PayPal Reduces Unlimited Cash Back Rewards from 2% to 1.5%

PayPal Reduces Unlimited Cash Back Rewards from 2% to 1.5%

On May 30th, I woke up to an email from PayPal titled "Important update to your PayPal Cashback Mastercard". Normally you can tell if an email is good or not by the subject line. If it's good news, you will have some idea of what the email is about even before opening the email by simply reading the subject line. If it's a bad news the subject line is typically ambiguous and cites some sort of importance. Based on reading the PayPal subject line alone, I could tell this email was bad news. Upon opening the email, I regrettably read the news that PayPal is dropping it's cash back rewards for its PayPal Cashback Mastercard to 1.5% (from 2%).

If you have been a long-time subscriber, you will know that I highlight the PayPal Cashback Mastercard a number of times as a good "catch all" card due to its 2% base cash back and opportunistic 3% cash back with PayPal Checkout. With PayPal checkout, it makes it easy to get 3% cash back for online shopping and can also help with getting some cash back on tax payments. While we lose the 2% cash back, the 3% cash back with PayPal checkout is still sticking around.

What is a "catch all" card? It's a card that you use when you don't have a good card for the category the transaction falls under. The catch all card "catches" all categories and gives fixed cash back rate, usually better than the default cash back that category-based credit cards give. Right now, the most competitive catch all cards give 2% cash back.

Is PayPal Cashback Mastercard Worth It?

So what now? Is it the card worth getting still? I personally think it's still a very strong card candidate to add to your pocket but not anymore as a catch all card. Going forward, this card is better fit for those who can take advantage of the 3% cash back consistently (e.g. online shop frequently or have a hefty tax bill).

If you already have the PayPal Cashback Mastercard, I would still keep it and make sure it's in your PayPal wallet so you can use it whenever PayPal checkout is available. You no longer need to really bring it in your pocket though.

If you are thinking of getting the PayPal Cashback Mastercard, I recommend getting it only if you already have a catch all card already unless you often use PayPal checkout.

Final Thoughts

The PayPal Cashback Mastercard has always been a staple in my wallet and the primary reason was because of its immediate settlement of cash back rewards (e.g. allowing me to move cash to my high yield savings ASAP instead of waiting for a billing cycle). With the cash back now being nerfed, I will now drop it from my pocket and swap it out with a different card that can give 2% cash back. Fortunately I do have one, which is the Fidelity Rewards Visa Credit Card. It's a simple 2% cash back card and provides the convenience of being able to direct cash back directly to my Fidelity accounts. It also has zero foreign transaction fees which is a plus from PayPal's card. Unfortunately, I will now have to wait for a full billing cycle though for rewards to settle. The PayPal Cashback Mastercard will continue remain active for my online shopping needs and tax payments but I will miss it from my day to day. RIP PayPal Cashback Mastercard (Dec 2021 - May 2024).

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