What Happens If You Don’t Pay Paypal Credit?

With a Paypal Credit account, you must meet a minimum payment requirement every single month. In the event that you do not make said payment by the date stipulated in your contract, you will be charged a late fee.

This date will be at least 23 days following the close of each billing cycle – if you manage to pay your entire balance by the due date each month, you will not receive any interest, provided the transaction was non-promotional.

However, failure to pay the full balance will result in an interest charge being applied to your account, which could mean you have failed to reach the minimum payment needed.

If you have paid your minimum payment by the due date in each of the previous six billing cycles (or in the last six months, basically) then you will be charged a late fee of $29.00.

Should you have failed to pay the minimum payment by its due date at least once or more in the previous six billing cycles, then your late payment fee will increase to $40.00.



It is important to note that the late payment fee you are charged will never be more than the late payment that is now overdue. The minimum payment for each user is calculated in a very specific way, according to the terms and conditions on the Paypal website:

“The sum of:

1. The new balance shown on your billing statement (excluding any Easy Payments purchase balance), the greater of:

– $29, or $40 if you have failed to pay the minimum payment due by the due date in any one or more of the prior six billing cycles; or

– The sum of 1% of such new balance (rounded down to the nearest whole dollar), plus interest (excluding any accrued interest on a deferred interest purchase billed in that billing cycle), late payment fees and returned payment fees charged in the current billing cycle (rounded down to the nearest whole dollar); PLUS

2. Any past due amounts; PLUS

3. Any Easy Payments purchase monthly payment. The monthly payment amount for an Easy Payments purchase will be equal to the Easy Payments purchase amount plus applicable interest divided by the number of months in the applicable promotional period.”

It is possible to contact Customer Service and ask for the late fee to be waived, but this is subject to several factors (including your previous repayments) and can only be done once in a twelve month period.

Should you fail to pay your late fee, it is possible that this information will be passed on to credit bureaus, which means that any late or missed payments could appear on your credit report and therefore affect your credit score.

After around six months of no repayments – sometimes more, sometimes less – Paypal may send your account in arrears on to debt collectors, though this is determined by how much money you owe and whether it is worth chasing you for it.

If Paypal or a third party debt collector attempts to sue you for collection of an outstanding balance, they must be able to demonstrate without doubt that you do in fact owe that amount – if it’s not possible, you might be able to get the case dismissed.

It’s probable that they’ll have the original creditor agreement, however, which means that you’ll struggle to disprove their claim.

Depending on the state where you live, the actions they are able to take to collect your outstanding balance will differ.

For instance, some states have a three year statute of limitations for credit card debt, which means if you can evade Paypal for that time, the debt will be written off; other states have a statute of limitations up to fifteen years or longer, so it is more difficult to evade repayments. 

A statute of limitations essentially refers to the length of time that you can legally be brought to court – in New York, this is twenty years! Yes, you read that right, two decades. Once this period of time passes however, the debt also expires and is considered time-barred. 

This doesn’t mean you can’t still be pursued however, just that you can’t legally be brought to court over it. You’ll probably find that Paypal will attempt to pursue you, or send another company to do so, for as long as it takes for you to pay them back.

The longer you ignore the debt, the more your credit score will be affected, and you’ll almost certainly be banned for life from using Paypal, unless you somehow manage to forge yourself an entirely new identity with documentation that’s good enough to fool their fraud department.

Don’t worry too much though – it’s not so much the fact that the debt exists that is affecting your credit score, but rather how frequently you make repayments on it.

Should you manage to turn things around and start giving some money back, your score will increase just as quickly as it took a nosedive. This signals to other borrowers that you are capable of paying things off, which may help you to lend money again in the future.

To cut a long story very short, if you don’t pay your Paypal Credit balance back, you’ll see a pretty sharp dip in your credit score and may well get taken to court for the amount, depending on what the outstanding charges are.

However, if you live in a state where the statute of limitations is particularly low and can ignore their letters for long enough, this isn’t really anything to worry about.

Plus, even if your credit score does take a beating, as has already been pointed out, if you show willingness to make repayments – no matter how small they are – this will improve things quite quickly.

Millions of Americans have good credit and remain in debt, it’s all about being able to pay back at least a little bit of what you owe.

At the end of the day, Paypal is a multi-billion dollar company and you are just one person, so don’t sweat it that much.