If I Use My Credit Card Through PayPal, Can I Still Earn Bonus Points?

Rewards Are Probably Paid, but Read the Fine Print

Smiling woman using smartphone and credit card at home
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It’s easy to link your favorite rewards credit card to your PayPal account and shop online. The benefits are you don’t have to share card details with every retailer you buy from, and you don’t have to repeatedly type in your card’s information. But by paying that way, are you leaving valuable credit card rewards or bonus points on the table?

Probably not. In most cases, you still earn rewards when you pay with your linked credit card through PayPal. But we’ll explain how it works so you can be sure to get every reward you earn.

What Allows You to Earn Points On Purchases?

Businesses who accept electronic payments—both credit cards and PayPal—have a four-digit merchant category code, or MCC, that identifies the type of business. Shoe stores have a merchant category code of 5661, for example. 

This MCC, determined by card brands like Visa and Mastercard, is associated with each credit card transaction and allows credit card issuers to determine which purchases, like dining or travel purchases, should receive bonus rewards. 

PayPal says on its website: “Just link your credit cards to PayPal and you can keep earning those rewards with every purchase.” But you may be wondering if purchases made with a linked card only identify PayPal on your credit card statement, or if they will also include the purchase category—so your card issuer knows to give you rewards.

Earning Bonus Points On Credit Card Purchases Made Through PayPal 

We’ve seen that the credit card statement identifies the purchase as one made through PayPal and includes the appropriate merchant category (retail, entertainment, utilities). In this case, those purchases should be eligible for available category rewards. 

But some purchases may not qualify for the rewards category, particularly if the card issuer doesn’t receive merchant code information from PayPal, or the merchant code isn’t eligible for rewards. For example, a restaurant inside a hotel may not qualify for bonus rewards on dining if the transaction indicates a hotel purchase.

Check your credit card statement and your rewards earnings to be sure rewards are credited as expected. If you don’t receive rewards on purchases you believe should qualify, contact the card issuer for more detail about the transactions.

PayPal as a Rewards Category

You may be able to earn even more rewards on PayPal purchases, depending on your credit card rewards program. Chase’s Freedom Flex and Freedom Unlimited are both offering 5% rewards on up to $1,500 of PayPal purchases through Dec. 31, 2020. Discover it previously had a similar offer of 5% on up to $1,500 in PayPal and restaurant purchases in the 3rd quarter of 2020.

PayPal offers two of its own co-branded rewards credit cards: the PayPal Cashback Mastercard and the PayPal Extras Mastercard. These cards earn cash or points rewards on purchases made through PayPal and elsewhere. You can apply for either card if you have a PayPal account.

How to Maximize Credit Card Rewards When Online Shopping

There’s no reason you can’t earn rewards on every dollar you spend online. Here are a few tips.

  • Choose a credit card—or two—that offers great rewards and fits your typical spending habits. That way you can spend as normal, but use your credit card to earn rewards on more of your purchases. 
  • Focus your spending on the categories that earn the most rewards, alternating between cards that pay the most rewards on those purchases. Using more than one card is smart if both cards have caps on the rewards you can earn. If you link multiple credit cards to your PayPal account, just select the best one at checkout.
  • Use online shopping portals for deeper discounts or to boost miles in a frequent flier program. You may lose credit card rewards when you use a shopping portal, but the ones you earn in frequent flier programs may be worth it.

A few credit card issuers now allow you to pay (either partially or fully) with rewards when you shop with PayPal.