PayPal Cashback Review: 2% Back on Everything Makes It Elite

Finding a credit card that offers an unlimited 2% back or more on everything you buy is somewhat rare, but PayPal has one of the few offerings: the PayPal Cashback Mastercard®, issued by Synchrony Bank.

High flat-rate cash-back cards are enticing because they have the ideal combination of being simple and rewarding. No fussing with different rewards for different purchases or activating reward categories every quarter. And this one is free to carry, with an annual fee of $0.

You can use the card anywhere Mastercard is accepted, but a minor catch is that to apply you must have a PayPal account, which is free.

» MORE: Credit cards that earn 2% cash back or more on purchases

PayPal Cashback Mastercard®: Basics and benefits

• Card type: Cash back.

• Annual fee: $0.

• Rewards: Unlimited 2% cash back on purchases.

• Sign-up bonus: None.

• Foreign transaction fee: 3%.

• APR: The ongoing APR is 19.99% - 26.99% Variable APR.

Where the PayPal Cashback Mastercard® shines:

Simplicity

Getting an unlimited 2% cash back on everything is simple and valuable, especially when the industry standard for flat-rate cards is 1.5% back. Other cards offer higher cash-back rates on certain types of spending, but very few have higher rates on all spending, especially with an annual fee of $0. There’s value in not having to devote headspace to your credit card’s reward categories. Just using this card for everything is a fine plan.

» MORE: NerdWallet's best cash-back credit cards

No redemption threshold

Redeem your cash back in any amount. Some other cards require you to rack up $25 or more before you can cash in.

Use it almost anywhere

To be clear, you can use this card to pay for things via your PayPal account, but you don't have to make purchases that way. It's a regular credit card; it can be used in stores and online — everywhere Mastercard is accepted.

Instant access

In most cases, once you're approved for this card, a temporary credit line will instantly be added to your account, and you can start using it on PayPal immediately — you don't have to wait for a physical card to arrive in the mail. (That will take seven to 10 business days.)

» MORE: Credit cards you can use instantly after approval

PayPal Cashback Mastercard®: Drawbacks and alternatives

Redemption is slightly limited

You have two choices for getting your cash back:

• Redeem it as a deposit into your PayPal Cash or PayPal Cash Plus account.

• Redeem it to your bank account or debit card linked to your PayPal account.

This might not be a big deal for some people, but it’s more limited than other cash-back cards that allow you to apply cash back as a statement credit or get a paper check in the mail.

As an alternative, a big contender among flat-rate cash back cards with an annual fee of $0 is the Citi® Double Cash Card – 18 month BT offer. It gives you 2% cash back: 1% back on every dollar you spend, then an additional 1% cash back for every dollar you pay off.

Also among cards that offer at least 2% back, you have:

• The Fidelity® Rewards Visa Signature® Card is a straight 2% cash-back card, but to get that rate you must redeem earnings as a deposit into an eligible Fidelity account.

• Among credit union cards, the Alliant Cashback Visa® Signature Credit Card, which earns 2.5% back — but there's an annual fee.

» MORE: Citi Double Cash vs. PayPal Cashback: A battle of 2% back

No sign-up bonus or intro APR rate

While the ongoing rewards rate is superior to most flat-rate cards, this card doesn’t give you a head start on accumulating cash rewards, unlike other options. It also doesn’t entice you with an introductory rate on balance transfers or purchases.Bigger cash-back bonuses typically come with cards that offer a lower rewards rate. You can choose among cards that offer 1.5% cash back and come with decent bonuses.

Introductory 0% APR offers are unusual for 2% cash-back cards. But, again, the Citi® Double Cash Card – 18 month BT offer has one: 0% intro APR on Balance Transfers for 18 months, and then the ongoing APR of 13.99% - 23.99% Variable APR.

'Only' 2% back on spending

Earning 2% back on all spending is an excellent return among flat-rate cards. However, other cards offer even higher cash-back rates for spending at certain types of merchants. Here are some options.

The other PayPal credit card: The older of the two PayPal cards is the PayPal Extras Mastercard®. Its has tiered rewards. You earn 3 points per dollar spent on gas and restaurant purchases, 2 points per dollar spent on PayPal and eBay purchases, and 1 point per dollar on everything else. This card’s drawbacks are high redemption minimums and low point valuation. For example, you need 6,000 points to redeem for $50, which is the minimum for cash-back redemption. That means a point is worth 0.83 cent. The industry standard is 1 point for 1 cent. Overall, it’s a mediocre card, but it has a better rewards rate for gas and restaurant purchases.

Rotating categories: Some cards offer 5% back in bonus categories that change quarterly. In the past, categories have included useful areas of spending such as gas stations, restaurants and supermarkets. Good examples are the Chase Freedom Flex℠ and the Discover it® Cash Back. Both offer 5% back in categories that you activate, on up to $1,500 in spending per quarter (equal to $75 in cash back), and 1% on all other spending.

Permanent categories: Other rewards cards have bonus categories that don't change. The Chase Freedom Unlimited® is a good example. It earns 5% cash back on travel booked through Chase; 3% back at restaurants and drugstores; and 1.5% back on other purchases.

Is the PayPal Cashback Mastercard® right for you?

If you already have a PayPal account and don’t mind redeeming cash rewards into it — or an associated bank account — you have cleared the minor hurdles for getting and using the PayPal Cashback Mastercard®. The upside is a simple and valuable 2% unlimited cash back on all purchases that few other cards can match. If you're still on the fence, check this list to find the best credit card for you.