Beware buying PayPal My Cash cards

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Those who enjoy earning credit card rewards can’t help but be tempted by PayPal My Cash cards.  These little seductresses can be paid for in many stores with a credit card.  Each card can be loaded up to $500 at a time with only a $3.95 fee.

PayPal My Cash Card

PayPal My Cash cards are ridiculously easy to use for running up credit card spend.  You can buy these with a credit card; load the funds to your PayPal account; and then retrieve the funds in a number of ways: transfer to your bank account; send money to friends; spend the funds with a PayPal debit card (load Bluebird or Serve, for example); etc.

It’s a nearly perfect Perpetual Point Machine.

There’s one little problem…

If you do this, you’ll get shut down.  You’ll eventually get a nice little email telling you: “Your account has been limited.”  At that point, you can log into your PayPal account, but you can’t actually do anything useful with it.  You can’t even withdraw any funds that are there.  If you inquire, PayPal will tell you that your funds will become available after 6 months.

Don’t do it

It’s so hard to pass up an easy credit card spend opportunity like this one, but I strongly recommend against it.  I’ve been there, done that.  And, yes, I’ve been shut down.  Worse, my innocent son’s teen account was shut down too.  His funds were also frozen.  This happened to us last year, but recently I’ve heard more and more reports of it happening again.

Here, for example, is one recent reader report:

Just a warning from my hard learned lesson.
Don’t use Paypal My Cash cards for your account EVER.
I had two warnings that the CSR explained were due to moving funds from My Cash cards to PP to my bank.
Fast-forward 6 months and I bought about 3K more to use for real purchases on eBay. All was fine until 4 months later PP permanently limited my account.
CSR said it was for my use of the cards 8 months back.
Appeal denied.

For visual learners, I’ve slightly modified PayPal’s flowchart showing how these cards work:

PayPalMyCashFrozen

See also: How to cash in your PayPal My Cash cards when PayPal freezes your account

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