Choose a Payment Method: PayPal vs Credit Card



You’re about to make an online purchase. At the shopping cart, a payment choice comes up. Do you want to use PayPal or a credit card to pay for the purchase? They both seem like good options. What are the differences? And is one more secure than the other?


The Basics of PayPal

PayPal is an online payment system that allows consumers to make financial transactions without paying directly from a bank account or credit card. It is a financial go-between.

Most PayPal users link a credit card or bank account to their PayPal accounts. When you pay with PayPal, you select how you wish to fund your payment. PayPal then pays the retailer by transferring funds from your bank account, credit card, or PayPal balance.


PayPal adds a layer of security by not sharing your full financial information with sellers.

Unlike transactions paid directly, if you make a PayPal purchase using your debit card as the source of funds, the payee will appear on your bank statement as “PayPal.” The statement may or may not include identifying information about the payee.


If you make a PayPal transaction using your credit card,  the payee will likewise appear as “PayPal” on your credit card statement, usually with some identifying information about the seller.


Credit Card Basics

A credit card offers you a line of credit to make purchases, cash advances, or balance transfers. When used online, you enter your credit card number directly when checking out.

A credit card is like a loan, and you must make the minimum monthly payment toward that loan. If you don’t pay off your monthly credit card balance, interest is charged to the remaining balance.

Why PayPal?

Ease of Payment

PayPal’s allure is that it makes online payments easy. If you don’t want to dig out your credit or debit card each time you buy something online, PayPal can be a good option.


Payment Options

PayPal gives you several ways to fund transactions beyond your PayPal balance. You can link your bank account to PayPal. Or you can link a credit card (or multiple credit cards) to your PayPal account.

PayPal also offers a PayPal Cash Card. The PayPal Cash Card is a MasterCard-backed debit card. It can be used online, or to pay for in-person purchases using your digital cash.

Cryptocurrency is now also an option for eBay purchases.


Another advantage to using PayPal with a bank account is budgeting. By linking your bank account to PayPal, and using this funding option, you’ll limit how much you spend online. If you don’t have the cash, you don’t buy it. This disciplined approach will prevent you from running up credit card debt.

Purchase Protection

PayPal has purchase protection that covers a variety of situations. If you receive an item different than what you ordered, it comes under this protection. You will also have a case if you purchase an authentic product and find that you received a knockoff. And, of course, if you don’t receive the item you purchased, your purchase is protected. Check with PayPal for an all-inclusive list of what is and isn’t protected.

To take advantage of PayPal purchase protection, you must make a claim within 180 days of the purchase or payment.

Disadvantages of PayPal

If your bank account is linked with PayPal, someone could drain your bank account using PayPal’s auto-withdrawal feature, if they somehow gain access to your PayPal information. Although PayPal has refund policies in place if something like this happens, it’s still an inconvenience—in fact, it could be a major inconvenience if you are without funds for an extended period of time, as Android Authority says.

Another drawback to PayPal is acceptance, as not all online retailers accept PayPal.

How Safe Is PayPal?

Despite some risks, PayPal is “one of the safest platforms out there” to pay for goods and services, according to Android Authority.

PayPal has end-to-end encryption designed to keep a hacker from accessing your information as it moves from you to the seller. Also, remember that if you have your credit card linked to PayPal, the seller never sees the card number when you make a transaction. This protects your valuable information.

PayPal monitors its security by employing “ethical hackers” to try to breach its system. An ethical hacker is a legitimate hacker who tests vulnerabilities in computer systems and software.

Why Pay With a Credit Card?

A credit card allows you to make those big-ticket purchases even if you’re running short on cash. You don’t have to save up to buy that computer. A credit card allows you to buy it and pay for it over time.

Credit cards also offer fraud and purchase protection. Indeed, federal law only allows you to be responsible for the first $50 of the fraudulent charges. Most credit card companies go even further than this. For example, Visa, MasterCard, and Discover offer “zero liability” protection. This means you aren’t even responsible for the first $50.

Many credit cards have rewards programs that allow you to earn cash back or travel points. Using a PayPal linked rewards credit card should still let you earn rewards, but using the card directly ensures that you get rewards every time you should.

On the other hand, some credit card companies run special promotions that offer extra points for shopping with the card through PayPal.

Disadvantages of Credit Cards

When using a credit card to make online purchases, you’re handing over your information to a retailer. Unfortunately, there’s a big black market for credit card data. When you give out your information, you risk having an unscrupulous retailer or hacker steal it. They can use the information to make both online and offline purchases. And the next thing you know, there’s a hefty bill in your mailbox.

Another disadvantage is debt. It’s so very easy to rack up debt with a credit card. Besides paying the loan back, you may pay double-digit interest rates. This can blow a budget very quickly.

Obviously, this disadvantage also applies to PayPal, if you link your credit card to PayPal to make purchases.

Using PayPal or Credit Cards on Amazon

Amazon and eBay are the two big boys on the block when it comes to online retail.

Although PayPal is no longer the default option for eBay, it remains a popular form of payment for eBay purchases.

Unfortunately, Amazon doesn’t directly accept PayPal. But there are ways to get around this. Amazon does accept PayPal Cash Cards—on Amazon, you can use a PayPal Cash Card the way you would use any debit card. Or, you can purchase Amazon gift cards through a retailer that accepts PayPal, and then use the cards to make purchases from Amazon.

Amazon does accept most credit cards, however, as well as offering its own rewards credit card.

A Matter of Convenience

When you spend, it’s your money, and you should do what makes you feel comfortable. PayPal is easy and safe to use. But with many credit cards offering great liability protection, they are also a safe option. Ultimately, the payment method you choose may simply be a mattter of convenience.

The Epoch Times Copyright © 2022 The views and opinions expressed are those of the authors. They are meant for general informational purposes only and should not be construed or interpreted as a recommendation or solicitation. The Epoch Times does not provide investment, tax, legal, financial planning, estate planning, or any other personal finance advice. The Epoch Times holds no liability for the accuracy or timeliness of the information provided.

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