Question: I have $10,000 at my Paypal account. This money is my income from my online ventures. I learned from my pal that Paypal offers 5% interest. My question is, is it safe to consider Paypal as a saving account? Just I thought it is better not to touch that money from Paypal because a 5% interest is already high compared to the interest rate offered by banks for a savings account.

Answer:

It is true that a 5% interest rate offered by Paypal is already better compared to the 1% to 2% interest rate offered by the majority of the commercial banks for a savings account.

However, it is not wise to use Paypal as your savings account.

To let you know, every month I receive payments from advertisers, clients and other individuals and companies. But I don’t let my money stay at my Paypal account longer.

Using Paypal in securing my credit card when paying for goods and services online and sending money to other Paypal users is the best way I need to do. But I consider it not a safe way to deposit your money in your Paypal account and let your money stay for a longer time, for reasons that Paypal might suspend your account for any reasons.

So, just forget the 5% interest rate. Use your Paypal in paying your online bills without exposing your credit card information but don’t ever use it as your savings account.

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