Save 1% on your monthly bills…FOR FREE
I was not intending to write a blog post about this until I realized that the upper limit of possible savings is well above what I thought I was going to spend.
What I am talking about is the PayPal cash back program on their debit card.
PayPal offers a MasterCard-branded debit card as a free option on your PayPal account. The debit card allows you to draw against funds that are in your PayPal account, and then some. They usually set limits on this debit card. My limits are $3000 per day and $50,000 per month. There is also a $400 ATM withdrawal limit, but that is not included as a cash-back benefit because it is a PIN-based transaction.
Here’s the deal.
PayPal accounts are set up against normal bank accounts. If you make a purchase using your PayPal account, you can indicate that the funds should come from any number of sources, including the bank account attached to your PayPal account.
I have about $4000 in bills that need to be paid each month. If all of those could be paid by credit card, that would be $40.00 back to me…each month. How about if I paid my $2067.41 mortgage and received $20.67 cash back the very next day? I could pay my car payment of $621.04, and receive $6.21, in some cases, the same day.
Now automate the process:
- Open a PayPal account
- Tie that PayPal account to your normal bank account (the one from which you pay your bills)
- Request a PayPal debit card
- Set your bank account is the back-up funding source for your debit card and set the limit on that back-up source to something slightly greater than the total amount of bills you plan on paying with the card.
- Sign up with each of your creditors to pay by credit card…automatically, and use the PayPal card.
- Stash the card away with your other hidden valuables, or use it to make everyday purchases and save even more money.
- Bonus: When your paycheck arrives in your bank account, transfer the amount of money you plan on spending on bills into your PayPal account. Until that money is deducted by each of your creditors, you will earn money market rates on your PayPal balance, as long as you sign up for the Money Market feature.
Worried about the fact that the PayPal debit card is tied to your bank account? No need to worry. Although your bank account is the backup funding source for your debit card, you are able to set a limit as to how much your debit card can dip into your bank account. This protects you in case you lose your card or someone gets your number and buys something online…just like a regular credit card.
*NOTE* All of this is stated with the caveat that whenever you do financial transactions online, be careful. The PayPal debit card carries no more risk than using your Visa-branded or MasterCard-branded bank card online. For this post, I would suggest that the funds you are paying your bills with through your PayPal account be placed in a bank account specific to this task only.
You know this is very good information because I’d heard a lot about pay pals virtual debit card but then I stopped hearing about it. They went to that plug in that didn’t interest me.
If PayPal would let you use a cash-back credit card as the funding source, then could you get double the cash-back and have only one bill to pay, the credit card?
Actually, you can. What a great idea, Al. For that to work, I believe your Paypal account would have to be empty and the backup funding source would have to be the other “cash back” card. For that matter, you could make money on paying on that cash back card using your Paypal debit card. I feel a paradox coming on….