Paypal Credit - is there a catch

‘Pay in three’ automatically takes the instalments.

‘PayPal credit’ leaves it to you to make payments, or set up a DD. If you’re late, interest rates kick in.

I've used pay in 3 with PP credit several times and not had a catch. Yes, they took three payments but the PP app is pretty decent, set a calendar reminder if you don't trust it and login a day or two before to see - eg: (this isn't 0%, but for the amount owed interest is negligible and I had a reason to use it)

I use it fairly often. No catch and you can pay as much as you want, whenever you want so long as you make the minimum payment every month. You don't need to take the full 4 months if you don't want to

No catch beyond their stated terms.  Quite useful if all you want is to spread the cost over only a couple of months.

It's really useful to spread purchase it 0% and there is literally zero catch as well unless you miss a payment.

even if the  order is cancelled the refund process works out easily as well

It counts as a credit card on your credit report, other than that there's no problems I've had with it

It's just a credit card, only with no card.  All the T&Cs are credit-card like.

They payment-spread thing, it means that each thing you buy is ring-fenced in your balance and the payments get made for those things along with the general balance.

I signed up to PayPal Credit because they were offering 20% off first purchase. I made the purchase with the 20% off then immediately paid off the balance. No come back, no catches, that was it. (I haven't closed the account but don't use it as from past exerience I know what can happen if you go down that rabbit hole).

I have used it for years and no catch at all.  I have a direct debit which I ensure covers the amount over 4 months and then just leave it to it.  As you buy more things the items get paid off in order so as long as you keep an eye on the dates (clearly marked) for when each purchase needs to be completely paid for then never pay interest.

Why wouldn't I use it when more money stays in my bank account getting interest (even if small amount) especially as I would use Paypal to buy the item whenever Paypal is an option anyway.

The only catch I’ve found is which thing is paid off if you have multiple purchase isn’t as transparent as it could be. I had bought something that was being paid monthly on some sort of deal over a year and then a second thing on the pay within 4 months its interest fee. The payments I made to clear the second thing before the it was due interest were located to the first thing reducing its term.

The credit agreement will appear on your credit report. Use it often and it can tank your credit score and impact availability to low rate credit for a mortgage for example.

Use it often and it can tank your credit score

Really? I thought using credit (and paying it off) was good for your credit score, not bad.

Probably thought of in the same way as payday lenders - “if you can’t afford a few hundred quid in a lump sum, how will they cope with mortgage payments?”.

the-muffin-man
Full Member

Probably thought of in the same way as payday lenders – “if you can’t afford a few hundred quid in a lump sum, how will they cope with mortgage payments?”.

My credit report every month says "use credit more often to build up history" so I suppose that using and paying off on time is rated higher than not using it at all?

As with everything - it depends! Got a credit card with 10k limit, use 8k of it and only pay off just above minimum every month and you will get you marked down.

Use 2k of your limit and pay a chunk more than minimum and you’ll get marked up.

Correct me if I’m wrong but any credit you have where you stick to the terms and don’t default won’t adversely affect your credit score as far as I understand it. Certainly I’ve happily used various types of credit over the years, have never defaulted on any payments and my credit score is excellent.
I just checked and it dropped ever so slightly because I’m above 25% of my maximum credit on a couple of things - travel credit card which I just paid off, and PayPal Credit which I haven’t quite gotten around to yet. So I guess it has a small effect if you have any credit above 25% of maximum anywhere.

Good write up here on factors that can  impacts your score https://www.barclays.co.uk/mortgages/guides/boost-your-credit-score/

Your score is calculated every seven days by the likes of Trans Union and Experian so give it a go and see for yourself. In fact I’d advise everyone to check regularly (it’s free) to ensure no unauthorised credit and defaults in error as both can have some serious financial impacts.

As with everything – it depends! Got a credit card with 10k limit, use 8k of it and only pay off just above minimum every month and you will get you marked down.

Having over 50% of your limit on any one card affects your rating a bit, but it doesn't matter how much the total is or how often you've been using it. According to MBNA's report on me anyway.

Yep same here although as per above comments seems that having >25% on more than one card / credit system at once downgrades you but only by a tiny amount.

https://www.moneysavingexpert.com/loans/credit-rating-credit-score/

Martin Lewis just recently did a 5 min video on it. Very informative. It's not just whether you are a risk; it's also if they are likely to make any money out of you too.

Pay off in full every month, don't use your cards enough, or always shift debt to 0% cards? You might feel like a dream punter, but for credit card companies you're a nightmare. If they spot this trend, you could be rejected. The most profitable customers are those perpetually in debt, never defaulting, but always meeting the minimum repayment.

