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Everything you need to know about PayPal Pay with Rewards

Sept. 25, 2020
6 min read
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Without a doubt, consumers are spending less on travel.

The ongoing pandemic has significantly impacted the industry as a whole, including decreased demand for flights and hotels. However, that has also opened the door for companies to engage with consumers for things that they are spending on now.

From buying more groceries to getting more food delivered, consumer behavior has shifted dramatically in 2020. And it’s not only credit card companies that have responded with new ways for you to redeem your points.

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Enter PayPal’s Pay with Rewards*. PayPal has made it easier for eligible cardholders to use their points at millions of retailers online.

Today, let’s dig into PayPal’s Pay with Rewards* feature to see how you can use your eligible credit card rewards at millions of online businesses.

What is PayPal’s Pay with Rewards?

At TPG, we always welcome another opportunity to use flexible credit card points and balances – and appreciate when cardholders have more options at their disposal.

(Photo Illustration by Rafael Henrique/SOPA Images/LightRocket via Getty Images)

By enrolling and linking your eligible credit cards (more on that later) and tapping into your rewards as a budget extension, a way to support small businesses or even donate, PayPal’s Pay with Rewards* feature allows customers to shop online using eligible credit card rewards at millions of businesses. Link rewards from credit card issuers such as American Express, Chase, Citi, Capital One and Discover to PayPal, and Pay with Rewards can convert your rewards balance to a dollar figure to put towards online purchases -- including for groceries, clothing stores, food delivery services and more.

Related: Boost your rewards by using PayPal with your credit cards

Earn your rewards

Travel might be down this year, but this is also an ideal opportunity to build up your points balances and strategize for the future.

First, you can earn rewards with your given credit card program as you normally do when you check out with the cards in your PayPal wallet. For example, you can link your Amex to your PayPal wallet, and use that as your preferred funding method anywhere PayPal is accepted online – while still earning points like you normally would with your Amex card. Of course, you'd want to maximize your earnings by using the right rewards card for a respective bonus category.

Don’t miss out on building up your rewards balances when you make everyday purchases by linking your card in your PayPal wallet. However, note that you can also redeem points with select PayPal partners:

Related: A review of the PayPal Cashback Mastercard

It takes just a few seconds to add your card through PayPal. Here's what it looks like once an American Express Membership Rewards-earning card is linked:

(Screenshot courtesy of PayPal)

Spend your rewards

Now, for the fun part. PayPal’s Pay with Rewards* feature enables credit cardholders to use rewards points on millions of different items, including essential things that you need most, at millions of online businesses where PayPal is accepted.

Since PayPal is seamlessly integrated into checkout at millions of online merchants, it makes it incredibly easy to use your card points just about wherever and whenever you need it most.

(Screenshot courtesy of PayPal)

The draw is flexibility and ease

In our evaluation of PayPal Pay with Rewards, we found that the redemption rates were on par with other retail redemptions, and we were able to find individual conversion rates with each credit card provider pretty easily on their respective websites. Although redemption rates aren't as high as you'd get using points for things such as travel directly through your Credit Card platform, the key here is flexibility and ease of use, as well as the ability to use your rewards at businesses you know and love, like small businesses in your community. PayPal’s offering expands your choice to the millions of merchants who accept PayPal and don’t just limit it to one platform. There are some merchant exclusions, but on the whole we found that paying with Pay with Rewards at checkout was commonly available when checking out with PayPal.

Related: How to use shopping portals to maximize your purchase

Peace of mind with purchases

There's another added benefit to checking out with PayPal. PayPal users also get the secure transactions when using the platform and spending your rewards on eligible purchases. That includes benefits like "Return Shipping on Us**," a refund of eligible return shipping costs, and Purchase Protection*** for eligible items that are not received or were not what was described.

Bottom line

While travel is down in the current environment, there are still plenty of opportunities to use your points elsewhere -- including for everyday purchases using PayPal’s Pay with Rewards feature.

As the pandemic wears on, there is a demand for people to use their rewards balances, even for everyday spending. Evaluate your earning and burning strategy. And if you're sitting on a pile of unused points, ensure that you're somehow making use of them.

*Enrollment may be required. Available on eligible transactions. Terms apply.
**Return shipping on Us requires activation and is available for eligible purchases. Limitations apply.
*** PayPal Purchase Protection is available for eligible transactions. Terms and Limitations apply.
Featured image by Getty Images
Editorial disclaimer: Opinions expressed here are the author’s alone, not those of any bank, credit card issuer, airline or hotel chain, and have not been reviewed, approved or otherwise endorsed by any of these entities.

