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PayPal vs. Credit Cards: Which Is Safer to Use?

Both PayPal and credit cards offer security features you can count on.

Marko Geber/Getty Images

No payment method is foolproof, so there’s always some risk when you enter your personal information to make an online purchase. Whether you shop directly with your credit card or a digital payment system like PayPal, you’ll want your data to be as secure as possible.

When you buy something via PayPal or with a credit card, you’ll qualify for a range of consumer protections and security features that offer assurances against fraudulent transactions and defective or missing purchases. But which payment method is more reliable? Can either give you greater peace of mind? 

Ultimately, the best choice for you boils down to convenience and preference. Read on to find out how PayPal stacks up to credit cards and what steps you can take to keep your accounts protected no matter how you pay.

How does PayPal work?

PayPal is a digital payment platform you can use to make purchases online with qualifying retailers or send and receive money securely between accounts. You can connect your preferred payment method to your PayPal account online or through the mobile app, which is encrypted to keep your information safe. The platform allows you to send payments and complete purchases using a credit card, debit card or PayPal balance. PayPal also extends financing offers so consumers can make payments on eligible purchases over time.

There’s no charge to create a PayPal account, and most peer-to-peer transactions are free, though PayPal charges fees for some transactions. When you use PayPal as a form of payment with online retailers and merchants, the company making the sale absorbs any fees, so there’ll be no cost to you. If you’re using PayPal to transfer money to a friend, you won’t be charged if the funds come from your bank account or PayPal balance, but if the funds are coming from a credit card, PayPal will charge you a 2.9% fee plus 30 cents.

How safe is PayPal?

PayPal provides several security features that can help protect your account and purchases, regardless of the payment method you use. PayPal offers 24-7 account monitoring to help stop fraud early on, and enhanced encryption ensures your transactions are safe and protected from start to finish. PayPal also has a dispute resolution process that temporarily “freezes” disputed transactions in your account until an issue is resolved. 

If you buy something via PayPal from a seller and your order never shows up, arrives damaged or was misrepresented in the original listing, you might be able to get a refund under PayPal’s purchase protection program. PayPal’s purchase protection covers an array of situations where the item you receive has a problem and requires some resolution with the seller. To qualify, your PayPal account must be in good standing and the dispute must be filed within 180 days of your payment date. If the dispute isn’t resolved successfully, you can escalate it further so that PayPal reviews the case and issues a final decision.

PayPal also offers protection against fraudulent or unauthorized transactions on your account. You must report the disputed transaction within 60 days of it taking place. According to PayPal, you aren’t liable for unauthorized purchases made from your PayPal account.  

Items not covered by PayPal purchase protection include (but are not limited to) the following:

  • Real estate
  • Vehicles
  • Not-as-described claims for custom-made goods 
  • Industrial machinery
  • Payments equivalent to cash, such as prepaid cards and gift cards
  • Items for sale that violate PayPal policies
  • Transactions made in person
  • Send Money transactions to family and friends
  • Items that were accurately described by the seller
  • Donations, including payments on crowdfunding platforms

How safe are credit cards?

Credit cards also come with their own safety features, as well as various consumer protections afforded by law. Nearly all consumer credit cards have $0 fraud liability policies to ensure you’re never on the hook for fraudulent purchases and provide safety features like EMV chip technology

You’re only liable for a maximum of $50 in fraudulent purchases charged to a credit card if the fraud is reported after a card is reported lost, according to the Federal Trade Commission. Your liability drops to $0 if you report your credit card lost or stolen before someone uses it.

The Fair Credit Billing Act also gives you the right to dispute billing errors on your credit card over $50, but they must be filed within 60 days of the transaction showing up on your statement. 

Separately, some credit cards go the extra mile to offer benefits like purchase protection against damage or theft and extended warranties on items that already come with a manufacturer’s warranty. 

If you’re worried about online merchants storing your card information, several credit card issuers allow you to use a virtual credit card, which provides an extra layer of security by masking your actual credit card number with a temporary one. Though not fraud-proof, virtual card numbers can help protect your card information in the case of a data breach. Card issuers provide the same fraud protections to virtual credit cards as they do physical credit cards. 

Is it safer to use PayPal or a credit card?

Both PayPal and credit cards offer consumer protections for transactions that don’t go as planned, and both guarantee similar protections against fraudulent transactions on your account. That means using PayPal or a credit card for your purchases should equally provide peace of mind.

Also remember that you can link your bank account, debit card or credit card to PayPal as your preferred method of payment. Linking your credit card to your PayPal account not only offers convenience but gives you added protections as you shop online and could also allow you to earn credit card rewards on your purchases, depending on the card.

Tips for secure online shopping

When you shop online, there are many ways to keep your personal and payment information safe. Consider the following steps before your next online purchase, whether you’re paying with PayPal, your favorite rewards credit card or both.

How to stay safe online when using PayPal 

  • Create a strong password for your PayPal account. Use a unique combination of letters, numbers and symbols to create a strong password that’s impossible to guess.
  • Set up multifactor authentication for online purchases. PayPal offers multifactor authentication for purchases made with a web browser, but you have to activate this security feature to use it. 
  • Set up a PayPal Security Key for in-app purchases. For PayPal app transactions, you can add an extra layer of security by creating a PayPal Security Key, which grants you a one-time PIN that changes each time you log in.
  • Keep tabs on your account to watch for fraudulent activity. Monitor your PayPal account for transactions you don’t recognize or purchases charged in the wrong amount.

How to stay safe online when using a credit card 

  • Use a strong password for your credit card account. Create a password that’s lengthy and complex so that no one can easily guess it.
  • Set up multifactor authentication for your online account. Depending on your card issuer, you may be able to set up multifactor authentication that requires you to log in using several pieces of identifying criteria at once.
  • Avoid online shopping on public Wi-Fi networks. Make sure you don’t enter your login or account details when using Wi-Fi in a public place, or in an area where the network is not secured.
  • Keep tabs on your account to watch for fraudulent activity. Monitor your credit card account for fraudulent activity or transactions you don’t recognize so you can report these instances quickly.

The bottom line

PayPal and credit cards offer a range of safety and security features that protect you from fraudulent purchases on your account, and both let you dispute purchases that don’t go as planned. Still, it’s important to take extra precautions to keep your information safe, such as monitoring your accounts regularly, using a strong password and setting up multifactor authentication.

The editorial content on this page is based solely on objective, independent assessments by our writers and is not influenced by advertising or partnerships. It has not been provided or commissioned by any third party. However, we may receive compensation when you click on links to products or services offered by our partners.

Holly Johnson is a credit card expert and writer who covers rewards and loyalty programs, budgeting, and all things personal finance. In addition to writing for publications like Bankrate,, Forbes Advisor and Investopedia, Johnson owns Club Thrifty and is the co-author of "Zero Down Your Debt: Reclaim Your Income and Build a Life You'll Love."