Since 2021, PayPal Savings accounts have been giving PayPal users a chance to earn high interest on their account balances, plus cash-back rewards.
When PayPal’s no-fee savings accounts were first introduced, they paid customers 0.40% APY. That rate sounds negligible today, but it certainly beat the national average savings account rate of 0.09%.
Fast-forward to 2024, and you can now earn 4.30% on these FDIC-insured accounts, while the national average sits at just 0.45%.
What’s the catch? You’ll have limited access to your PayPal Savings, making it a less attractive option than most high-yield savings accounts (HYSAs). Here’s a closer look at the PayPal Savings account and how it works.
What is the PayPal Savings account?
PayPal Savings is an online savings account available to people who have PayPal Balance accounts. To fund your PayPal savings, you can transfer money — including cash-back rewards — from your PayPal Balance account.
PayPal Savings accounts are provided by Synchrony Bank, which means that, unlike the money you keep in your PayPal Balance account, your deposits can be FDIC-insured. You’ll get up to $250,000 in coverage on your combined PayPal Savings and Synchrony deposits. Here’s a look at the other account features:
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APY: 4.30% (variable)
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Minimum opening deposit: $0
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Minimum balance: $0
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Maximum balance: $250,000
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Monthly fee: $0
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Compounding interest: Daily
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ATM deposits/withdrawals: No
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Check deposits: No
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Other: A PayPal Balance account and PayPal personal account or debit card are required to open this account
One unique account feature you might appreciate is “Goals with PayPal Savings.” With this feature, you can create customized savings goals for a chosen portion of the funds in your account and visually track your progress to your goals.
Read more: Synchrony Bank review (2024)
How to set up a PayPal Savings account
Setting up a PayPal Savings account is easy, as long as you already have the other required accounts you need to qualify. Here’s the step-by-step process:
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If you don’t already have one, you’ll need to open a PayPal personal account or debit card and have a PayPal Balance account in good standing. You may need to submit your Social Security number, driver’s license, or other identifying documents with your application.
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Sign up for PayPal Savings by logging in to PayPal.com or the PayPal app.
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Go to the Finances tab on PayPal.com or the Accounts tab in the PayPal app.
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Click “Savings” and then “Add Money.”
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Choose to add money to “General Savings” or to a specific goal.
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Select the amount and frequency of your deposits.
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Review and click “Add Money.”
Once your account is set up, you can manage it on PayPal’s website or the PayPal app.
How do you deposit and withdraw money from a PayPal Savings account?
The only way to move money in and out of PayPal Savings is to transfer it to and from your PayPal Balance account. These transfers are free, and the funds will be immediately available, although the transfer may take several days to process fully.
Unfortunately, you can’t transfer funds to or from your bank accounts, receive direct deposits, or deposit or withdraw funds at an ATM, by check, or at a physical bank branch.
Is the PayPal Savings account worth it?
A PayPal Savings account is worth considering if you regularly keep a balance in your PayPal Balance account, or if you’re earning cash-back rewards through PayPal.
According to the Consumer Financial Protection Bureau (CFPB), it’s not safe to hold a balance in a regular PayPal, Venmo, or Cash App account, since the funds are not FDIC-insured. By moving your funds from a PayPal Balance account to PayPal Savings, you’ll gain FDIC insurance, and you’ll go from earning no interest to earning a competitive interest rate.
Still, a PayPal Savings account isn’t the best option for most people. Although you’ll earn a high rate, you can transfer your balance to other online savings accounts that pay more. And if you want to access your savings account via ATM, check, or bank branch, your best bet is to use a traditional savings account instead.
Alternatives to the PayPal savings account
If you’re looking for a high-yield, online savings account that’s easier to access than PayPal Savings, you have plenty of options to choose from. Consider transferring your PayPal balance to one of these savings accounts instead:
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Synchrony High Yield Savings: The rate on Synchrony’s HYSA is usually higher than PayPal Savings, and you can currently earn 4.30% APY. Funds in this account can be accessed via ATM, and you can transfer money to and from external bank accounts and make mobile check deposits. Plus, there’s no monthly fee.
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SoFi Online Bank Account: This combination checking and high-yield savings account allows you to earn up to 4.20% APY when you set up direct deposits. Right now, you can also earn a new account opening bonus of up to $300. SoFi also rounds up your debit card purchases and deposits the difference to your savings.
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Lending Club LevelUp High-Yield Savings: You’ll earn 5.00% APY if you deposit at least $250 a month to this Lending Club account, or earn 4.00% APY if you deposit less. The account has no monthly fees and comes with a free ATM card.
