How Does "Bill Me Later" Work?

When shopping online, many people pay with a credit card or with a third-party processor like PayPal. Another option available with some merchants is called "Bill Me Later," which has recently changed its name to Paypal Credit. This is similar to a credit card, in that you get to open a credit line when you make a purchase. Unlike with a credit card, with Paypal Credit, you do not have to deal with opening a new account.

What is Bill Me Later?

Bill Me Later is a company associated with PayPal, and is effectively a form of Paypal credit – hence the recent name change. It is a payment method available at more than 1,000 online merchants. When you want to use Bill Me Later, you simply select this option when you check out online. At that point, you must enter in the last four digits of your Social Security number and your birth date. Once you do this, you can charge the purchase on Bill Me Later and then you pay your bill at a later date.

How Do You Get Bill Me Now Approval?

Paypal Credit is a type of credit account, even though you do not set it up like you traditionally would a credit card. With the Paypal Credit system, your credit approval is given instantaneously when you make a purchase. The lender looks at your credit profile and then determines how big of a credit line you can have. If you have used Paypal Credit several times, you may not have enough credit to make additional purchases.

Understanding the Paypal Pay Later Transaction

When you select Paypal Credit at checkout, Paypal pays the merchant for your purchase. At that point, you receive a statement in the mail from Paypal Credit about 10 to 15 days after your purchase. The statement provides you with information about how much you spent, what your interest rate is and when your payment is due. At the time of publication, the interest rate on the account is similar to credit card interest at around 25.74 percent APR.

Convenient if You Need More Credit

Paypal Credit is convenient for online shoppers who do not have a credit card or need more credit to make a purchase. This service also is valuable because it offers no fraud liability for its customers. No one else can make unauthorized purchases on your account. If unauthorized activity appears on your account, you will not be held responsible for the charges. Before using this service, though, you need to determine if the high interest charges are worth the convenience.