PayPal is widely used as a way to make payments online, but that’s not all it can do. You can also hold money within PayPal, in what’s now known in the US as a PayPal Cash account.
This article will guide you through what a PayPal Cash account is, and how it works.
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|Wise's multi-currency Mastercard can be up to 4x cheaper when spending abroad, compared to banks and PayPal|
A PayPal Cash account is simply the place within PayPal where you can store money – not money in your bank account or on your credit card, but money kept in PayPal itself.
PayPal Cash accounts have only existed since March 29, 2019, in the USA. Before then, it was still possible to store money in PayPal – but not in a specific account called PayPal Cash.
If you were storing money in PayPal before then, your balance should have been moved into an automatically created PayPal Cash account. So long as you’ve confirmed your identity to PayPal at some point, that’ll all have happened automatically.
Why the change? Legal reasons – a new federal rule came into effect on April 1, 2019.¹
You don’t need a PayPal Cash account to continue to use PayPal itself: you can keep using PayPal to send and receive money, so long as you’ve got a bank account and/or credit or debit card linked up. In that case, the money will just go straight through PayPal without stopping there.
If you don’t technically need one to keep using PayPal, you might be wondering if you really need to get a PayPal Cash account at all. They do have a few advantages, though:
- You can use the money you hold in a PayPal Cash account to send money directly from PayPal, rather than from your bank account or credit card
- You can also use the PayPal Cash account to pay with Google Pay and Samsung Pay
- And if you use Acorns for investments, you can transfer money directly there from your PayPal Cash account.²
There are a few extra features available if you upgrade to a PayPal Cash Plus account. Which extra features? We’ll run through them below.
As the name implies, a PayPal Cash Plus account gives you everything a PayPal Cash account does, plus a few more things on top.
The PayPal Cash Plus account’s additional features are:²
- FDIC coverage. That means that your money is insured by the Federal Deposit Insurance Corporation, up to a certain limit. You only get this if you get a PayPal Cash Mastercard.
- The option to withdraw cash at ATMs via a PayPal Cash Mastercard
- The option to top up your balance in stores via the PayPal app or a PayPal Cash Mastercard
- The option to get cash at Walmart via the app
- The ability to pay in checks to your balance, via the app.
As you’ll notice, a lot of those differences relate to a card: the PayPal Cash card is a debit card that links to a PayPal Cash Plus account. If you want the card, you’ll need to sign up for PayPal Cash Plus.³
There’s good news and bad news when it comes to fees. The good news is that neither the PayPal Cash nor the PayPal Cash Plus account costs any specific fees to set up or maintain. There’s a second piece of good news too: it’s often cheaper to make a payment from a PayPal Cash account than it is to use a credit or debit card with PayPal.⁴
The bad news is that there are still a range of fees that you might end up having to pay as you use the various available services.
Those fees include the following.
|PayPal fee||Amount and notes|
|Move money from PayPal to your bank account instantly – Instant Transfer||1% fee (max $10). It’s free if you can wait 1-3 days⁶ ⁷ ⁸|
|Send money abroad from a PayPal Cash or Cash Plus account||5% (min $0.99, max $4.99)⁴ ⁷ ⁸|
|Load cash into PayPal Cash Plus account using app||$3.00-3.95 ⁵ ⁸|
|Load cash into PayPal Cash Plus account using PayPal Cash card||$3.00-4.95 ⁵ ⁸|
|ATM withdrawal from PayPal Cash Plus account via PayPal Cash card||Free at MoneyPass ATMs, up to $2.50 at other ATMs (in US or abroad)⁵ ⁸|
|Foreign transaction fee||2.5% of the purchase amount if you buy from a non-US merchant or use an ATM abroad. This is charged whether or not there’s a currency conversion⁵*(Note that the owner of the ATM you are using may charge an additional fee.)*|
That’s not a definitive list of the fees, just some of the most likely to affect you, especially if you go for the PayPal Cash Plus account with the card. Watch out in particular for international fees with PayPal, whether you’re using a PayPal Cash account or not.
|Spend online without a foreign transaction fee - get the Wise Mastercard|
With Wise you’ll get free access to a multi-currency account, that lets you store money in 40+ currencies. You’ll also get local account details for the UK, Eurozone, Poland, Australia, New Zealand and US. It’s easy to pay and get paid from all over the world.
With Wise you’ll get the mid-market rate applied on all transactions - and there’s no foreign transaction fee. Just a transparent fee.
Still want to know more about the PayPal Cash account? Here are a few further answers for you.
No, you don’t. You can use PayPal perfectly well without one.
If you want to store money in PayPal, though, you do indeed need one. You can set one up for no fee.
This is easier than it might sound, because it’s just an extension of your main PayPal account, using the same login details.
One option to create a PayPal Cash account comes when someone sends you money. When it arrives to PayPal and you’ve accepted it, you’ll be given the option to either transfer it straight to your bank, or “Keep it in PayPal.” If you select “Keep it in PayPal,” you’ll find yourself setting up a PayPal Cash account.²
While it’s likely your money will be OK inside a PayPal Cash account, it’s worth noting that it isn’t FDIC assured unless you get the PayPal Cash Plus account with the Mastercard.
That means that if anything were to happen to your PayPal Cash account, you wouldn’t be able to claim it back in the same way you would with a bank account covered by the FDIC.
All in all, it’s easiest to think of the PayPal Cash account as an extension of a regular PayPal account. If it’s useful to you to keep money stored within PayPal rather than using your bank balance or credit/debit card each time, then this is the way to do it.
Otherwise, you might be OK without one. And if you do decide you need to use one, it could well be worth considering the PayPal Cash Plus with the Cash Mastercard, which comes with FDIC coverage and of course all the benefits of a cash debit card.
As ever, though, make sure you know exactly what you’re signing up for – including all the possible fees you might face. International fees especially are often an issue with PayPal, but there’s also the 1% you have to pay on instant transfers if you need to get the money out of the PayPal account and into your bank account fast. Is it worth it? That’s ultimately down to you.
- PayPal - How do I sign up for a PayPal account
- PayPal - What can I do with my personal PayPal Cash account or PayPal Cash Plus account
- PayPal Cash Card
- PayPal - Credit Card Fees, Send Money Fees & Other Charges
- PayPal Fees page
- PayPal Instant Money Transfer To Bank Account
- PayPal Cash Long Form Disclosure
- Page | 1 PayPal Cash Plus Long Form Disclosure
All sources last checked on 30 January 2020
This publication is provided for general information purposes only and is not intended to cover every aspect of the topics with which it deals. It is not intended to amount to advice on which you should rely. You must obtain professional or specialist advice before taking, or refraining from, any action on the basis of the content in this publication. The information in this publication does not constitute legal, tax or other professional advice from TransferWise Limited or its affiliates. Prior results do not guarantee a similar outcome. We make no representations, warranties or guarantees, whether express or implied, that the content in the publication is accurate, complete or up to date.
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