Customers pay more as PayPal Credit increases interest rates

PayPal customers using its credit service will have to pay back more after it got rid of its lowest APR last week.

Previously, PayPal Credit charged 21.9%, 25.9% and 29.9% depending on your individual financial circumstances. But it has announced that as of 1^st September it will no longer be offering customers 21.9% APR - hiking its lowest charges by 2% to 23.9%.

The changes mean that customers will pay back an additional 69p per month for every £500 borrowed.

And there could be more changes to come with PayPal saying they’re also reviewing the rates customers currently pay, which could mean lots of people repaying more if they’re moved onto higher APRs.

PayPal says it has contacted affected customers and advised them about the changes.

What’s Paypal Credit and how does it work?

PayPal Credit is essentially cardless credit that offers shoppers extra time to pay off their purchases. It’s a credit limit that’s attached to your PayPal account that can be used to pay for online purchases.

You can apply for PayPal Credit online. Once you’re approved, you choose PayPal Credit as a payment option at checkout.

You can use Paypal Credit anywhere Paypal is accepted online.

If you spend over £99 with Paypal Credit, you’ll get 0% interest for four months. Interest will be charged on outstanding balances after four months at either 23.9%, 25.9% and 29.9%. The amount of interest you’ll be charged depends on your individual circumstances.  

What’s the difference between Paypal and Paypal Credit?

Paypal is a payment option that draws money from either your bank account or credit card. You can also keep a balance in your Paypal account and use it for purchases.

PayPal Credit is a credit line that allows you more time to pay off purchases but charges interest if you carry your balance forward.