Woman looking down at phone while holding a credit card

How to shop with PayPal and earn reward points

Add a rewards credit card to your account and you can earn points per $1 spent through PayPal.

A PayPal account gives you a secure place to store your payment details so that you don't have to enter them every time you buy something online. It also offers encryption for every transaction and reimbursement if items don't show up or are different from the seller's description.

Plus, you can still get reward or frequent flyer points when you link an eligible credit card to your PayPal account. So, let's take a look at how it works.

How does PayPal work with credit cards?

Once you have set up a PayPal account, you can add your credit card details to your PayPal wallet. Then, when you're shopping online, you'll just need to click on "PayPal" as the payment option, enter your login details and choose the card you want to use.

Compare rewards credit cards

Rates last updated February 24th, 2019
Name Product Bonus Points Rewards Program Rewards Points per $ spent Purchase rate (p.a.) Annual fee Product Description
Qantas Premier Platinum
100,000 bonus points
Qantas Frequent Flyer
1
19.99% p.a.
$149 p.a. annual fee for the first year ($299 p.a. thereafter)
Get 70,000 bonus Qantas points when you meet the spend criteria and 30,000 more after the first year (100,000 total). Ends 30 April 2019.
Citi Rewards Platinum Credit Card - Exclusive Bonus Points Offer
100,000 bonus points
Citi Rewards Program
1
20.99% p.a.
$49 p.a. annual fee for the first year ($149 p.a. thereafter)
Enjoy 100,000 bonus Citi reward Points when you spend $3,000 within the first 90 days. Plus, save with a $49 first year annual fee.
More info
Westpac Altitude Platinum Card - Qantas
60,000 bonus points
Qantas Frequent Flyer
0.5
20.24% p.a.
$50 p.a. annual fee for the first year ($200 p.a. thereafter)
Earn 60,000 bonus Qantas Points when you spend $3,000 within 90 days of card approval. Plus, a $50 first year annual fee.
Suncorp Clear Options Platinum Credit Card - Online Offer
60,000 bonus points
Suncorp Bank Rewards Program
1.25
20.74% p.a.
$49 p.a. annual fee for the first year ($129 p.a. thereafter)
Save with a 0% balance transfer offer and earn up to 60,000 Bonus Suncorp Reward Points. Plus, a discounted first year annual fee when you apply online.
Qantas American Express Ultimate Card
100,000 bonus points
Qantas Frequent Flyer
1.25
20.74% p.a.
$450 p.a.
Receive 100,000 bonus Qantas Points, a $450 Qantas Travel Credit each year and 2 complimentary Qantas Club lounge invitations per year.
HSBC Platinum Qantas Credit Card
Qantas Frequent Flyer
1
19.99% p.a.
$0 p.a. annual fee for the first year ($79 p.a. thereafter)
Save with a $0 first year annual fee and a long-term balance transfer offer. Plus, complimentary travel insurance.
NAB Qantas Rewards Signature Card
90,000 bonus points
Qantas Frequent Flyer
1
19.99% p.a.
$295 p.a. annual fee for the first year ($395 p.a. thereafter)
Collect 90,000 bonus Qantas Points when you spend $4,000 within 60 days of account opening. Plus, a $295 annual fee in the first year.
St.George Amplify Signature - Qantas
80,000 bonus points
Qantas Frequent Flyer
0.75
19.49% p.a.
$179 p.a. annual fee for the first year ($279 p.a. thereafter)
Enjoy 80,000 bonus Qantas Points when you spend $4,000 within 90 days and 2 complimentary Qantas Club lounge invitations per year.
Virgin Australia Velocity Flyer Card - Bonus Points Offer
60,000 bonus points
Velocity Frequent Flyer
0.66
20.74% p.a.
$64 p.a. annual fee for the first year ($129 p.a. thereafter)
Earn up to 60,000 bonus points in the first 3 months and save with a $64 first year annual fee. Plus, a long-term balance transfer offer.
St.George Amplify Platinum - Qantas
50,000 bonus points
Qantas Frequent Flyer
0.5
19.49% p.a.
$99 p.a.
Earn 50,000 bonus Qantas Points when you spend $2,000 within 90 days and earn 0.5 Qantas points per $1 spent.

Compare up to 4 providers

How can I link a credit card to my PayPal account?

You can add any valid American Express, Mastercard or Visa credit card to your account by following the steps below.

  1. Log in to your PayPal account.
  2. Click on "Wallet" at the top of the page.
  3. Select "Link a card", fill in your card details and follow the prompts to confirm the account.

After you have linked your account, you may see a $1 charge from PayPal on your credit card account. This is a temporary authorisation charge that PayPal uses to confirm the account is valid. Once that's confirmed, the $1 charge is released (so it's never actually taken from your account).

What purchases will earn points through PayPal?

In most cases, you'll earn points when you use PayPal to buy clothes, mobile devices, makeup, music or for any other retail purchases. Spending that usually doesn't earn points includes gambling transactions, foreign currency purchases, gift cards and any other transactions that may be processed as cash advances.

The terms and conditions for credit card reward schemes vary when it comes to "eligible transactions" that earn points, so check with your card provider for more information.

