Comparison sites Canstar and RateCity have run the rule over PayPal’s new credit card and given it positive but not particularly glowing reviews. Companies entering a new segment of the market often like to make a statement but the PayPal Rewards Card doesn’t do that.
PayPal is issuing a Visa card issued under a white label arrangement with Citigroup. The offer includes an uncapped rewards program with an earning rate of one point per A$1 of spend. There is no annual fee.
The rewards points can be redeemed online through the PayPal Checkout at 750,000 businesses globally, including 300,000 business in Australia, “or applied to a recent PayPal Rewards Card purchase to offset the cost”. The interest rate on revolving balances is 20.99 per cent.
Canstar compared it with five other rewards cards on its database that have no annual fee. The standout appears to be the American Express Essential Card, which has a points earning rate of 1.25 points per $1 of spend and an interest rate of 14.99 per cent on revolving balances.
Canstar calculated that to repay the average debt accruing interest on personal credit cards in Australia of $3,965 in two years, consumers with an American Express card would pay around $192 per month and $649 in interest compared to PayPal’s $204 in monthly repayments and $924 in interest.
However, there is always a caveat with an Amex card, which is non-universal acceptance.
BankVic’s Qantas Visa Credit Card has a 16.95 per cent interest rate but a points earn rate of just 0.65 points per $1 spent.
RateCity pointed out that PayPal has not yet provided details of how many points customers will need to redeem rewards, so we don’t have a complete picture of the value of the card.
It said other cards consumers would consider in the no annual fee rewards category is the HSBC Premier World Mastercard with Rewards Plus, which also has an interest rate of 19.99 per cent and has a points earn rate of one per $1 spent on local purchases and 1.5 points on overseas purchases.
Another option is the Kogan Money Black Card, which has a 20.00 per cent interest rate and a points earn rate of two points per $1 spent at kogan.com and one points on other purchases.