Updated on 09.21.17

PayPal’s new credit card offers 2% cash back with no annual fee

Andy Bowen

Say hello to PayPal’s latest venture: the PayPal Cashback Mastercard®. It isn’t PayPal’s first credit card (remember the PayPal Extras Mastercard?), but it is the company’s first dip into the cash back pool. Consumers are extremely excited about cash back rewards right now, so this move makes a great deal of sense as PayPal tries to increase its presence with brick-and-mortar stores and compete with mobile payments rivals like Apple and Facebook.

The card offers 2% (unlimited) cash back on all purchases with no annual fee — that’s one of the highest unlimited cash back rebates on the market. (Most cash back cards offer either 3%-6% with an earning cap, or a flat rate of 1.5%.) Those stats put it head-to-head with the Citi Double Cash card and U.S. Bank Fidelity card, both of which also offer unlimited 2% cash back with no annual fee.

Cardholders can redeem cash back earnings at any time, for any amount, which is pretty flexible considering that some cash back cards require at least a $25 minimum for redemption. (Chase recently follued Rewards will live in PayPal users’ online wallets and can be spent immediately on PayPal purchases or transferred to a bank account.

The PayPal Cashback Mastercard

Annual fee None
Rewards details Earn 2% cash back at PayPal, Ebay, and all other purchases made anywhere that Mastercard is accepted.
Redemption options Cash Rewards can be redeemed directly into your PayPal balance at any time, for any amount.
Variable purchase APR 16.99%, 24.99% or 27.99%
Signup bonus None
Foreign transaction fee 3%

What’s not to love?

If you’re an avid PayPal shopper, the flexibility to redeem your rewards for any amount is incredibly attractive. But before you sign up, there are a few things you should consider.

2% cash back is great, but there are better reward rates.

If you aren’t a heavy spender, you should consider a card with higher rewards rates for certain categories. For example, the earns a whopping 6% at U.S. supermarkets on up to $6,000 per year. (It also earns 3% unlimited cash back at U.S gas stations and select U.S. department stores.)

If you max out the 6% category and spend $500 a month on groceries, you’ll earn $360 cash back. In comparison, you’d have to spend $1,500 a month — three times as much — with the PayPal Cashback Mastercard® to earn the same $360 reward. The bottom line is that unless you’re spending $2,000 or more on your card each month, you might be better off with a higher-rate cash back card — even it if has earning caps.

Note: the has a $95 annual fee, while the PayPal Cashback Mastercard® doesn’t have an annual fee at all.

There’s no signup bonus.

The the PayPal Cashback Mastercard doesn’t offer a signup bonus. If that disappoints you, the is a great alternative. If you spend $1,000 in the first 90 days of opening your account (that’s around $330 a month), you’ll earn $200 cash back that you can redeem for gift cards, statement credits, or deposit directly into your bank account. On top of that, you’ll get a cash back redemption bonus of 5% every time you redeem.

If travel is more up your alley, the offers 50,000 bonus points worth $625 when you redeem toward travel via Chase Ultimate Rewards®. The minimum spending requirement is a bit steeper ($4,000 in the first three months), but the bonus is one of the most generous on the market right now.