Is a Paypal Debit card better than a Paypal Plus card?
I've been a Paypal member since before it was part of eBay and I only recently learned that they have credit cards available. Cool! My question: what's the main difference between their Paypal Debit Card and Paypal Plus Card?
These are two completely different beasts, actually, and their differences are quite substantial. The Paypal Debit Card looks like a real credit card, it even has a MasterCard logo on it, but it's not a credit card and doesn't give you access to any credit whatsoever. It does, however, give you easy access to your Paypal balance. The Paypal Plus Card, by contrast, is a true credit card and while it lets you purchase items you can't afford, it doesn't let you gain any access to your Paypal account balance.
Let me define a few things, then we'll come back to these two cards.
Credit is basically an ongoing loan that a credit card issuer (usually a bank) grants you. If you're young and at the beginning of your earning and payment history with financial devices, your credit limit can be quite low, perhaps just a few hundred dollars. As you earn more and build a record of reliable payments, your credit limit can shoot through the roof and you could easily go tens or even hundreds of thousands of dollars into debt.
Banks issue credit cards because they want you to be unable to pay off your debt every month. Think about this: If you buy a $1000 item and can only pay $100/month, odds are you'll end up paying closer to $1500 by the time you finish the last payment because of interest charges. Many credit cards have 20% or higher credit rates, which isn't too far from that loan shark down the street in my eyes. :-\
Anyway, it's confusing on the Paypal site because they have these two cards that look so darn similar, but they're really quite different. The credit card that they offer, the Paypal Plus, is what's know in the financial industry as an affinity card, and it's managed by a bank that's unrelated to Paypal corporation. It's just a credit card like the one you can get with a Disney logo on it from Disney, the NASCAR one you can get, the airline credit card you might already have, and so on. In many ways, it's completely detached from anything else on Paypal.
In my opinion, the Paypal Debit Card is far more cool because if you have lots of money flowing in your Paypal account, you already know that it can be a pain to access and use it, and leaving it in The Bank of Paypal might be good for them, but it sure doesn't help you pay the bills. That's why the debit card is so cool: it automatically deducts the cost of any given transaction from your Paypal account.
So if I go into Starbucks and use my Paypal debit card to pay for a chai, say, then there's an immediately transaction against my Paypal account for that cost and it shows up as yet another Paypal transaction, as if I'd stood at the register and clicked on the "Send Money" tab. Here's how it looks, in part:
Notice here that these three transactions are money sent to me, money I sent someone else and, the third entry, a Paypal debit card transaction. All neatly displayed and easy to track and monitor.
That's the scoop on the debit versus credit card. Hope that helps you make an informed decision with your own Paypal account.
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