What is the disadvantage of PayPal Credit?

The Drawbacks of PayPal Credit

PayPal Credit is a convenient and flexible payment option offered by PayPal. However, it is essential to be aware of its potential drawbacks before using it.

High Costs

PayPal Credit’s primary disadvantage is its potential for incurring high costs. It imposes deferred interest on promotional purchases not paid off within the promotional period, typically 6 months. If the balance is not repaid during this time, the deferred interest will be added to the balance, and interest will start accruing.

Furthermore, PayPal Credit has a relatively high APR compared to other financing options. This means that carrying a balance on your PayPal Credit account can result in significant interest charges over time.

Limited Use

PayPal Credit can only be used to make online purchases. This can be a limitation for consumers who prefer to make purchases in brick-and-mortar stores. Additionally, some online retailers may not accept PayPal Credit as a payment method.

Other Considerations

Besides the high costs and limited use, other factors to consider when using PayPal Credit include:

• Impact on Credit Score: Applying for PayPal Credit will result in a hard inquiry on your credit report, which can temporarily lower your score.
• Late Payment Fees: Late payments on PayPal Credit may incur additional fees and penalties.
• Account Closure: PayPal may close your PayPal Credit account if you consistently fail to make payments or violate the terms of service.

Conclusion

PayPal Credit can be a convenient payment option, but it is essential to weigh its potential drawbacks before using it. The high costs associated with deferred interest and APR, as well as its limited use, can make it an expensive and inconvenient option for some consumers. It is recommended to explore alternative financing options or carefully manage your PayPal Credit account to avoid incurring high costs.