PayPal Credit is formerly known as Bill Me Later, and I’m sharing my tip with you on how I use them to pay off my credit card to avoid paying interest fees. I try to never carry a balance on any of my credit cards, but let’s face it, sometimes it just happens. For instance, I went on vacation back in July for 3 weeks and I had to take leave without pay at work since I didn’t have enough annual leave. I came back and I spent a little too much ($2,000 too much). I absolutely hate paying interest on credit cards so what I’ve done in the past is take an interest free loan against my Bill Me Later account to pay off my credit card.

For as long as I can remember, PayPal credit has always offered interest free payments for 6 months on any purchase over $99. Taking a quick peek at their website confirms they still have this deal going on. The offer is valid until September 30, 2014, but most likely the deal with get renewed time and time again as it has in the past.

So how do I use PayPal credit?

I have two PayPal accounts. One is my own and the other is my partner’s. You can link your PayPal Credit account to your account so that when you go to send a payment, PayPal Credit is listed as a payment option vs. having to pay by bank or by credit card. Depending on my available credit, I take a certain dollar amount (i.e. $2,000) and send it to my partner’s PayPal account and I make sure to select PayPal Credit as the payment method. After the money goes into my partner’s PayPal account, I withdraw the money to a bank account and pay off the credit card. I’ll have 6 months to pay the balance and avoid interest all together. The great thing about PayPal Credit is that it doesn’t report to your credit! Your credit card companies never see that you have a balance with PayPal Credit.

What you will need:
  1. Two PayPal accounts.
  2. Apply for a PayPal Credit account (this will result in a hard pull on your credit).

Once you login to your account, all you need to do next is click the Send & Request button at the top of your screen.

Always select you’re paying for goods or services!
PayPal credit pay for goods or services

If you don’t select “I’m paying for goods of services” you’ll be charged a fee! Even though it says “The seller pays the fees” I’ve always received the full amount when the payment is received in the other account.

I always like to write down when the balance has to be paid off by in order to avoid interest. I would suggest doing the same by putting a reminder in your calendar! If the balance hasn’t been paid in full by 6 months, you’ll get zapped with all the accrued interest.

How else this could be used:

If You’re unable to payoff your PayPal Credit balance before the 6 months is up, you could do a little manufactured spending and buy some Visa gift cards with a credit card. Deposit the gift cards into your BlueBird account at Wal-Mart, and then send a payment from your BlueBird account to pay off your PayPal Credit account. Once your PayPal credit account is paid off, repeat the steps at the beginning of this article to send another payment. In return you’ll have yet another 6 months completely interest free!

Now obviously I don’t get in the habit of doing this, nor do I recommend it. I always recommend to pay your credit cards in full each month. However, I wanted to share this tip because it has helped me out in the past.


UPDATE: PayPal has caught on to this and is now charging the standard PayPal fees for accepting PayPal credit.