March 19, 2021
Should You Redeem Your Credit Card Rewards To Pay With PayPal?
Robin Saks Frankel READ TIME: 5 MIN.
Earning a big stash of points may no longer mean what it used to. Aspirations of fancy travel or other swank redemptions have given way to more practical uses. Issuers have taken notice and in response have increased the number of ways you can use your rewards, such as allowing you to transfer your earnings to travel partners or shop directly with Amazon.
Most people have found themselves shopping online more than ever before and if you have a card that lets you use your credit card rewards via PayPal's Pay With Rewards option, it may seem like a no-brainer.
But just because you can do something doesn't mean you should. Even though having a wide variety of ways to use your credit card rewards is generally a good thing, some redemptions are simply a poor value. Here's what to know about the best ways to use your rewards to shop with points via PayPal and what to avoid.
American Express Membership Rewards
You can use your Membership Rewards points from an eligible American Express card to pay for your purchase via PayPal. But doing so wouldn't be the most effective way to use your points given that a Membership Reward point is worth only 0.7 of a cent when redeemed as a statement credit for purchases made using PayPal.
The best value from your Membership Rewards is generally when used for airfare redemptions or to transfer to travel partners. Other redemptions are often worth less than a penny a point, including directly redeeming points for a statement credit against a purchase, which is typically worth 0.5 to 0.6 of a cent, depending on the card.
If you truly want to use your Membership Rewards points for something other than travel, consider gift cards. Many retailers' gift cards will give a value of 1 cent per point.
Bottom Line: Don't use American Express Membership Rewards points to shop with PayPal.
Capital One Rewards
There are multiple Capital One cards that are eligible for PayPal's Pay With Rewards redemption option. These include:
On the Capital One cash back cards, earning a dollar back on the card is worth a dollar in PayPal spending. But on the Capital One travel cards that earn miles, you'll need 125 miles to redeem for a dollar's worth of shopping with PayPal. This means your Capital One miles are worth only 0.8 cent each this way. You'll earn a higher rate of 1 cent per point when redeeming for travel.
Bottom Line: Use your rewards from Capital One cash back cards to shop using PayPal, but not the miles earned on Capital One travel cards.
Chase Ultimate Rewards
Chase Ultimate Rewards can be redeemed in multiple ways including taking your earnings as cash back, as a statement credit, a gift card, used for travel or transferred to one of Chase's travel partners (if you have an Ultimate Rewards card that charges an annual fee).
To use your Ultimate Rewards with PayPal, you can choose Checkout with PayPal at an eligible site and use Chase Pay to complete the transaction. You'll receive a statement credit against the cost of the purchase.
Eligible cards include:
Typically, cash back, statement credit and most gift cards via the Chase portal will yield a value of a penny a point.
You can get even more value out of your Ultimate Rewards by booking travel through Chase's travel portal where points are worth anywhere from 1 cent to 1.5 cents each, depending on which Chase card(s) you have. In every scenario, you'd get better value out of buying whatever you want on your card and then taking cash back as a statement credit than if you get PayPal involved.
For example, buy something for $100 online with your Chase card and then redeem 10,000 points as a cash-back statement credit. Buying that same $100 item using PayPal would require 12,000 Ultimate Rewards points.
Bottom Line: Don't use Chase Ultimate Rewards points to shop with PayPal.
Citi ThankYou Points
You can redeem Citi ThankYou Points to shop using PayPal to pay for all or a part of your purchase.
Eligible cards include:
You can also use the earnings from the Citi Double Cash Card if you have an eligible card and convert your cash back to ThankYou points.
Using your ThankYou points to pay with PayPal for a purchase is a good use as a ThankYou point is worth 1 cent when redeemed this way. Citi Rewards+ cardholders will receive a 10% rebate on redemptions up to the first 100,000 per year, making ThankYou points an especially attractive redemption for PayPal.
Note that cash back as a deposit in your qualifying account or as a check is typically only worth 0.5 cents per point with many Citi cards, but there's a workaround in that you can pay your mortgage or student loan with ThankYou points at 1 cent per point.
Citi Prestige and Citi Double Cash cardholders can redeem points for cash back at a rate of 1 cent per point. Citi ThankYou points can also be transferred to travel partners where they can be worth over 1 cent each.
Bottom Line: You can get decent value using Citi ThankYou points to pay with PayPal.
Discover
You can use your earnings from either Discover it cards to shop via PayPal. Both Discover cash back earnings and miles are worth one cent when paying for your purchase via PayPal, so it's a solid redemption value.
Bottom Line: Use your earnings from your Discover card to shop with points via PayPal.
Bottom Line
When using rewards to shop via PayPal, some cards are better than others. Be sure to understand exactly what you're getting and what you're giving up before you redeem your points to shop with PayPal.