Pros and cons of using PayPal to earn credit card reward points

Pros

  • Protection. As well as fraud and theft prevention, PayPal also makes sure you get what you pay for through its Buyer Protection program. You can get a full refund if your eligible order doesn't arrive or isn't as described.
  • Convenient payment process. Instead of entering your card details and billing information, you only have to type in your PayPal login and password.
  • Avoid card payment fees. Sometimes you can get around credit card payment fees by choosing to pay through PayPal. For example, Telstra applies a processing fee for payments made by card, but charges no fees for PayPal payments, even if you choose to pay through a linked credit card.
  • Amex acceptance. If you have an American Express card, you may be able to get around the acceptance limitations and surcharges that some online stores have by choosing to pay through PayPal and then selecting the Amex card as your preferred option.

Cons

  • Switching to a new platform. If you've never used PayPal before, it could take time to get used to the service.
  • Not always a payment option. While PayPal is accepted by a wide range of stores, including eBay, The Iconic, Woolworths, Optus and Telstra, there may still be times when you need to type in your credit card details to make a purchase. Find out which stores accept PayPal with this guide.
  • Overspending. The ease of making payments with PayPal, coupled with the ability to earn points for purchases, could lead you to rack up more credit card debt and interest charges.
  • Reward variations. Your card's reward scheme may differ when using PayPal compared to using your card directly. Contact your credit card provider directly to find out exactly how PayPal payments will be treated in terms of rewards.

What else do I need to know?

If you want to use a rewards credit card through PayPal, make sure you keep the following details in mind:

  • Transaction details. When you make a payment through PayPal, your credit card statement may show "PayPal" for the transaction description, rather than the store where you made a purchase. This could make it hard to figure out what every purchase is unless you check your purchase history through PayPal.
  • Foreign currency charges. If you're buying something in a foreign currency, PayPal automatically applies its own foreign currency conversion rates. This is 3.5% above the exchange rate for purchases in US or Canadian dollars, or 4% above the exchange rate for purchases in any other currency, which could be higher than the rates offered by your credit card provider. It's also hard to figure out how to change this setting in PayPal, but you can set it to your credit card's rate through this link: https://www.paypal.com/cgi-bin/webscr?cmd=_manage-paylist
  • Points processing. While your payments will go through straight away with PayPal, it could take a day or so for the transaction and points to show up on your credit card account.
  • Security. Both PayPal and credit cards offer security features to help keep your details safe when you shop online. But if you're using a credit card through PayPal and have security concerns, you may need to contact both PayPal and your card provider to sort them out.

Compare PayPal and credit card security features

While you could just enter your credit card details every time you make a purchase online, PayPal can speed up the process while still allowing you to earn points for your spending. Just remember to regularly log in to your credit card account so that you can check your balance, make repayments and see exactly how many points you've earned for PayPal purchases

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Amy Bradney-George

Amy is a senior writer at finder.com.au with more than 10 years experience covering credit cards, personal finance and various lifestyle topics. When she’s not sharing her knowledge on money matters, Amy spends her time as an actress.

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8 Responses

  1. Default Gravatar
    June 14, 2016

    Hello

    Can you still earn points on the money you send to “Family and Friends” using your credit card as the manner of payment through Paypal?

    Thanks.

    • finder Customer Care
      MayJune 14, 2016Staff

      Hi Ebony,

      Thanks for your inquiry.

      Generally, credit cards will let you earn points if you use them on eligible purchases and not on cash advances. Since credit card companies view fund transfer as a cash advance, when you send money to your family and friends using your credit card through your PayPal account, you won’t be able to earn points from it.

      Cheers,
      May

  2. Default Gravatar
    ashJune 10, 2016

    how can I get into reward program in paypal if I have no credit card and only link with bank account and how can I use that point ?

    • finder Customer Care
      LouJune 10, 2016Staff

      Hi Ash,

      Thanks for your comment.

      With Paypal, you can only earn points when you link your credit card to your Paypal account. PayPal accepts a number of credit cards including Visa, MasterCard, American Express, Diner’s Club and more. However, it is important to note that certain cards like procurement and private label credit cards
      are not compatible with PayPal Merchant Services.

      Cheers,
      Anndy

  3. Default Gravatar
    F.July 21, 2014

    Is there an annual fee to use PayPal???

    • finder Customer Care
      ShirleyJuly 22, 2014Staff

      Hi F,

      Thanks for your question.

      At the time of writing there is no annual fee to use Paypal.

      However, certain transactions could incur a fee – such as when buying internationally, a currency conversion fee may apply.

      Cheers,
      Shirley

  4. Default Gravatar
    KarenMarch 11, 2013

    Both my bank account and credit card are already linked to my Paypal account. When I use Paypal it takes the money from my bank account. I have followed your directions but can’t find a way to make Paypal take funds from my credit card rather than bank account. Both cards are listed as primary. How do I change from which source funds are taken?

    • finder Customer Care
      MarcMarch 11, 2013Staff

      Hello Karen,
      thanks for the question!

      Sometimes when a bank account and credit card are linked to a Paypal account, Paypal will only use the credit card as a back up. One way of fixing this is to physically change your funding option during payment for an item. After you make a purchase, you’ll receive an invoice through Paypal. On this invoice there’ll be a link that displays your payment method, so click the link that says “more funding options”. This will allow you to select your credit card to pay.

      I hope this helps,
      Marc.

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