The financial technology company PayPal hardly needs any introduction with nearly 223 million users worldwide and over $27.5 billion in annual revenue; they’ve been a household name since their founding in 1998.
What you may not know is that they just launched a high yield online savings account in May of last year just as interest rates started to pick up.
The account has no minimum deposit requirements, minimum balance requirements or monthly maintenance fees of any kind.
To learn more about PayPal’s online savings account continue reading our review below.
PayPal Savings Rate + Account Details
The PayPal Savings account is 100 percent digital. You can download their app here and start saving immediately.
The account has no minimum deposit requirements or monthly balance requirements and all balances are eligible for the advertised rate.
The rate is variable and can change at any time without notice.
PayPal itself is not a bank, however your deposits are FDIC-insured through their partner Synchrony Bank.
Pros and Cons
|✅ High interest rate. Roughly 11x the national average per FDIC data.|
|✅ No minimum balance or deposit requirements.|
|✅ No monthly maintenance fees.|
|✅ Can be opened and managed completely online or by smartphone.|
|✅ Helpful savings tools.|
|✅ FDIC insured up to $250,000.|
|🛑 No joint accounts.|
|🛑 No additional deposit accounts such as checking, money market or CDs (certificates of deposit).|
|🛑 No physical branches.|
|🛑 No business accounts (despite many using PayPal with eBay for business).|
|🛑 Slow transfers from 3rd party banks that may take up to 6 days.|
Savings Account Rate
To put this yield into perspective, the current national average for a savings account and a money market account sit at just 0.40% and 0.59% APY, respectively, according to recent FDIC data.
The best high yield online savings account rates are just now inching over the 5.00% APY mark following the Fed’s last rate hike in early May.
How does PayPal’s Savings Account Compare?
If you’re curious to see how PayPal’s APY (annual percentage yield) stacks up against the competition, then take a look at the table below. It compares PayPal’s savings rate with other FDIC-insured online banks and their high yield savings account rates.
|First Foundation Bank||4.85%|
Managing your money is straightforward with the PayPal app. You can transfer funds from your bank account or current PayPal balance into the savings account.
From the app you’ll also have access to the following:
- Get your paychecks up to 2 days early when you set up direct deposit.
- Mobile check cashing. Cash a physical check to your account from your phone.
- Set up bill pay. Pay your TV, utilities, internet, phone bills, etc from the app.
- Set up auto-save features and savings goals. Move money from one goal to another if priorities change.
- Get a PayPal Cash Card. No fees or credit checks required. Can be used anywhere Mastercard is accepted.
- Add cash with the app or Cash Card at 100k+ stores across the US, including Walmart, CVS, and 7-Eleven
- Buy, sell and hold cryptocurrencies.
As far as FDIC-insured online savings accounts go, PayPal’s is fairly competitive – with a yield roughly 11x the national average.
Plus the fact that the account has no maintenance fees, minimum deposit requirements or monthly balance requirements to earn the high rate makes it available to a large swathe of consumers.
PayPal Savings Account FAQs
If you still have questions about PayPal and their newly launched online savings account, don’t worry we’re here to help. Here are some of the most commonly asked questions by consumers and our responses below.
Is PayPal a Bank?
No. PayPal itself is not a bank, but it provides a high yield savings account through Synchrony Bank.
Peter Thiel, the founder of PayPal, has stated that PayPal is not a bank because it does not engage in fractional reserve banking. Essentially meaning the company does not engage in the act of borrowing and lending their customers’ funds.
Federal Regulators also reiterated this notion back in 2002, stating that PayPal is not a bank and shouldn’t be regulated as such.
That being said, PayPal has dipped their toe into banking products like the online savings account that they now offer.
In the past, they have also tested out money market accounts, lines of credit and even a debit card, which is still offered as the PayPal cash card.
Are PayPal Accounts Insured by the FDIC?
Yes, by proxy.
While PayPal itself is not a bank and is not FDIC-insured, the accounts they offer are through their partner Synchrony Bank (FDIC# 27314).