While you cannot select which purchases to pay off first, our system is designed to automatically apply your repayments to purchases with the highest interest rate first whilst also ensuring that any instalment offer plans are repaid within the term of the plan. This is to your advantage as it means you pay less interest overall across all of your PayPal purchases.
Assuming you are up to date with your repayments from previous billing periods, we apply your payment first toward the minimum amount due in your statement and then any additional amount left is allocated as follows:
- Toward any monthly payment due on an instalment plan. If you have more than one instalment offer plan, our system will repay the plan with the highest interest rate first followed by the plan(s) at a lower interest rate(s); then
- Toward balances that are subject to the standard variable interest rate (interest and fees on your statement are paid off before any principal); then
- Toward any promotional offer balance: this could be your 0% p.a. interest for 4 months on purchases over £99, that is yet to expire or the balance of an instalment plan; then
- Toward any other balances shown on your statement.
If you have two or more instalment plans with the same interest rate or two or more promotional offers (for example two 0% p.a. interest for 4 months purchases, one expiring in June and one in September) repayments are allocated based on the expiry date, with the soonest to expire being repaid first.
Example:
On your May statement, you have a balance of £750 which comprises the following purchases:
- Sunglasses- £100 @ 0% p.a. for 4 months expiring on 30th June (Promotional Offer 1)
- Camera- £250 @ 9.9% p.a. for 12 months expiring 30th October (Instalment Plan 1)
- Watch- £400 @ 0% p.a. for 4 months expiring on 30th July (Promotional Offer 2)
- £0 balance at standard variable rate
The minimum payment due assuming no interest or charges have been applied is £32.90. This is the Instalment Plan 1 monthly amount due plus 2% of each Promotional Offer balance.
You decide to pay £100, which is more than the minimum payment due but less than the full balance. From your £100 payment, £32.90 is allocated to the minimum due payment, which leaves £67.10 to be allocated to the above balances as explained here:
- Entire £67.10 allocated to Instalment Plan 1 (the camera at 9.9% p.a.). This is because any amount in excess of the minimum monthly payment due is used to repay that remaining instalment balance. This will NOT reduce monthly instalments due going forward but will shorten the duration of your plan so that it will end sooner.
- If the balance owed on the camera was £250, we would allocate £22.90 plus £67.10 toward repaying this, resulting in the balance the following month being reduced to £160. You would still be required to make a repayment toward the camera purchase in the following month but the instalment plan would end earlier than 30th October.
- £0 toward your standard variable rate balance as you are not repaying a standard balance for this statement period. A standard balance is made up of standard purchases of goods and services you make using PayPal Credit that are not promotional balances.
- A balance of £80 for the purchase of clothes does not qualify for a promotional offer of 0% (less than £99) or an instalment plan so this is a standard variable rate balance.
- £0 toward your Promotional Offer 1 (sunglasses)
- £0 toward your Promotional Offer 2 (watch)
NOTE: Purchases on a 0% p.a. for 4 months promotion will only be paid down in the event there are no Instalment Plans or standard variable rate balances on your account.
