Paypal Interest rate...?? what's going on?

[CJsoccerchic]

Is it just me or does paypal's interest rate go up and down too much? I started them like a week ago and it was at 4.48% and a day later it was at 4.47 and today it is at 4.40% I'm like, what is going on?!?!? Does anybody else have a paypal account?

[ender513]

I don't have any money sitting with paypal, but I found this on their site:

"The PayPal Money Market Fund invests in high-quality, short-term securities—like U.S. Treasury bills or notes . . ."

I think the frequent change must have something to do with Paypal being a money market fund (not to be confused with a money market account at an FDIC insured bank). Paypal's money market fund must run like a mutual fund, with ups and downs daily depending on the market.

[Firefly]

I don't know. I only use my paypal account to pay off my Ebay purchases. I don't use them for anything else.

[CJsoccerchic]

I do the same - I don't PUT money into paypal - but I am keep the money that I have been getting from ebay IN there since the interest rate it pretty OK. I was just amazed by the CONSTANT change - I mean if it were going up - YAY I would not complain - but it's been going DOWN!!! Paypal is not my first CHOICE for putting money IN, but it's OK for it to stay in for a bit (pay seller fees and what nots...) I'll transfer what I need when I feel like it (small money in there)

[Firefly]

I didn't know they paid interest on the amount left in there. As soon as someone pays me I transfer it out. Call me the big dummy. LOL

[jmjj215]

Some people don't like the idea of keeping money in Paypal, so they pull it out regardless of the interest rate. Also, to get the dividend payment each month you need to elect to convert it to a MM fund. On top of that, remember that Paypal has a .25% annual expense that you should consider when looking at the rate they're "paying".

[CJsoccerchic]

Huh?!?!? I PAY THEM?!?!? I just went over to the mm account - are you saying it would be a good idea to back out of it?! I can always put my 138 dollars in the ING account as opposed to the paypal...

[weiwentg]

Originally Posted by CJsoccerchic

Huh?!?!? I PAY THEM?!?!? I just went over to the mm account - are you saying it would be a good idea to back out of it?! I can always put my 138 dollars in the ING account as opposed to the paypal...

yes, you pay them. but it's not as frightening as it sounds. you pay ING to set up and administer the account, and to take phone calls from you and other customers, it's just that ING or HSBC or Emigrantdirect don't show an expense ratio. money market mutual funds like Paypal do. the dividends you receive from the fund are net of any expenses the fund incurs. the same is true for bond and equity mutual funds. Paypal's yield of 4.whatever % is currently the top for money market funds - it will go down soon when their 0.25% expense waiver expires. money market funds waive expenses when yields are low - or else people would lose money investing. they may also waive expenses when starting up to attract new customers. Paypal's been around a few years, so it's probably the former reason.

[CJsoccerchic]

......yeeee......
Thanks for the info... But just because I'm all spooked - I most definently will be transferring my money into ING and keeping it to a minimal inside Paypal.

[jmjj215]

Sounds like a plan!

[CJsoccerchic]

Thanks jmjj!