OT: paypal plus credit question

[mudder17]

Hi! We're about to have a (temporary) large amount that we can transfer to my funded paypal account to take advantage of their money market account interest. I have a few questions about it:

1) Is this a bad idea? The current percent interest is 5.0%, which is higher than our credit union or Bank of America interest rate, which is the attraction.

2) If it's fine to do, we're trying to figure out what would be the best way to access the funds. I could just transfer the money when needed to my bank (which is connected to the paypal) and write a check when needed.

3) Is there a limit on how much we can have in the paypal account?

4) What about the paypal plus credit card? Does anyone have that? Assuming the credit limit is high enough, we could use that to pay for our bills and then just pay off the paypal credit card with the paypal account. Is that possible?

5) Anything else I'm not thinking about? Other suggestions?

TIA!

Eileen

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[Momof3Labs]

I hate paypal (it's a necessary evil, though) so would suggest opening an account with a different online bank. We use ING Direct but there are others (Emigrant?) that offer slightly higher interest. You can usually get a bonus when you open the account; if you want a link to get an ING bonus, LMK.

Is the paypal account FDIC insured? No way would I do it if they are not.

Since I have an ING account, I know that ING links directly to your bank account, and you can transfer back and forth as needed (though allow a couple of days for the transfer to go through). ING also offers a high-interest checking account which I don't know a lot about; maybe that would suit you better since you could use the funds to pay bills. Other online banks probably offer similar features.

The other thing is that if the amount is truly temporary (how long - a few months?), you won't get a ton more in interest by going with a 5% vs. 2%, so maybe convenience and simplicity should trump the interest rate in your decision.

[TracyBee]

I certainly would not trust a large amount of money with paypal for a number of reasons. First thing is they are not a bank, and therefore do not have to follow the same rules as banks do and they are not FDIC insured. Not to mention the account security problems they have.

I have an account with GMAC bank online and it's fantastic. The rate is higher than paypal and they give you a debit card and you can link your checking account so you can easily access the money. There are limitations on the number of autodebit withdrawals and debit card withdrawals you can have in a month, so watch that. That's really the only downside that I've run across.

I definitely think putting the money into paypal is a bad idea. Very bad idea!