others do it only for certain types of PayPal transactions.
How to choose your funding source each time you pay
When you check out on a merchant's website using PayPal, or when you send money through PayPal's app, you'll see a screen showing your available funding sources. You can select which card, bank account, or PayPal balance you want to use for that specific transaction. This lets you avoid the credit card for person-to-person transfers (where fees are higher) and use it only for merchant payments (where there's no PayPal fee).
You can also set a default funding source in your PayPal settings. PayPal will use that source unless you change it at checkout. If you want to use your credit card for rewards but avoid cash advance fees, set your bank account as the default and manually switch to the credit card only when paying merchants.
What to do if your credit card payment is declined
If a PayPal transaction using your credit card is declined, the most common reason is that your card issuer flagged it as suspicious. Credit card companies monitor for unusual activity, and PayPal transactions sometimes trigger their fraud detection systems, especially if you're using the card for the first time or paying an unfamiliar merchant.
Contact your credit card company directly — not PayPal — and tell them you authorized the transaction. Ask them to clear the block and allow PayPal transactions going forward. You can also call the number on the back of your card. Once the block is lifted, try the PayPal payment again. If the transaction is still declined, ask your card issuer whether they classify PayPal as a cash advance, because some cards decline PayPal transactions entirely for that reason.
Rewards and other benefits of using a credit card with PayPal
If your credit card earns cash back or points on all purchases, you'll earn those rewards on PayPal transactions too. A card that gives 2 percent cash back on all purchases will give you 2 percent back on a PayPal payment to a merchant. This can add up if you use PayPal regularly — over a year, 2 percent cash back on $5,000 in PayPal purchases is $100.
However, this benefit only applies to merchant payments, not to person-to-person transfers. And if your card treats PayPal as a cash advance, you won't earn rewards on those transactions at all. Before you use a credit card with PayPal for rewards, confirm with your card issuer that PayPal is treated as a regular purchase and that you'll earn your normal rewards rate.
Frequently Asked Questions
Can I use a debit card with PayPal instead of a credit card?
Yes. PayPal accepts debit cards, and the process is the same — link the card in your Wallet and use it to fund payments. Debit cards won't earn rewards and won't build credit history, but they also won't trigger cash advance fees or interest charges. If you want to avoid credit card risk, a debit card is a straightforward alternative.
Does PayPal charge a fee when I use a credit card to pay a store online?
No. PayPal charges no fee for merchant payments, whether you use a credit card, bank account, or PayPal balance. Your credit card company may charge their standard purchase fee (usually 1 to 3 percent), but that's their fee, not PayPal's. The only time PayPal charges a fee for credit card use is when you send money to another person.
What happens if I don't have enough credit available on my card?
The transaction will be declined. PayPal will show you an error message and ask you to choose a different funding source or contact your card issuer to increase your available credit. Your credit limit works the same way on PayPal as it does anywhere else — you can only spend up to your available balance.
Can I remove a credit card from PayPal after I've linked it?
Yes. Go to your Wallet, find the card, and select "Remove" or "Unlink". The card will no longer be available as a funding source. If that card was set as your default, PayPal will prompt you to choose a new default before you can complete a payment.