Urgent news for my friends who use PayPal

Credit Cards to charge $10 or 5% per PayPal transaction!

This is a personal message to my peers. I am not affiliated with PayPal or any bank or credit card company.

If you shop online and pay for merchandise through PayPal, and

 if your PayPal account is paid via your credit card,

you will soon pay your credit card company $10 or 5% of each transaction, whichever is greater. You’ll be charged the extra fee immediately. Every time. Just as if you had gotten a cash advance on your credit card.

I didn’t believe it when I received the announcement in the mail, so I called my credit card service provider. They confirmed the new arrangement is as stated, and it does pertain to PayPal and any similar service you may be using. I received this from more than one credit card company.

 If, like me, you use PayPal so that you can charge your shopping without giving your credit card number to a hundred different sellers, this is catastrophic. I love my PayPal account, and it makes online shopping safe and ridiculously easy. (Okay, shopping may be too easy. I could stand to cut down on the shopping a bit, so maybe this news will help me do that.)

Your credit card account agreement may have changed or will be changing effective March 2021.  If you threw away that four-page, small-print mailing called “Important Changes to Your Account Terms” — sent out by your credit card company/bank — then you missed what they said way down in the middle of all the legalese language.

Under the new agreement, “making a payment using a third party service [translation: PayPal or other similar services] including bill payment transactions not made directly with the merchant or their service provider [translation: when you are not handing your card or card number directly to the merchant you are paying]” will now be considered “Cash-like Transactions.”

“Cash-like Transactions” are treated like Cash Advances on your credit card. The “Cash Advance Fee” [whether or not you pay the entire balance at the end of every billing cycle] will be:

“Either $10 or 5% of the amount of each transaction, whichever is greater.”

The only way to beat this seems to be: (1) pay your PayPal charges from your bank account, or (2) pay all merchants with your credit card instead of with PayPal.

What solutions can you recommend? Comment below.


You should know that the following credit card transactions ALSO fall under the “Cash-like Transactions” rules:


1. Purchasing travelers checks, foreign currency, money orders, wire transfers, cryptocurrency, ” etc.;


2. purchasing lottery tickets, casino gaming chips, race track [sic] wagers, and similar offline and online betting transactions;


3. person-to-person money transfers [e.g., sending money to a friend or relative], and account-funding transfers that transfer currency.

For years I have skimmed, or refused to read, the pages of fine print that came in the mail with “changes to your credit agreement.” I need to be more diligent. Banks and credit card companies are in business for profit, and they can’t be expected to declare increased charges loudly and clearly. Customers might not like it.

Oh, and if you still believe the government will prevent big business from acting unethically toward the average customer, I’m sad to tell you this is a fairy tale. Not that government is necessarily evil; after all, we are the source of the government and we do have a voice. We just don’t exercise it, or people with more money exercise their voices more effectively. (Money talks, you know. Sometimes it bellows until nobody can hear anyone else.)

All quotations in the foregoing article are from a letter of February 2021 to this author from Chase Card Services of Wilmington, Delaware.


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