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

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.

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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 (1% at the time of purchase and 1% when you pay for those purchases) 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 FeeNone
Rewards detailsEarn 2% cash back at PayPal, Ebay, and all other purchases made anywhere that Mastercard is accepted.
Redemption optionsCash Rewards can be redeemed directly into your PayPal balance at any time, for any amount.
Variable purchase APR16.99%, 24.99% or 27.99%
Signup bonusNone
Foreign transaction fee3%

What’s not to love about the PayPal Cashback Mastercard® ?

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 Blue Cash Preferred® Card from American Express earns a whopping 6% at U.S. supermarkets on up to $6,000 per year, then 1%. Plus earn 6% cash back on select U.S. streaming subscriptions (It also earns 3% unlimited cash back at U.S gas stations and on transit.)

If you max out the Blue Cash Preferred® Card from American Express’ 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 Blue Cash Preferred® Card from American Express has a $95 annual fee (See Rates and Fees) , while the PayPal Cashback Mastercard® doesn’t have an annual fee at all.

No signup bonus

The the PayPal Cashback Mastercard doesn’t offer a signup bonus. If that disappoints you, the Barclaycard CashForward™ World Mastercard® (currently unavailable) 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 Chase Sapphire Preferred® Card offers 60,000 bonus points worth $750 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.

For rates and fees of the Blue Cash Preferred® Card from American Express, please click here .

Editorial Note: Compensation does not influence our recommendations. However, we may earn a commission on sales from the companies featured in this post. To view our disclosures, click here. Opinions expressed here are the author’s alone, and have not been reviewed, approved or otherwise endorsed by our advertisers. Reasonable efforts are made to present accurate info, however all information is presented without warranty. Consult our advertiser’s page for terms & conditions.

Andy Bowen

Senior Editor

Andy Bowen joined The Simple Dollar in 2014 to help people in every state find the right car insurance. Now, he writes about everything personal finance while aggressively paying off his student debt with side hustles, trimming his budget, and racking up rewards points for family trips to Disney. You can find his work on Engadget, AOL, Bankrate, Reviews.com, and AskAudio.