How to Get an Overdraft on PayPal [Loophole and Limit]

By Robert Courtneidge 11 Min Read

You’re expecting some funds to pay for items or cover a subscription but unfortunately, the payment has been delayed. This puts you in a tricky spot where you wish to make a purchase on an online store, but your current PayPal balance is insufficient. The way to go is to get an overdraft on PayPal, but only if it’s really worth it. Do note that PayPal is not a bank, so the directly responsible institution for the overdraft is your bank.

How to get an overdraft on PayPal

How to get an overdraft on PayPal

While you can overdraw PayPal, understand that you will be charged a fee. Moreover, it’s usually up to your bank to approve or deny the request. Below is how you get an overdraft on PayPal.

1. Opt for a PayPal Prepaid Card

An actual overdraft is not possible with PayPal’s prepaid card. Nonetheless, the card features a ‘Purchase Cushion Program’, which potentially allows overdraft transactions up to $10, but it depends on your bank’s decision. To qualify for this service, a total direct deposit of at least $200 within the first 35 days from the date of enrolling in the program is required. Subsequently, to stay enrolled, you need to receive a minimum of $100 in direct deposits every 30 days. Also, remember to reimburse the overdraft within 24 hours.

2. Register for PayPal Credit

You can always apply for PayPal Credit as a way to get around having to get an overdraft on PayPal. Are you wondering if an insufficient PayPal credit balance will trigger a debit from a previously linked card for the remaining amount? Unfortunately, it does not work that way. PayPal quickly verifies your account and other factors to determine whether it can extend your credit line to cover the purchase during checkout.

However, if PayPal decides against expanding your credit, it might resort to your backup, preferred, or default funding sources. Therefore, make sure these sources are ready to cover the transaction. PayPal does not support splitting of purchases through PayPal Credit.¹

Maintain high creditworthiness for an automatic increase in your PayPal Credit limit when required, particularly when PayPal Credit is offered as a payment option.

3. Use your PayPal balance for overdraw

As a buyer, it’s not mandatory to maintain funds in your PayPal account. When you make a payment, PayPal credits the seller, deducting the necessary funds from any funding source linked to your PayPal account, such as a bank account or card. However, if your only linked source is a bank account, PayPal prefers that you link a backup card or you may encounter a wait for fund progression or complete payment disallowance.

If you’re considering overdrawing your bank account, your PayPal account could enter a negative balance and become restricted until you repay. Even after repayment, PayPal might limit your future purchasing power or apply a block due to the negative balance incident.

4. Direct PayPal charges to your bank account

When you make a debit card purchase but your PayPal balance isn’t sufficient to cover the cost, the transaction often proceeds with PayPal advancing the payment and later debiting your bank account. The bank associated with your card is primarily responsible for authorizing these transactions.

To avoid an overdraft, ensure sufficient funds in your bank account. PayPal will withdraw the amount from your account, which might lead to an overdraft, subsequently incurring extra charges, if your account lacks sufficient funds.

5. Overdraft with PayPal Cash Card

If your Walmart Money Card (WMC), for example, is linked as your primary payment method for online and offline transactions, its overdraft protection will come into play if you use your PayPal Cash Card for payments. This holds true as long as the WMC is configured as the preferred payment method.

Does PayPal overdraft my bank account?

PayPal can overdraw your bank account unless the bank declines the transaction. In such cases when you want to get an overdraft on PayPal, PayPal sends an email notifying you about the unsuccessful electronic funds transfer and states its intention to retry the transfer in three business days. According to the PayPal agreement, the platform can execute transactions as it sees fit. So, have a linked checking account, even if you have linked a credit card.

If your bank account doesn’t have enough funds for an Instant Transfer, PayPal notifies you via email. Although PayPal doesn’t charge a fee for insufficient funds, your bank might, and these fees are not refundable through PayPal. If the second attempt to withdraw funds from your bank account is unsuccessful, PayPal charges one or more of your backup funding sources, which could include another bank account or a debit or credit card.

