Paypal My Cash cards

How To Use Your Paypal Account (More) Safely

ByThe Miles Professor

A few days ago, I wrote about using Paypal My Cash cards purchased at drugstores to earn miles. Afterwards, a few expressed concerns that they heard others having problems with Paypal. Everyone is correct to be concerned and to want to understand the risks. It is your money, after all. So I am going to explain how I approach Paypal and what I do as an attempt to avoid problems.

First of all, I’d like to say that I do accept the possibility my Paypal account may be frozen or closed at some point. If that happens, they may freeze the funds I have in there and I may not get them back for up to six months. That said, I will receive them back eventually and I am not in a position where that’s a problem for me. It’s not catastrophic for me to have my Paypal account closed and a few thousand dollars held back for six months at a maximum. Those that are not in the same position should really be cautious and think twice before getting involved. You should also know that most credit card point earning ideas will have some risk and it’s important to fully understand them, think them over and make sure you can withstand them. I’ve been working with Paypal cards for at least 6 months now and haven’t had any problems, but that’s not a guarantee of the future. In the meantime, I take the following precautions:

Do Not Withdraw Money Too Quickly

When I load money into Paypal, I don’t withdraw for a few days to a week. There is no hard or fast rule to what is the exact period to wait. It’s just “when I get around to it”. Moreover, I often have money just sitting in Paypal and am not constantly emptying it. I don’t have an “in, immediately out” pattern so my Paypal account use looks like most other Paypal accounts. Over the weekend, someone told me had an account freeze after 12 months. He got some very good value from his Paypal account, but his account was closed eventually. One thing he suggested was always withdrawing funds immediately as that meant he never had any funds frozen in his account. While that minimizes the risk of having funds stuck in a frozen account, it significantly increases the risk of the account being frozen. Like I said, it’s not catastrophic for me if I don’t get back funds in Paypal for a few months so I’d rather leave money in there to make things run smoothly.

Do Not Load and Withdraw With The Same Account

No one loads money into Paypal and withdraws to his own account for any kind of reasonable purpose. That’s just not a natural thing to do. On the other hand, if my mom loads money into Paypal and sends it to me, there are many reasons that could be happening. She can be helping me pay rent, sending money to her kids in college, etc. Paypal is meant to make payments to businesses and send money between friends and family. So do what it’s intended to be used for. Send money to friends and family.

Mix Other Large Transactions in Your Paypal Account

I am very active in Kiva and send all the transactions through my Paypal account. Every month, Kiva sends me my repayments through Paypal and this amounts to thousands of dollars. Because a large organization is sending me large payments every month, it doesn’t look odd when other individuals send me payments as well. Moreover, I try to use Paypal as much as possible for my online transactions and general transactions. When I am buying something online and have an opportunity to pay with a credit card, I’ll often bring out my Paypal business debit card. I still use the Barclaycard Arrival, of course, for larger transactions to get the full 2.2% cash back, but the Paypal business debit card earns 1% cash back as well.

Consider Getting a Paypal Business Debit Card

I always believe the better your overall relationship with a bank, the better both sides treat each other. The Paypal Business Debit card gives you access to your Paypal funds when you’re out and about. Signing up for the card is only a soft pull (no hard credit inquiry) so, if you’re using a Paypal account, you may as well have it. It’s a lot easier to mix in transactions into your Paypal account when you have their debit card and there’s not much harm in getting it.

Summary

The point is to continue to use your Paypal account the way a normal professional, college student or stay at home mom would. They make purchases, get involved in routine transactions and don’t withdraw money instantaneously. This actually applies to most prepaid cards and accounts, not just Paypal. It’s good advice whether you’re using a My Vanilla Debit, AccountNow, GoBank, etc. Bluebird is probably the one exception in that you can pretty much pay your bills immediately after loading your funds. While I haven’t had issues with Paypal as of yet, I am not stranger to having an account frozen (well, this only happened once with MyVanillaDebit) and it’s always because I did something against the above advice. I understand that not everyone has the luxury of having thousands of dollars of Kiva transactions every month to mix in with Paypal, but I can only share my own experience and what I’ve done to make things run smoothly.

For some people, the right thing may be to avoid Paypal altogether and they’ll have better peace of mind doing so. But for me, I like living on the edge! Only joking… for me, the small risk I’ve outline above is worth the 5% cash back at drugstores when I can efficiently pick up Paypal My Cash cards on my walk home!

27 Comments

  1. This is all great. But more must be discussed about very real pitfalls of Payal.

    1) They give a phoned or emailed warning stating that one cannot just load and wd money (and know it’s being sent to other people to do that)

    2) they shut people down and hold funds for 180 days for suspected versions of this

    3) it is not in their TCs that the process cannot be done, but PayPal is like Bancorp, GreenDot, some Walmart managers/market managers… or any of the many entities we MSers use that always make up obtuse rules.

    4) maybe list ways on how to try to recoup held funds – FDIC, OCC, CFPB, AGO, SCC–and what they all are, how and when someone might use them and what their limitations or waiting periods may be.

