What Happens If You Don’t Pay PayPal Credit?

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“What happens if you don’t pay PayPal credit” has to be one of the most frequently asked questions about PayPal that I’ve come across. I’ve also been getting this question sent to me by email so I thought I’d write an article about the topic and refer people to it. Continue reading to learn more about PayPal credit and what happens if you don’t pay it?

PayPal will turn your account over to a debt collection agency after 90 days of not paying your debt. Letters and phone calls keep coming in and your credit score drops a bit each month until it gets to a point where nobody trusts you. 

The calls and letters can turn out to be very annoying. And your credit score dropping a bit each month is probably not in your best interest. It’ll be after 7 years before you’ll be able to build your crest score back up from the scratch. And that’s a lot of time. I’ll be talking more about PayPal credit below so be sure to continue reading. 

What is PayPal Credit and how does it work?

I’m sure you don’t think of credit when you think about PayPal. Yes, you may know about PayPal credit but the first thing that comes to everybody’s mind when PayPal is mentioned s sending and receiving money. But there is a branch of PayPal that offers a line of credit and that branch is called PayPal credit. 

PayPal Credit is an unsecured line of credit that PayPal users can apply for. You’ll be able to use PayPal credit anywhere PayPal is accepted online and your credit line will be linked to your PayPal account. There is the option of using PayPal Credit as a payment method on PayPal. As you’d do with any other credit or debit card. 

PayPal credit is different from PayPal’s credit cards in the sense that you don’t get rewards when you use PayPal credit. However, PayPal credit offers you a number of special payment deals of which longer interest-free loans are an example. PayPal credit usually gives users about six months to pay off credit of $99 or above interest-free. There are even retailers that may offer extended periods to pay the credit, interest-free of course. 

Note that it’s important you pay back within the required period. Failure to do so means you’ll owe interest on the entire repayment period. Bruce McClary, vice president of communications for the National Foundation for Credit Counseling, advises PayPal credit users to have a repayment plan that leaves them with at least a month to spare, says

You can also use PayPal Credit to send funds to your family and friends. But this comes at a one-time transfer fee of 2.9%, the same amount it’d cost you when using a debit or credit card. Since Paypal will treat any payment you make to your friends and family via PayPal credit as a cash advance, you will begin owing interest on this payment immediately.

Where do you apply for PayPal Credit?

It’s easy to apply for PayPal credit through PayPal’s website or any stores that accept PayPal. You’ll also be given the option to apply for PayPal Credit when you choose PayPal as your method of payment. After applying, PayPal will go through your credit history and get back to you in a minute or so. It’s a fast and quick process. 

What happens if I owe PayPal money and I never pay?

PayPal Credit is not the only way you can owe PayPal money. You can also owe PayPal money by having a negative balance on your PayPal account. The most common way for you to have a negative balance is when someone sends you money, you spend the money, and then the sender charges back. PayPal will send the money back and your account will be negative. Subscription re-billing is another way by which you can have a negative balance. Typically, PayPal will decline the transaction but they may allow the transaction to go through assuming you have a backup funding source, such as a credit card or bank account.

If you don’t pay back your debt to PayPal, your account will be turned over to a debt collection agency. The agency will try to get you to pay back the debt and letters will be sent to your address and you’ll also receive automated calls. Many people change the last four digits of their phone number before PayPal hands over to a debt collection agency. If you are using PayPal Credit, your credit score will reduce a bit each month until it becomes difficult for anybody to trust you. 

Will PayPal credit sue me?

PayPal can sue you but this rarely happens. I don’t think I’ve heard of PayPal suing anyone over unpaid credit or negative balance unless you owe them large amounts like $10,000. There’s a late charge payment fee of £12.00 GBP for overdue payments under the terms of the PayPal Credit Agreement. If you have an overdue payment please log in to your PayPal account as soon as you can to make it.


  • Tristan

    Tristan has a strong interest in the intersection of artificial intelligence and creative expression. He has a background in computer science, and he enjoys exploring the ways in which AI can enhance and augment human creativity. In his writing, he often delves into the ways in which AI is being used to generate original works of fiction and poetry, as well as to analyze and understand patterns in existing texts.