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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  1. Looks like we will only lose out on the cashback or rewards from our credit card which has nothing much to do with our paypal account.

    During the earlier times when US currency is weaker, i could have just keep the money in paypal and use credit card instead. That's because i'll have even more savings due to currency exchange. And the fact is that i didn't do that. 🙁

  2. I have about $500 sitting in my paypal account. Is it bad to leave a lot of money sitting in there?

    <abbr>Chris’s last blog post..Expose Profitable PPC Campaigns With Traffic Travis</abbr>

  3. The plum card changed from 2% cashback to 1.5%.

    I guess they were giving away too much cash. I got in just before the change.

  4. Great article! Quick question: What if I want to pay a contract worker $300? Is there a way to pay him via my Amex card instead of just writing him a check?

  5. Zac,

    PayPal Account after nine months of online business = $00.00.

    After nine months of building relationships with ‘marketing guru’s’, joining Affiliate networks (over 20!) and attending BlogWorld Expo 2008, Affiliate Summit West 2009 and reading every .PDF and eBook on the subject of web marketing, taking PPC courseware, Online Profits Courseware, reading membership site blogs, reading “how to blog in your pajama’s” etc ad naseum I have come to one conclusion.

    Without a mentor, web-administrator, copywriter, and / or someone who can help you navigate the endless computer-programmer level tasks associated with an online business, you are not going to make a living on the internet.

    Requirement to learn all of the following:






    Writing good content on your blog

    Learning CPA, CPM, PPC, SEO (not sure about SEO..)

    Landing page design

    Social Media relationship-building

    Oh and watching to see if your campaign profits are being siphoned-off by an Affiliate Network insider!

    The challenges for an unemployed, ex- Sony senior systems design engineer are insurmountable.

    I’m no stranger to complexity, but I do not have the time to learn all of these web-disciplines and try to continue in this business.

    In other fields, engineering for example the classes actually teach hard facts applicable to a job in the field.

    Web marketing by it’s very nature is ’secretive’ and no one will reveal the truth behind the marketing success, that it took years of 16-hour days, and large sums of $$ spent grinding it out.

    Successful web marketing requires an individual with plenty of time, the skills and attributes listed above and a stable source of income to ‘finance’ the click-budget’ expenses which can quickly max-out a credit card.

    After nine months of attempts to breakthrough to success online have ended in near bankruptcy for me and my family.

    While individuals such as yourself ‘get it’ for the rest of us newbies the success rate has to be astronomically low.


    Nicholas Chase

    <abbr>Nicholas Chase’s last blog post..Guy Kawasaki's New Book – 'Reality Check'</abbr>

  6. Hi

    Seems like a good idea to get the balance out of paypal into a place where it can be earning interest.

    <abbr>Neil’s last blog post..Making a Budget Is Not the Hard Part</abbr>

  7. Cutting corners like this can save you thousands for the course of a year. Side note I heard awhile ago Amex was paying people to cancel their accounts.

    <abbr>Debt Consolidation’s last blog post..Taking Care of Your Financial Health</abbr>

  8. I like the idea and what you are suggesting. Amex has just changed recently though hasn't it not doing so much with its cashback deals. I am all for saving and making extra money online as much as I can. I might have a look at different cards though.

  9. @Chris I like to keep my Paypal account empty. I usually withdraw when any decent sized payments come through.

    @Shawn In most cases, you can pay through paypal. Depends on how your contractor accepts payments.

    @Nicholas Chase you'll get there soon enough, the effort is there!

  10. Paypal is basically the biggest scam site ever, just right after Western Union. When Paypal is losing the money out of their pockets, they will do EVERY SINGLE STEP to get it back from you.

    While if the money is coming out of your pocket and not Paypal, they would only try 10-20% of the way and not even bother.


  11. A very little money to pay my monthly broadband bill to pay my yearly hosting fee and for a little round of world. 🙂

    <abbr>Shanker Bakshi’s last blog post..40 Great WordPress Optimisation Tips by Yoast</abbr>

  12. I see all the time, now that I am trying to sell a book (multiple sales with lower price points), that the little fees taken from the total amount every time ALSO add up. I am thinking on the payout, not just for the extra security, this may be beneficial…

    Matty Byloos’s last blog post..Book Launch for Michael Schmelling’s The Plan at Family

  13. I have been a PayPal user for … I don’t know, several years now. I have not had one problem with either receiving payments or any other type of horror story. If you buy anything on EBay, that is the only way you can pay for it anymore, so Yeah, I use it from time to time. I use it to collect money that is owed to me for services rendered, but I don’t leave more than oh, a $50 balance in there. I also have it set up on a money market account, that whatever my balance is it earns interest (maybe not much, but it is better than ZILCH). Anyhoo — I am satisfied with PayPal, don’t see my practices changing at all.

    thanks for the tips though.

  14. Paypal is great, but I primarily use it to buy and pay for things on the internet, so as to not compromise my credit cards by using them online. It works just dandy for that purpose, for me.

  15. I agree, using a credit card to make purchases affords a number of protections against fraud.

  16. I agree with you, but Paypal also gives incentives for purchases at many online shop sites, so if you buy online they give you cash back.

    <abbr>Free Webmaster SEO Tools’s last blog post..18 Comment Tools and WordPress Plugins for SEO and Bloggers</abbr>

  17. I only got paypal to get money from the freelance writing work I do. I never spend it online, just transfer it to my bank account.

    1. I do the same thing but with graphics. It is a great way to earn money isn't it?

  18. hi, it is a good service but plz tell me How to pay/fund Paypal account from verified Paypal to another verified account?

    <abbr>my car purchase’s last blog post..Looking for best web design and seo marketing</abbr>

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