    5) that it works differently for different people – I am of the firm belief that, without our knowledge or acceptance, some entitles such as PayPal (and American Express even) look into what they assume our finances are and assess us beyond what we think or what we allow them to do, and only then can we more safely proceed–or not. A person with low income from nowhere, USA is going to have a tougher time than say, some exec from Chicago.

    6) there’s more… but others can and should chime in. Just because bad stuff aint happened to someone who is doing paypal, doesn’t mean it aint happening to someone, or could happen to any of us at any time. YMMV and there are very real risks! MSers MUST be able and willing to float funds in any given schema at any time, as sad of a reality as that may be. The heavier one goes, the higher the odds are that something WILL go wrong. If it does not, you are darn lucky!

    1. Thanks for the thorough response! We can always say more about any tricks, but need to do it in limited time so I’m glad you could add to the discussion. I definitely echo your point #6 where you need to be able to float any funds you have locked up – it’s just the reality of the situation and it’s important to know and not get oneself into financial trouble. Always, always, do the research and know what you’re doing! :)

  2. Can you load your paypal account & then unload the funds by paying bills at WalMart using your linked paypal debit card?

    1. You should be able to, but that won’t earn the 1% cash back as that requires a PIN. 1% cash back is only for non-PIN transactions. Though that is a great idea to mix in more transactions!

  3. It was nice meeting and talking with you in CLT. I am glad you made this post because it made me a little nervous for Newbies on how awesome you made Paypal sound, without mentioning the pitfalls. I don’t think everyone understands the risks we take to play the game. So I hope this will keep some people out of trouble.

  4. What values do you buy the cards in when you buy? I have been buying various cards for some time and always throw something in with the purchase but that is a pain and a I am getting fat from the snacks that I tend to add on the transaction. Does it really matter to avoid the $XX.95 transactions?

    1. Hahaha, wells said! Points are certainly not worth weight gain or diabetes :) I usually buy two cards and don’t worry about it. That said, I usually put them on my Citi or Wells Fargo cards. I haven’t bought too many with Amex yet as that card is new.

  5. My issue has been in trying to get Square Cash to work. In trying it out I have attempted to send money to another email account that I have. And that is where I am stuck. I can not get anywhere with accepting or authorize a withdrawl. Any help/advise?

    1. I am not sure you can send money to yourself via Square, but I never tried. They will send you $1 to try it out and you can see if it works. I tried this myself and it was fine.

  6. Hi Inna, thank u for sharing. I need your help. The last few days, different CVS stores are not allowing me to purchase ONE VANILLA cards with a credit card. They say debit or cash. Have u had similar occurrences ?

    1. Helene, as Inna said, she rarely buys GC in Manhattan… nowhere to burn em. But I can tell you that some stores wont sell those to CC but most will. It is YMMV. My stores will and they will even sell PP cards to CC. But this depends on how the clerk or the store manager interprets or enforces whatever new policies exist. You gotta just keep trying different stores. Then, do not tell the universe cuz if you do, guess what happens!

      1. Thank u for your response. Is pp prepaid cards? Like what cards for example. Also, the same cvs’s that used to let me buy one vanilla gc last week didn’t let me this week. It’s weird.

        1. PP like in paypal card.

          Some stores allow em some dont. Some clerks some no, and it could depend on them or anything. We never know but we must just try more places

  7. I routinely load paypal reloads and Green Dots to paypal for a few years already, then I immideatly send them to my ex-wife. It works well. Never had a problem. I never keep any balance on paypal, as if you want to buy something on ebay, it automatically takes it from your paypal balance, and not from a credit card. Now, for credit card for paypal, I mainly use old Amex prepaid card, which I load using VRs or GDs, which I buy in drug stores for 5x or 5% cashback. After CVS stopped selling VRs I switched to Green Dots. It works pretty well so far. This gives me around 4% cashback when buying something on ebay. You can also use Amex gift cards, which you could buy with 4% cashback right now.

      1. Ask Miles Professor where does she buy Paypal realods. I guess it’s the same place.

        1. In NYC, most CVS registers have GreenDot MoneyPaks coded as cash only so I never bought one.

          I actually stopped going to CVS as it’s out of my way – though allowing purchase of Paypal cards with cash is quite store-spefic. Paypal cards can be found at a few different large chain drugstores… so try some out :)

          1. How do you load your Bluebird now? NYC doesn’t have any Wal-Marts, AFAIK, and CVS doesn’t sell VRs anymore. What do you do? I switched to Serve with Isis completely.

          2. yugi one thing some people might do is find family they can trust (who play this stuff too) and send them the BBs. Have them load, and in return, maybe do some paypal for them, to also help spread the use of paypal accounts around or something. Just an idea.

          3. Exactly, networking is key and that’s a great way to go! I don’t load Bluebird when I am in NYC since there is no way to do it, but I was in Charlotte last weekend and planned to visit the Walmart there ahead of time. I pre-bought Visa cards in NYC and did a quick stop at the Charlotte Walmart to unload them onto my Bluebirds. Worked out great!

  9. Pingback: Paypal: pure evil, or evil-but-useful? Plus a $28 million Popeye statue – Personal Finance Digest

    1. The regular PayPal debit card has a monthly fee. The PayPal business card has no monthly fee but requires your PayPal account type to be Premier or Business, not Personal.

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