PayPal offering 2% Cash Back Mastercard. What's the catch?

I just received an offer from PayPal for a 2% cash back Mastercard (T&C document here: https://www.onlinecreditcenter2.com/consumereApply/Internet/paypaldc/en/pdf/TwoPercentCashback.pdf)

We have only ever used one credit card and pay off its balance every month. Never paid interest or fees of any kind. Adding a second card is a big deal. But, I've been considering using a "cash back" card to help with the cost of healthcare premiums (2% is 2% right?) - got the idea from a post here somewhere.

What "gotchas" do I need to look out for/be aware of?

As always, advice from this forum greatly appreciated! Thanks in advance.

Felix Mulier said:

I just received an offer from PayPal for a 2% cash back Mastercard (T&C document here: https://www.onlinecreditcenter2.com/consumereApply/Internet/paypaldc/en/pdf/TwoPercentCashback.pdf)

We have only ever used one credit card and pay off its balance every month. Never paid interest or fees of any kind. Adding a second card is a big deal. But, I've been considering using a "cash back" card to help with the cost of healthcare premiums (2% is 2% right?) - got the idea from a post here somewhere.

What "gotchas" do I need to look out for/be aware of?

As always, advice from this forum greatly appreciated! Thanks in advance.

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Check to be sure your health care providers/insurance company accept Mastercard. Every now and again I've planned to use a card for a specific bill only to find it isn't accepted.

Fidelity also offers a 2% cash back VISA card. One catch is you need a Fidelity account to which the cash back gets deposited. Another catch could be a limit on the annual amount of cash back earned although I don't believe this applies to the Fidelity VISA.

If there's a fraudulent charge on your card but the card company doesn't believe you, and you decline to pay it they'll instead take the money from your Paypal (or Fidelity, or whatever) account.

Hi Felix, Rewards credit cards are a great idea and there are many available. 2 of the most popular are the Chase Freedom and the Discover It card. I have the US Bank Cash Plus Signature, which has both 2% and 5% back categories (you choose several from a variety of choices like groceries, etc.), plus pays 1% back on everything else not in the 2 or 5% categories.

I plan to get another rewards credit card presently. I also have 2 rewards credit union checking accounts. Check around, it all adds up!

GrayHare said:

If there's a fraudulent charge on your card but the card company doesn't believe you, and you decline to pay it they'll instead take the money from your Paypal (or Fidelity, or whatever) account.

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GrayHare said:

If there's a fraudulent charge on your card but the card company doesn't believe you, and you decline to pay it they'll instead take the money from your Paypal (or Fidelity, or whatever) account.

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I didn't know they had the ability to pull out of your bonus cash account. I guess you'd need to read the fine print to find out how much they could pull, and if they can pull if you simply miss a payment.

To me, it wouldn't make a difference because I wouldn't pick a fight with my credit card company at the level of not paying for something...you just need to pay the credit card bill and call the customer service people and make your case.

But I routinely pick fights with people who bill my credit card! That's a prime advantage of using plastic. I can't think of even once where it didn't go my way. If it ever doesn't go my way, and I'm convinced I'm justified, I'll quit using the card. When I do challenge a charge, I pay the entire monthly balance, including the disputed charge. It's just simpler that way, since there's no chance of getting into paying interest on a credit card balance if the timing of credits is unexpected. Sometimes I "loan them a few bucks" by running a credit balance (after I pay the full bill and they credit me for the disputed amount), but small potatoes.

GrayHare said:

If there's a fraudulent charge on your card but the card company doesn't believe you, and you decline to pay it they'll instead take the money from your Paypal (or Fidelity, or whatever) account.

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I've never had a CC company question fraudulent charges and I've had it happen a number of times. Nowadays, it appears that the CC companies identify fraudulent transactions before I have a chance to.

Now that I have the Fidelity card with 2% cashback on everything, I just wish I'd had it sooner! Trying to keep track of the "rotating" rewards categories on some of these other cards is just a pain in the neck IMHO.

Ian S said:

I've never had a CC company question fraudulent charges and I've had it happen a number of times. Nowadays, it appears that the CC companies identify fraudulent transactions before I have a chance to.

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Agreed - plus, while I must confess that I did not go back to the user agreement to double-check, I VERY SERIOUSLY doubt that Fidelity could, or for that matter would, dip into your non-cc account to recover any funds. Why would they? They can leave the balance on the card and earn interest!

To the OP, about the only thing to make sure is that there is no annual fee (upfront or in year 2).

Ian S said:

I've never had a CC company question fraudulent charges and I've had it happen a number of times. Nowadays, it appears that the CC companies identify fraudulent transactions before I have a chance to.

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I had thought that would be the case too but learned the hard way it isn't always true.

Ian S said:

Now that I have the Fidelity card with 2% cashback on everything, I just wish I'd had it sooner! Trying to keep track of the "rotating" rewards categories on some of these other cards is just a pain in the neck IMHO.

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+1! Likewise, playing games with "points" isn't my thing. Give me the cash. You never know what a "point" is worth, day-to-day.

I use the Citibank Double Cash, 2% back on everything IF you pay your balance in full, which I always do. I also have a PenFed card that has a grandfathered 5% back on gas. I don't think they offer that any more.

There are other 2% back cards (see above.) You might find some that offer 3% on categories like groceries or restaurants, which wouldn't be a bad deal; Just always use that one card for that type of purchase. The rotating cash back thing is more of a gimmick, not worth the effort when there are simpler options.

Thanks again folks, for the great advice.

My takeaways are:
1. read the fine print (first I have to find it!) to see if they, for example, can dip into my PalPal account if there's a dispute
2. make sure there are no annual fees
3. make sure the healthcare/insurance providers accept MC
4. cash is better than points!

All good advice. Cheers!

I got citi double back card (master card). Than realized that Costco would not take it. Have to keep old card as backup and Costco use.

2% on everything is cool

fidelity cc

I set up notifications for any charge over $20 or any charge without the card present. Helps me monitor for fraud. I haven't had any problems yet.