Here's a comment a reader recently left on my post titled The Best Cash Back Credit Card:
I don't think this has been mentioned, but this is a rather unusual method of accumulating cash back rewards I have adopted. For those who have had a PayPal debit card for many years, you will earn 1.5% cash back on signature purchases (the newer accounts only get 1%). Inside of your PayPal account you can also have a PayPal Plus Credit Card (gives 1-1.25% cash back depending on the number of points you accumulate prior to redeeming your reward). You can setup your PayPal plus credit card as a "backup" funding source for your PayPal debit card, so that if you have a $0.00 balance in your PayPal account, a signature based transaction will still go through.
I inquired the PayPal department about this situation several years ago, and I asked if, in the event that I had $0.00 in my PayPal account and I did a signature based transaction on my PayPal debit card and the PayPal plus credit card was used as a backup funding source, would I receive both 1.5% cash back on the debit card AND the PayPal plus credit card reward points. They answered in the affirmative, so I proceeded to do all of my daily expenses like this. It is effectively 2.75% cashback unlimited.
Granted, it's an unusual circumstance -- I'm guessing many people don't have PayPal accounts and credit cards. Then again you could get both of them. And for those of you who have them already, this seems like a great way to earn a good cash back amount.
Anyone else ever done this?
I have never done that but I wanted to let you know I've been a chase freedom user for a long time and they just sent me a letter saying they were taking away the extra $50 after you earn $200 and moving to one "rotating" category instead of top 3. That one category will now get 5% back but they did not explain exactly how they would "rotate" the category, so I may end up getting only 1% most of the time. Suddenly it's a very average card!
Posted by: Todd | February 27, 2010 at 08:22 AM
Oo, I have the Paypal debit card and the Paypal account, but not the credit card. Good stuff to know tho, if I ever spring for the credit card. Thanks!
Posted by: BD | February 27, 2010 at 06:51 PM
Also on the Chase Freedom card, pay attention to your statements. Even if you pay off your entire balance by the due date, you still pay a finance charge. They now charge you interest on your average daily balance.
Posted by: bobsmit | February 28, 2010 at 06:39 AM
Re Todd - I just got teh same letter from Chase about my Freedom Card.
Re bobsmit - I'm doubtful. Any evidence?
Posted by: Matt | February 28, 2010 at 03:30 PM
bobsmit is wrong:
"So you can take full advantage of your grace period, credit card issuers will be required to mail your billing statement at least 21 days before finance charges would be assessed. This new law goes into effect on February 22, 2010."
http://credit.about.com/od/glossary/g/graceperiod.htm
Posted by: Apex | March 01, 2010 at 01:21 AM
What if you use the Schwab 2% cashback card as a backup funding source?
Posted by: t | March 01, 2010 at 09:43 AM
Yes, would a non-paypal backup rewards card work as well?
Posted by: Bryan | March 01, 2010 at 01:00 PM
Todd and Matt, when did Chase tell you that those new rules are taking effect?
Posted by: Eric | March 01, 2010 at 10:10 PM
They sent me something in the mail a few weeks ago saying it would go into effect April 1st. They said at some point I would get another letter with more details but I haven't seen it yet.
Posted by: Todd | March 09, 2010 at 09:33 AM
Forget Chase.
Get a Discover More and a Schwab. Done.
Posted by: Eric | March 22, 2010 at 07:45 AM
Read the notices from Chase carefully. I got one five or six months ago, saying that the "rules" on my Freedom card were changing (sorry, I don't recall the exact details, but I do know the new rules were the same as others reported here on FMF).
Anyway, the notice said something like "call us if you don't want to switch" -- so I did. I told the CSR that I didn't want my card to change. She said OK, and as of today, I am still getting my top 3 categories at 3% (different every month), and I can redeem $200 earnings for a $250 check. I'm keeping an eye on my statements to see if they try to slip any changes in, but so far, so good.
BTW, I don't have any other kinds of accounts with Chase.
Posted by: Rick | March 30, 2010 at 11:34 AM
This doesn't work with paypal anymore. You'll only get your 1.5%/1% cash back with the debit card. They won't give you any points when you use the credit card as backup funding.
Posted by: Jeff | September 29, 2010 at 05:18 PM
I have the xtras credit card with paypal as well as the debit card getting 1.5% back and I get both the money and the points. just don't know how they do the calculations. my points seem a little high
Posted by: Michael | November 11, 2012 at 11:24 AM