Online shoppers often want the ability to buy on credit. Buying on credit protects the buyer from scams, provides time to pay off the purchase, and provides an additional layer of security between one’s bank account and online accounts. In recent years, companies like PayPal, which processes online payments, have offered “credit” without the card. Specifically, a credit line that works only when you use your PayPal account.
Here’s why you might want to consider a few alternatives, first:
1. Lower interest – PayPal’s Buyer Credit has an interest rate of more than 27% per year. Most starter credit cards have lower interest rates, with many just over 10% per year.
2. Flexibility – PayPal’s Buyer Credit can only be used online. For the most part, PayPal is an online service that you cannot use to buy gas or groceries. A physical credit card will allow you to shop wherever you’d like; online or offline, it doesn’t matter.
3. Better promotions – Credit cards offer as many as 18 months of purchases at zero interest. Furthermore, the interest, if you do take longer than 18 months, does not defer. PayPal offers a 3-12 month interest-free period, but if you take longer, the interest will come back.
All credit lines are not created equal. PayPal’s Buyer Credit is excellent for people who plan to pay in full when the first statement arrives, as well as people who simply want a backup line to one of their online accounts. For those who want the full benefits of a credit card, however, might be better suited for a standalone credit card product.
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