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Ultimate Guide to PayPal Credit

PayPal has been a major driver in the eCommerce and mobile payment industries. Research shows that over 87.5% of online buyers use PayPal and the average PayPal user conducts 36.9 transactions every year. In 2018, PayPal had revenue of $15.45 billion, and by 2019, revenue exceeded $17.70 billion.

Its variety of related services currently fuels its rise in revenue. They include credit card readers for small merchants, debit cards for payments, and lines of credits. Speaking of lines of credit, PayPal introduced PayPal Credit in the UK in 2014. They launched the service with an interest-free option.

Curious about PayPal Credit? in this guide, we take you through what PayPal Credit is, how it works and much more.

What is PayPal Credit?

PayPal Credit is a credit line available to PayPal users on purchases at several retailers that accept PayPal. Previously called Bill Me Later, it’s a proprietary method that gives shoppers the flexibility to shop what they need at major stores. Examples of major retailers that accept PayPal include Argos, Home Depot and others.

As a reusable credit line, you can enjoy up to 6 months of special financing on purchases of £99 or more. Your credit line is usually linked to your PayPal account. You can even set it as your default payment method, just like your credit or debit card.

Unlike credit cards and debit cards, PayPal Credit does not offer rewards. But it offers special payment deals such as interest-free terms.

How Does PayPal Credit Work?

PayPal Credit is available as a funding source in your PayPal wallet. You can make purchases in the same way you would with a debit or credit card. What you ought to do is select PayPal Credit as your primary payment option during checkout.

As a virtual line of credit, PayPal Credit allows shoppers to make purchases in instalments rather than pay in full. During checkout, PayPal Credit will show a selection of instalment offers. This is to enable you to spread the purchases, especially larger purchases, in a more manageable way.

The instalment offers vary by merchant. Some merchants offer 0% instalments with PayPal Credit. For purchases less than £99, PayPal will charge a standard interest rate of 19.9% p.a. If you fail to repay the full amount by the date shown on your monthly statement, they’ll charge you the interest.

Your minimum repayment is always shown in your monthly statement or in your PayPal account under PayPal Credit section.

How Do I Apply for PayPal Credit?

Applying for PayPal Credit is very easy. Before getting started, you must meet the following requirements.

  • Be 18 or over
  • Be a UK resident
  • Have an income of £7,500
  • Must be in full employment
  • Have a good credit history
  • Must not be bankrupt or have any country court judgements

To apply, head to PayPal website, complete the short application form. If PayPal approves your application, they’ll start you off with a minimum credit line of £250.

If you don’t have a PayPal account, the first stage of the PayPal Credit application will require you to create a PayPal account. Once you sign up for a PayPal account, you can begin your PayPal Credit application. Both applications take minutes to complete, and PayPal Credit approval takes a few seconds.

PayPal Credit is available to PayPal personal account holders only. If you have a PayPal business account, contact support to change the account to personal.

What are the PayPal Credit Promotion offers?

PayPal Credit has the following promotional offer- 0% for 4 months on all purchases of £99 and over.

Four Months Interest-Free off (0% for 4 Months)

The four months interest-free is available on single transactions of £99 or more. Basically, PayPal will not charge you interest on that transaction four months after purchase. The offer applies automatically to purchases made using PayPal Credit.

You can use the four months interest-free offer as many times as you like. But you must have an available credit limit. After the four-month offer, any balance due is usually charged at 19.9% p.a (variable). If you fail to make payments on time, PayPal will remove this offer.

Does PayPal Credit Offer Any Buyer Protections?

PayPal Credit comes with the same flexibility and security as other payment systems from PayPal. Basically, it offers buyer protection to cover all eligible purchases. This covers orders that never arrived, those that got damaged or lost, plus orders that arrived different from what was described.

You must report the problem within 60 days by calling or submitting a form through the PayPal website. PayPal will investigate the transaction and refund the full cost plus shipping.

PayPal Credit Pros and Cons


  • No annual fee
  • Offers quick access to convenient credit
  • Accepted by major retailers such as eBay and Wayfair
  • It can help you build credit
  • Comes with PayPal’s Buyer Protection


  • Full credit check during application can affect your credit rating
  • High APR of 19.9%, unlike most credit cards
  • Offers low credit limit

Final Thoughts

PayPal Credit is fast and convenient. It offers access to credit and the ability to make purchases in instalments at major retailers. Even when you don’t have funds in your PayPal personal account, the virtual credit line allows you to make purchases.

As a product of PayPal, it comes with buyer protection. If your product gets damaged, lost or the retailer ships a different product, PayPal will refund the full cost plus shipping. Also, signing up is free, and the approval process takes seconds.

However, before signing up for PayPal Credit, it’s wise to consider if you need it. PayPal conducts a full credit check as part of the approval process. This has an impact on your credit rating. If you’re planning to apply for a mortgage, it’s wise to take your time to really consider if you need PayPal Credit.

Besides the full credit check, there is the possibility of overspending. Since PayPal Credit allows you to make purchases in instalments, you can spend more than you would with your PayPal account.

Remember, beware of PayPal scams. To protect yourself, enable two-factor authentication, fingerprint and facial recognition. Do not share PayPal accounts and always use strong alphanumeric passwords for PayPal and shopping accounts.