Building or rebuilding your credit? Want the convenience of plastic but have trouble getting approved for a credit card? Paypal, the internet third party payment system owned by eBay, has launched several services targeted at people with no credit or bad credit.
The first service is Bill Me Later, a service that functions as an alternative to credit cards, which starts users out with a $500 line of credit, which is increased over time with responsible use. Bill Me Later is an open-end credit account with PayPal, which can be used to make purchases online or over the phone without using a credit card. Users then pay for Bill Me Later purchases slowly over time—like they would for credit card purchases. The interest rate on unpaid balances is 19.99 APR, not exactly cheap, but certainly comparable to the purchase APR of credit cards for people with bad credit.
Another useful service for people with bad credit, who have problems getting a credit card, is PayPal’s prepaid card service called MoneyPak, which allows users to add money to the MoneyPak card and then use it for online purchases and anywhere else where PayPal is accepted. MoneyPak cards are available at thousands of retail locations, including Walmart, K-Mart, CVS, Walgreens, 7-11, and others. Consumers can pick up the card in the prepaid section of the store, take it to the cashier to load money for a fee, capped at $4.95. At home, users then log in to their Paypal account, go to the Add Funds section and select MoneyPak to transfer the money into their PayPal account for use online.
Additionally, PayPal has partnered with MasterCard to launch a PayPal debit card with a rewards program that’s competitive with many offered by major credit card issuers. PayPal debit cardholders who also sign up for PayPal Preferred Rewards will get 1 percent cash back on every purchase they sign for. There are no fees and the card works at all merchants and ATMs that accept MasterCard. The only difference is that this card draws from users’ PayPal account and not their checking account.
Also on the convenience front, PayPal has released a plan for mobile phones that lets users pay with their phone in-store, just like they would with a regular credit or debit card. Users simply wave their cell phone in front of a specially-equipped payment terminal, and the payment is automatically deducted from their PayPal account. Short of cash in your PayPal account? No problem. A new PayPal iPhone app lets users add money to their Paypal account by filling out a check, photographing both sides of the check with their iPhone, enter the amount in the app, and then send “the check” to PayPal for deposit. The amount will appear in users’ PayPal account within a few days.