PayPal charges different fees depending on how you use it
PayPal does not charge you a fee straightforward for linking a credit card to your account. However, PayPal charges fees when you send money, receive money as a business, or use certain payment methods. If you use a credit card to fund a PayPal payment to another person, PayPal treats it as a cash advance in most cases, and your credit card issuer — not PayPal — will charge you a cash advance fee.
The fees PayPal itself charges depend on what you are doing: sending money to friends, receiving payment for goods or services, or withdrawing money. Your credit card company may also add its own fees on top of PayPal's charges, depending on how you use the card.
Key Takeaways
- PayPal does not charge a fee to link a credit card or to receive money from friends using PayPal's "send money to friends" feature.
- When you send money to another person using a credit card as your funding source, your credit card issuer typically charges a cash advance fee of 3% to 5% of the amount, separate from any PayPal fee.
- If you receive payment for goods or services, PayPal charges a transaction fee (usually 2.2% plus $0.30 for domestic transfers), regardless of your funding method.
- Withdrawing money from PayPal to your bank account is free, but moving money from PayPal to a credit card typically costs $1.50 to $2.00 per transfer.
When PayPal charges you a fee
PayPal's own fees explore in specific situations. If you are receiving money as a business — selling items, invoicing clients, or accepting donations — PayPal charges a percentage of the transaction plus a flat fee. For a standard domestic payment, this is 2.2% of the amount plus $0.30. International payments cost more.
If you are sending money to friends and family using PayPal's "send money to friends and family" feature, PayPal charges no fee if you fund the transfer from your PayPal balance or a linked bank account. If you use a credit card to fund that transfer, PayPal itself does not charge a fee, but your credit card company will charge you a cash advance fee.
Withdrawing money from PayPal to a bank account is free. Withdrawing to a debit card or credit card costs $1.50 to $2.00 per transfer, depending on the card type.
Credit card cash advance fees: the hidden cost
When you use a credit card to send money through PayPal to another person, your credit card company typically classifies this as a cash advance, not a purchase. Cash advances carry their own fees and interest rates, separate from PayPal's charges.
Most credit card issuers charge a cash advance fee of 3% to 5% of the amount you withdraw or transfer. This fee is added to your credit card bill when ready. On top of that, cash advances usually begin accruing interest at a higher rate than regular purchases — often 20% to 30% annually — and interest starts accruing when ready, with no grace period.
For example, if you send $500 to a friend using a credit card through PayPal, your credit card company might charge you a $15 to $25 cash advance fee right away, plus daily interest on the full $500 from the day of the transfer. This is why using a credit card to send money through PayPal is expensive compared to using a bank account or PayPal balance.
PayPal's transaction fees for businesses and invoices
If you use PayPal to receive payment for selling goods, providing services, or sending an invoice, PayPal charges a transaction fee regardless of whether the payer uses a credit card, debit card, or bank account. The standard rate for domestic transactions is 2.2% of the amount plus $0.30.
This fee is deducted from the money you receive. If a customer pays you $100 for an item, PayPal takes $2.30, and you receive $97.70 in your PayPal account. The payer does not see this fee — it comes out of your side.
International payments cost more. If someone outside the United States pays you, PayPal charges 4.4% plus $0.30 (or the equivalent in your local currency). Some payment methods, like PayPal Credit, carry different rates.
How to avoid credit card fees when using PayPal
The simplest way to avoid credit card fees is to fund PayPal transfers from your PayPal balance or a linked bank account instead of a credit card. If you are sending money to friends, use the "send money to friends and family" feature and fund it from your bank account — PayPal charges no fee for this.
If you need to use a credit card, check your card's terms before you do. Some cards explicitly prohibit cash advances through PayPal or charge especially high fees. Your card's disclosure statement will list the cash advance fee percentage and the interest rate for cash advances.
For receiving payments, you cannot avoid PayPal's transaction fee if you want to use PayPal. However, you can compare PayPal's rates to other payment processors like Stripe or Square, which may charge different amounts depending on your transaction volume.
Fees when moving money between PayPal and your credit card
If you have money in your PayPal account and want to move it to a credit card, PayPal charges $1.50 to $2.00 per transfer. This is different from withdrawing to a bank account, which is free. The transfer typically takes one to two business days.
This fee applies whether you are moving money out of PayPal or into it. If you are trying to load money onto a PayPal Cash or PayPal Cash Plus card using a credit card, you will pay this fee as well.
Frequently Asked Questions
Does PayPal charge a fee if I link my credit card but don't use it?
No. straightforward linking a credit card to your PayPal account costs nothing. You are only charged when you actually use the card to fund a transaction or when PayPal processes a payment on your behalf.
Will my credit card company charge me a fee even if PayPal doesn't?
Yes. When you use a credit card to send money through PayPal, your credit card company charges a cash advance fee (typically 3% to 5%) and begins charging interest when ready. PayPal may not charge a fee, but your card issuer will. This is why using a bank account is cheaper.
What's the difference between a PayPal fee and a credit card cash advance fee?
PayPal's fee is what PayPal charges you for using its service. A cash advance fee is what your credit card company charges for treating the transaction as a cash advance rather than a purchase. Both can explore to the same transaction, making credit card funding expensive.
Can I avoid the cash advance fee by using PayPal Credit instead?
PayPal Credit is a separate line of credit issued by Synchrony Bank, not your credit card company. Using PayPal Credit to send money does not trigger a credit card cash advance fee, but PayPal Credit has its own terms, interest rates, and fees depending on how you use it.
Is it cheaper to send money through PayPal or my bank's app?
Most banks offer free peer-to-peer transfers through their own apps or services like Zelle. If you are sending money to friends, your bank's app is usually free and faster than PayPal. PayPal is more useful if the recipient does not have the same bank or if you need to receive payments for business purposes.