How to Add and Use Payment Methods in PayPal

What payment methods PayPal accepts and how they work

PayPal lets you link a bank account, debit card, or credit card to your account, and you can also use PayPal Credit (a line of credit PayPal offers) or a PayPal balance you've built up from receiving money. When you send money or make a purchase, PayPal draws from whichever method you choose at checkout. The method you pick determines how fast the money leaves your account, whether you pay a fee, and whether you earn rewards.

Each method moves money differently. A bank account transfer is slowest but usually free; a debit or credit card is faster but may carry a fee depending on the transaction type; PayPal Credit is instant but charges interest if you don't pay it off monthly. Your PayPal balance—money sitting in your account from sales, refunds, or transfers in—moves instantly with no fee.

Key Takeaways

• Bank accounts and debit cards are the cheapest ways to pay through PayPal, though bank transfers take one to three business days to process.
• Credit cards offer buyer protection and rewards but usually trigger a fee when used for PayPal payments, unlike debit cards.
• PayPal Credit is instant but charges interest on unpaid balances, making it expensive if you carry a balance month to month.
• You can set a preferred payment method so PayPal uses it by default, but you can change it at any checkout.
• PayPal holds some transactions for review, which can delay when money actually leaves your account even if the payment shows as sent.

How to add a bank account or debit card

Log into PayPal, go to Settings (the gear icon), then select Wallet. Click "Link a debit or credit card" or "Link your bank." For a debit card, you'll enter the card number, expiration date, and CVV. For a bank account, you'll provide your routing number and account number—you can find these on a check or in your bank's app.

PayPal may verify the account by making two small deposits (usually under $1 each) to your bank account, then asking you to confirm the amounts. This takes a few business days. Once verified, the account is linked and ready to use. You can link multiple cards and accounts and switch between them at checkout.

Understanding fees for different payment methods

PayPal's fee structure depends on what you're doing and what you're paying with. Sending money to friends or family using a bank account or PayPal balance is free. Sending money to a friend using a credit card costs 2.2% plus $0.30. Paying for goods or services (like an online purchase) using a debit card or bank account is free for the buyer, but using a credit card may trigger a fee depending on the seller's setup.

The key difference: credit cards cost more because PayPal pays the card network a fee, and that cost gets passed along. Debit cards and bank accounts don't carry those network fees, so PayPal doesn't charge you. If you're receiving money—selling something or getting paid for work—PayPal takes a cut from the amount you receive, not from your payment method.

How PayPal Credit works and when to use it

PayPal Credit is a line of credit that PayPal offers directly. When you choose it at checkout, the purchase is instant and the money goes to the seller immediately. You then owe PayPal the amount, and you have a grace period (usually 21 days for regular purchases, or longer for promotional offers) to pay it back interest-free. If you don't pay within that window, PayPal charges interest on the remaining balance.

PayPal Credit is useful if you need to spread a purchase across a few weeks or months, but it's expensive if you carry a balance. The interest rate varies but is typically in the 19% to 29% range. You can check your available credit limit and current balance in your PayPal account under Credit. Not everyone is offered PayPal Credit—PayPal decides based on your account history and payment behavior.

Setting a default payment method and changing it

Your default payment method is what PayPal uses automatically if you don't pick one at checkout. To set or change it, go to Settings, then Wallet, then click the payment method you want to use as default. PayPal will show a checkmark next to it. You can change your default anytime, and you can always override it at the moment you pay by selecting a different method.

Changing your default doesn't affect past transactions or standing balances. If you have PayPal Credit with an unpaid balance, you can still use a different method to pay for new purchases—the Credit balance stays separate and you'll need to pay it off through your account settings or by making a payment directly to PayPal.

Why PayPal holds or delays payments

Even after you hit "send," PayPal sometimes holds the transaction for review. This is a fraud check and can take 24 hours to several days. During a hold, the money leaves your account but doesn't reach the recipient yet. You'll see the transaction in your activity as "pending" or "on hold." PayPal notifies you by email if a hold is in place.

Holds are more common on your first few transactions, large amounts, payments to new recipients, or when PayPal detects unusual activity. You can't speed up a hold, but you can contact PayPal Support to ask about it. Once the hold clears, the money moves to the recipient. This delay doesn't mean the payment failed—it's just PayPal's verification step.

Removing or updating a payment method

To remove a card or bank account, go to Settings, then Wallet, find the method you want to remove, and click the trash icon or "Remove." You can remove any method except your default—PayPal requires you to set a new default before you can delete the current one. Removing a method doesn't affect past transactions or any balance you owe on PayPal Credit.

To update a card (for example, if your card number changed after a replacement), remove the old one and add the new card. If your bank account information changed, you can edit it directly in the Wallet without removing it first. PayPal will re-verify the new account with small test deposits if you change the account number.

Frequently Asked Questions

Can I use a prepaid card with PayPal?

Yes, most prepaid cards work like debit cards in PayPal. Add it the same way you'd add a debit card—enter the card number, expiration, and CVV. Some prepaid cards may not be accepted if they're not Visa or Mastercard branded, so check your card's network before linking it.

What happens if my linked bank account or card is closed?

PayPal will try to use the method at checkout and it will fail. You'll see an error message. Remove the closed account from your Wallet and link a new one. If you had a recurring payment set up (like a subscription), you'll need to update the payment method in that subscription's settings to keep it active.

Can I use someone else's card or bank account?

No. PayPal requires that the payment method be in your name or that you have legal authority to use it. Using someone else's card without permission is fraud. If you're sharing an account with a family member, both of you should link your own cards and accounts instead.

Why did PayPal decline my payment method?

Common reasons include insufficient funds, the card or account being closed, the card being expired, or PayPal flagging it as high-risk. Check that your card hasn't expired and that your bank account has enough money. If the method is active and funded, contact your bank to ask if they blocked the PayPal transaction, then try again.

Do I earn rewards on PayPal purchases?

Rewards depend on your payment method, not PayPal itself. If you pay with a credit card that earns cash back or points, you'll earn those rewards just as you would anywhere else. PayPal doesn't add extra rewards. Debit cards and bank accounts typically don't earn rewards unless your bank offers them.