Trying to get some extra cash fast? Looking at PayPal for it? Read this article to learn more about cash advances, loans, and credit cards. 

What Does Cash Advance Mean on PayPal?

PayPal does not actually offer cash advances on your paycheck, nor have they announced any plans about offering cash advance services. Anyone telling you that you can get a cash advance through PayPal is trying to scam you. 

However, you can get a PayPal credit card and use it to buy goods from stores that accept PayPal. Many big box retailers like Target and BestBuy accept PayPal, as do online retailers like eBay and Etsy. This functions like a standard credit card, where you purchase the goods, then pay the credit card down later. 

You can also borrow money from PayPal with either a Business Loan or Working Capital. Unlike other loans, these loans do not have interest, but there is a fixed fee that must be paid over the life of the loan.

Business Loan repayments are automatically debited from your bank account. Working Capital repayments are deducted from sales, rather than a bank account. 

Understanding Cash Advance Fees

Lenders impose cash advance fees in the event that you borrow cash against your credit line. It’s calculated as a percentage of what is borrowed. The percentage is usually low, from 2-5%. 

The Concept of Cash Advances

Cash advances are when you go to an ATM and pull out money using a credit card rather than a debit card. Convenience checks are also an example of cash advances. The concept of a cash advance is that you are pulling out cash from a line of credit, rather than money stored in a bank. 

Cash Advance Fees for Person-to-Person Transfers on PayPal

When you use your debit or credit card to make a payment or money transfer through PayPal, PayPal only charges the card for the payment amount. However, if you are making a cash advance purchase with a credit card, the card issuer may instate a cash advance fee.

This has nothing to do with PayPal. PayPal recommends if you are making a cash advance purchase to instead pay using your bank account or eCheck if possible. 

Reported Incidents of PayPal Cash Advance 

The closest thing PayPal has to a Cash Advance would be the Working Capital loan, which PayPal does sometimes refer to as a Working Capital cash advance. 

Instances of Cash Advance Fees on PayPal Transactions

Working Capital advances through PayPal are repaid through sales, with payments needing to be made at least once every 90 days. When you get a Working Capital advance, you can choose the terms of how much must be repaid at a time.

PayPal states that you must pay at least 5% or 10% (depending on length of the loan) of the cash advance plus the fixed fee at least 90 days. 

Factors to Consider in PayPal Cash Advance 

PayPal Working Capital loans tend to be more flexible than a Business loan

To get a PayPal Working Capital advance, you must have had a PayPal Premier or Business account for at least 90 days. With a Premier account, you must have also made at least $20,000 in the last year. With a Business account, you must have at least $15,000 in annual PayPal sales. 

If the loan is estimated to last longer than 12 months, you must pay back at least 5% every 90 days. If the loan is estimated to last less than 12 months, you must pay back at least 10% every 90 days. 

Evaluating Potential Cash Advance Fees on PayPal

PayPal Business loans and Working Capital advances do not have interest, but there is a fixed fee that PayPal adds to the cost of the loan. This fee is competitive and does not fluctuate during the loan, but different loans may have different fees. 

Alternative Options to PayPal Cash Advance 

As mentioned above, you can get a credit card through PayPal that will be accepted at all retailers that accept PayPal. Notably, this does not include Amazon. However, you can purchase Amazon gift cards at places like BestBuy and use those on Amazon instead. 

Utilizing Existing PayPal Balance or Linked Checking Account

Additionally, if you have a balance in your PayPal account, you can use that to transfer money to people and make cash advance purchases. You can also link a checking account, which is what PayPal recommends. 

Exploring Other Money Transfer Alternatives

There are other money transfer alternatives out there as well for you to consider. Some examples are: 

• MoneyGram
• Moneywise
• WesternUnion
• WorldRemit
• Xoom – which does sit underneath the PayPal umbrella

Chase’s Updates on Cash Advance Fees for Person-to-Person Transfers

Unrelated to PayPal, Chase bank has instituted new cash-like transaction rules. These apply to using credit cards to do the following: 

• Currency exchange such as: cryptocurrency, digital currency, foreign currency, money orders, travelers checks, and wire transfers
• Gambling such as: casino chips, lottery tickets, and racetrack wagers
• Person to person money transfers
• Third party bill pay services 

Impact on Credit Card Rewards and Earnings

These sorts of transactions incur the cash advance fee, have a higher interest rate than other purchases, do not have a grace period for when they start accruing interest, and do not allow the cardholder to get card rewards. 

FAQs

Is Sending Money Through Paypal With A Credit Card A Cash Advance?

While PayPal will not instate a fee on this transaction, the bank the card is through may consider it a person to person transfer. Ideally these sorts of transactions should be done with eCheck or a bank account. 

How To Avoid Paypal Credit Card Fees?

Avoid PayPal credit card fees by paying the balance down before the bill rolls. For purchases under $99, this means monthly. For purchases over $99, PayPal gives you 6 months to pay off those purchases. 

Who Pays The Credit Card Fee On Paypal? 

The sender pays the fee on personal transactions paid with a credit card and some debit cards. Merchants pay the fee when they are selling products for people to purchase.  

Conclusion

Now you have a better understanding of PayPal’s fee structure and how you can move money around with PayPal.