Using your backup funding sources instead of overdrafting

PayPal, being an online payment service rather than a bank, does not directly overdraft your account. However, as a PayPal user, you can link your bank account to PayPal, and use it as a backup funding source. This comes with several pros and cons.

The process of linking your bank account to PayPal is quite straightforward. You just need to log into your account, select “Add or Edit Bank Account” on your profile page, and follow the instructions emailed to you by PayPal. Typically, they will make a minor deposit or withdrawal to confirm the account linkage.

Once the accounts are linked, you can make purchases through PayPal that exceed your PayPal account balance. This is possible because PayPal covers the additional cost by using funds from your linked bank account. However, this is not an overdraft process per se, and it doesn’t involve any fees. Furthermore, you can also link a debit or credit card to your PayPal account.

PayPal overdraft limit

The overdraft limit on PayPal will depend on your bank.

PayPal only authorizes ATM withdrawals when your account has sufficient balance, so no overdraft is allowed at all.² You won’t face ATM withdrawal or spending declines due to insufficient funds as an overdraft decision by your bank lets you through.

Note that PayPal does not charge overdrafts or negative balance fees.

Addressing overdraft on PayPal

To solve the issue of overdraft with PayPal, start by refreshing your browser – clear its cookies and cache and restart it. If the issue persists, you can get in touch with their customer service for help. The “Contact” button on the PayPal website will direct you to all the customer service options available.

Remember, PayPal’s system will make three attempts to draw funds from your bank. After the third unsuccessful attempt, they will stop trying and your account balance may turn negative.

You can reach out to your bank, explain the situation and see if they can waive any resulting bank fees. However, PayPal is unlikely to provide any compensation. You may have to wait until your PayPal balance turns negative, after which you can contact their collections department and settle the amount using another card.

Now, if you’re planning on paying back your overdraft, here are some strategies to guide you through:

1. Use your savings

While it might not seem ideal, utilizing your savings to clear your debt is often beneficial. When you’re facing high-interest charges on your overdraft, it’s not wise to keep your savings idle. It may be tough to part with your savings, but remember, it’s more cost-effective in the long run to clear high-interest rates, and this is exactly what an emergency fund is for.

2. Switch banks

Being in overdraft doesn’t mean you’re stuck with your current bank. Moving to another bank with lower interest rates can aid you in repaying your debt faster. The Current Account Switch Service makes switching banks effortless. However, it’s crucial to ensure you’re actually getting a better deal with the new account and you qualify for an arranged overdraft. Always factor in any charges involved in switching and any benefits offered by the new bank.

3. Switch to a credit card

Credit cards can also be a way to handle overdraft debt, particularly with overdraft interest rates often exceeding those of credit cards. Various 0% credit cards are available if you can’t avail of a 0% overdraft.

Can you overdraft PayPal card at gas pump?

PayPal Cash Card will be overdrawn at gas pump if you don’t have sufficient funds in it. That’s because PayPal Cash Card uses money available in your PayPal Cash Plus account. If you don’t have sufficient funds, the gas payment will be declined.

Can I overdraft my PayPal debit card at ATM?

PayPal only authorizes ATM withdrawals when you have sufficient funds in your balance.

Read also: there’s a way to use your PayPal Credit in physical stores


  1. PayPal Credit. PayPal
  2. PayPal Debit Card, Direct Deposit and Cash Load. PayPal

Read also: you can be paid on PayPal vis credit card

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Independant Industry Expert in Payments and the Digital Future of Money, Co-Editor of The PAYTECH Book, top Payments Lawyer and voted No. 1 in Payments Power 10 at #PayExpo What do I do? I solve the problem of moving payments firms into the new era of money. Traditional financial services businesses risk getting left behind as Generation Z leapfrogs the banks, opting instead for big techs, challengers, and social commerce propositions. Ignoring blockchain technology and the widening knowledge gap between the financial services and digital sectors puts businesses at risk of falling behind their competitors, compromising their competitive edge, and ultimately becoming redundant.
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