We’ve written about a few different options for high-interest savings accounts. Often times, these come from savings accounts attached to a prepaid card. Here we’ll discuss the Paypal Prepaid option.
- Interest Rate: 5% APY
- Minimum Balance: None
- Maximum Balance: $5,000 (drops to 0.50% APY if over this balance)
- Availability: Nationwide
- Direct deposit required: No
- Additional requirements: Must have Paypal account
- Hard/soft pull: Soft
- Credit card funding: No
- Monthly fees: $4.95
- Insured: FDIC
- Length of promotion: Unknown
- Open a Paypal Prepaid Mastercard account and you’ll be eligible to open a Savings account with 5% APY on up to $5000
You can apply for the card online with no fees. (Or you can buy a temporary card at many locations which usually comes with a $4.95 fee.)
The card does come with a regular monthly fee of $4.95 (non-waivable).
There are also a couple of other fees to be aware of, mainly a $1.95 ATM withdrawal fee and a $5.95 replacement card fee. (See all fees at the end of this PDF.) There is no fee for balance inquiry online or by phone.
There are three ways to add funds to your Paypal Prepaid account.
- Direct deposit the funds. Sending money via ACH transfer from another checking account will work as well. (1)
- Transfer funds from your Paypal account. Up to $300 per day and $2000 per rolling 30-days. First get the money into the Paypal account, then transfer it from there in $300 increments to the Prepaid card.
- You can add cash at a reload center. Fees may apply.
You can not add money to the savings account directly. First add money to the Prepaid card using one of the above methods, then transfer the funds to the linked savings account.
Taking Money Out
To get money out of the account, first transfer it from the savings to the Prepaid card, then you’ll be able to transfer it to your Paypal account. From there the funds can be transferred to your bank. (1)
Rewards and Referral Program
- Like many similar prepaid cards, the Paypal Prepaid has a referral program which gives each of them a $5 reward when the new member enrolls and adds at least $10. (Feel free to add your referral links in the comments, but please add some pertinent information about the topic as well.) If the referred individual had a Paypal Prepaid or any other Netspend Prepaid within the past 180 days, they are not eligible for the referral bonus.
- Based on your shopping activity, Paypal will target you with offers for various merchants. Since most of us will just be opening the account for the 5% savings rate and won’t be using the debit card, we probably won’t get much out of this.
After accounting for the $4.95 monthly fee, the actual interest earned is around 3.8%. That’s much better than the standard interest rates offered these days and could be a worthwhile option.
Some people are afraid to trust Paypal with their money. These accounts are FDIC insured so you should be safe, at least in the long run.
There are other options for high-interest Prepaid cards as well, such as the Control card which we’ve written about. Both the Control card and the Paypal card are Netspend Prepaid clones and work similarly.
See Netspend 5% Savings Accounts on up to $5000 for a look at the other Netspend options.
See Guide to 5% Interest Prepaid/Savings Accounts for a full roundup of all 5% prepaid/savings options.