TPG featured card

Best starter travel card
TPG Editor‘s Rating
Card Rating is based on the opinion of TPG‘s editors and is not influenced by the card issuer.
4 / 5
Go to review

Rewards

1 - 3X points
3XEarn 3 Points per $1 spent at Restaurants and Supermarkets
3XEarn 3 Points per $1 spent at Gas Stations, Air Travel and Hotels
1XEarn 1 Point per $1 spent on all other purchases

Intro offer

Earn 80,000 ThankYou® points60,000 points
For a limited time, earn 80,000 bonus ThankYou® Points after you spend $4,000 in purchases within the first 3 months of account opening

Annual Fee

$95

Recommended Credit

670-850
Excellent, Good
Credit ranges are a variation of FICO© Score 8, one of many types of credit scores lenders may use when considering your credit card application.

Why We Chose It

The Citi Premier’s 3 points per dollar spent across a wide range of popular categories is one of the more lucrative offerings in the world of points and miles. The Citi Premier comes with a $95 annual fee and is currently offering a solid sign up bonus of 80,000 points after you spend $4,000 on purchases within the first three months. It also has some valuable transfer partners to make the most of your rewards. Add in access to Citi Entertainment plus a $100 hotel credit for any single-stay hotel booking that exceeds $500 or more, excluding taxes and fees, booked through the Citi travel website, there are few reasons why the Citi Premier should not be in every traveler’s wallet.

Pros

  • Earns 3x points on restaurants, supermarkets, gas stations, air travel and hotels.
  • $100 annual hotel savings benefit (on single hotel stay bookings of $500 or more, excluding taxes and fees, booked through thankyou.com)
  • Points transfer to 16 airline programs, from JetBlue to Virgin Atlantic.
  • World Elite Mastercard benefits, extended warranty, damage and theft protection.

Cons

  • $95 annual fee
  • Lacks travel protections that other travel rewards cards come with
  • For a limited time, earn 80,000 bonus ThankYou® Points after you spend $4,000 in purchases within the first 3 months of account opening
  • Earn 3 Points per $1 spent at Restaurants and Supermarkets
  • Earn 3 Points per $1 spent at Gas Stations, Air Travel and Hotels
  • Earn 1 Point per $1 spent on all other purchases
  • Annual Hotel Savings Benefit
  • 80,000 Points are redeemable for $800 in gift cards when redeemed at thankyou.com
  • No expiration and no limit to the amount of points you can earn with this card
  • No Foreign Transaction Fees on purchases
Best starter travel card
TPG Editor‘s Rating
Card Rating is based on the opinion of TPG‘s editors and is not influenced by the card issuer.
4 / 5
Go to review

Rewards Rate

3XEarn 3 Points per $1 spent at Restaurants and Supermarkets
3XEarn 3 Points per $1 spent at Gas Stations, Air Travel and Hotels
1XEarn 1 Point per $1 spent on all other purchases
  • Intro Offer
    For a limited time, earn 80,000 bonus ThankYou® Points after you spend $4,000 in purchases within the first 3 months of account opening

    Earn 80,000 ThankYou® points
    60,000 points
  • Annual Fee

    $95
  • Recommended Credit
    Credit ranges are a variation of FICO© Score 8, one of many types of credit scores lenders may use when considering your credit card application.

    670-850
    Excellent, Good

Why We Chose It

The Citi Premier’s 3 points per dollar spent across a wide range of popular categories is one of the more lucrative offerings in the world of points and miles. The Citi Premier comes with a $95 annual fee and is currently offering a solid sign up bonus of 80,000 points after you spend $4,000 on purchases within the first three months. It also has some valuable transfer partners to make the most of your rewards. Add in access to Citi Entertainment plus a $100 hotel credit for any single-stay hotel booking that exceeds $500 or more, excluding taxes and fees, booked through the Citi travel website, there are few reasons why the Citi Premier should not be in every traveler’s wallet.

Pros

  • Earns 3x points on restaurants, supermarkets, gas stations, air travel and hotels.
  • $100 annual hotel savings benefit (on single hotel stay bookings of $500 or more, excluding taxes and fees, booked through thankyou.com)
  • Points transfer to 16 airline programs, from JetBlue to Virgin Atlantic.
  • World Elite Mastercard benefits, extended warranty, damage and theft protection.

Cons

  • $95 annual fee
  • Lacks travel protections that other travel rewards cards come with
  • For a limited time, earn 80,000 bonus ThankYou® Points after you spend $4,000 in purchases within the first 3 months of account opening
  • Earn 3 Points per $1 spent at Restaurants and Supermarkets
  • Earn 3 Points per $1 spent at Gas Stations, Air Travel and Hotels
  • Earn 1 Point per $1 spent on all other purchases
  • Annual Hotel Savings Benefit
  • 80,000 Points are redeemable for $800 in gift cards when redeemed at thankyou.com
  • No expiration and no limit to the amount of points you can earn with this card
  • No Foreign Transaction Fees on purchases