Never looked at a credit score, is there a way to check for free?

I get links from my credit card apps eg Halifax.

Never had/applied for a credit card etc, or mortgage.

I do use PayPal “pay in 4 instalments” though, that’s handy for Xmas/birthdays/big spends of a few £££

You might not have much of a credit score then! Try Experian.co.uk

Ta, will do

Amended as its .co.uk not .com
The one I got to via Halifax says it’s powered by Transunion so I assume also legit.

Never looked at a credit score, is there a way to check for free?

Martin Lewis explains - but also says a score isn't the be all and end all, when deciding if you are approved for a loan or whatever they will look at more than a number. Obvs depends what the loan is but behaviours and as i said before, also how much they'll make from you. Having a 'perfect' credit score doesn't necessarily make you a desirable customer.

And in your case, with very little credit record there's little to base a decision on. I've encouraged my daughter, and also will my son when he hits 18, to have a credit card and use it, and then pay it off to build up a history.  And also as they get older, because of the credit protection that comes from using a CC - she's a student now so it's a bit of shopping here and maybe a coffee and a sandwich there but one day it'll be a TV and a computer or whatever....

I had a look at the sites on MSE but they all require signing up and given them loads of details so didn't bother, ill never have a loan/CC or mortgage anyway.

An unusual thing in this day and age but I guess one where your credit score would largely be irrelevant I guess!

Yeah I'm probably out of the norm, got spms that's rapidly taking everything so I'm just about hanging on till I decide ive had enough, or perhaps I could I take out every loan possible, withdraw it all and give to a mate who needs the cash then pull the plug. No dependants, live on my own so no-one to chase for the debt.

Now there's an idea....... 😉

So sorry to hear that.

The credit agreement will appear on your credit report. Use it often and it can tank your credit score and impact availability to low rate credit for a mortgage for example.

Absolute claptrap...

With PayPal credit, you apply for it in advance, very much like you would a credit card, then use it very much as you would a credit card, and as long as you don't get right up near your limit regularly and when you use it, you always pay more than the minimum payments (and ideally pay any balances off notably before they are due), then it very much will impact positively on your credit score!

I use PayPal credit all the time... I use my main credit card all the time... I use a 0% balance transfer card for the 12-18 months free period I get on it with a decent sized balance on it to get money interest free (better in my bank than theirs!) and transfer or pay it off before it is fully due (always paying more than the minimum monthly payments too)...

I have a 999 Experian credit rating...

Credit is a game... Learn how to play it and use it to your favour! I spent my 20's and some of my 30's with toxic debts and burying my head in the sand. I got "back in the black" at 35, got a mortgage at 38, and have had a 999 credit rating continually since I was 40... I repaired my credit score (it was low, recovered from a couple of CCJ's I'd ignored due to depression in my early 30's) mainly by using credit that was made available to me and by making sure I not only stuck to the rules, but paid both more often than I was required to and a greater amount too...

Credit isn't that difficult to understand. The problem is that most of us just don't want to understand it, until the time that we seriously need it, and by that point it's way too late...

If you want to understand how credit works in its simplest terms... Watch the film "Revolver"... It's a Guy Ritchie film, so all the usual cliches and violence involved you would expect. The key character "Jake Green" (played by Jason Statham) has a plan to exact revenge (and forms the storyline of the film), but he has no assets when he leaves prison so he needs to spend some time effectively earning credit with the local gangsters and loan sharks... So he does... He religiously borrows money off them, then pays it back (with interest) before its due every single time... Over time they trust him more and more, so start lending him more and more... You can see where this is going!

The problem of course when you've got a perfect credit rating is that people are ready to lend you far more than you can realistically afford to pay back... So don't get lead into temptation and financial trouble (unless you have a cast iron plan to emigrate to South America with your ill gotten gains) once they will lend you such large amounts! Me and my GF are looking at a bigger house right now, just did an affordability calculator with our current mortgage provider, and they're ready to lend us up to 5.5x our gross salary ffs! With current interest rate, that would mean 50% of our monthly take home pay was spent purely servicing the mortgage!!! 🤯 They'll lend it to me, but I can't actually afford to pay that much I can tell you!

So be careful... Don't hang yourself with the rope they give you... Keep it artificially short for your own safety and you will be the one that gains from all the low (or zero!) interest credit in the long run... 👍🏻

Indeed…without asking for it I have ended up with enough credit to (if I was stupid enough) spend nearly £40 grand on credit cards alone.
I use my credit cards simply for convenience and payment protection and pay them off in full every month, the result of this being that banks determinedly try to tempt me to get into debt!