How Much is Sitting in Your Paypal Account?

Paypal can provide a different service for different people. For affiliates, it’s mostly about receiving money… while for merchants and advertisers, it might just be for sending payments out. Either way, how you manage your payments and money sitting in Paypal is important.

As a paypal user you have a lot of options for sending payments. The top three methods for sending payment are “paypal funds“, “bank account” and “credit card“. This post will serve as a reminder, and hopefully influence others to change over to sending out payments using a credit card, instead of spending money that’s already sitting in a paypal account. Here’s why.

Where’s the Benefits?:
If you have $1,000 in funds (balance) sitting in your Paypal account, and you just received a bill from someone for $300, it’s way to easy to have Paypal just make the payment from your balance. Instead, I recommend you withdraw the money in your Paypal account (by check, or to your bank account) and use a credit card instead to make all payments. By using a credit card, you will then earn points for all purchases, and even cash back with some cards. My Plum card from American Express gives back 2% on all purchases. If I was to send out $100,000 in payments through Paypal, using funds sitting in my account, I would lose out on $2,000 in rewards/cash back. Two percent might not sound like a lot, but over the course of a year, this can add up.

Security Issues:
It seems like everyone has their own Paypal horror story at some point. Whether it is that horrid eBay seller who never shipped your item, or you simple can’t withdrawl your funds from Paypal. If you send out payments using a credit card (AMEX is the best for this), you then have another layer of protection on your outgoing payments. Should any problems arise, not only do you have Paypal to contact, but if they can’t resolve your problem, in most cases your credit card company will cover you for the loss.

If you’ve been using Paypal for a while now, this may already be common sense for you. If you are receiving small payments from here and there… then quickly spending/sending out that money through your Paypal funds… you can be losing out on some nice rewards and cash back options.

Just a quick recommendation for those of you who aren’t currently doing this.

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