Everything you need to know about the PayPal Savings account

Since 2021, PayPal Savings accounts have been giving PayPal users a chance to earn high interest on their account balances, plus cash-back rewards.

Today, this FDIC-insured account earns 3.5% APY — nearly nine times the current national average of just 0.39%.

What’s the catch? You’ll have limited access to your PayPal Savings, making it a less attractive option than most high-yield savings accounts (HYSAs). Here’s a closer look at the PayPal Savings account and how it works.

PayPal Savings is an online savings account available to people who have PayPal Balance accounts. To fund PayPal Savings, you can transfer money — including cash-back rewards — from your PayPal Balance account.

PayPal Savings accounts are provided by Synchrony Bank, which means that, unlike the money you keep in your PayPal Balance account, your deposits are FDIC-insured up to the federal limit (up to $250,000 in coverage on your combined PayPal Savings and Synchrony deposits). Here’s a look at the other account features:

APY: 3.5% (variable)
Minimum opening deposit: $0
Minimum balance: $0
Maximum balance: $250,000
Monthly fee: $0
Compounding interest: Daily
ATM deposits/withdrawals: No
Check deposits: No
Other: A PayPal Balance account and PayPal personal account or debit card are required to open this account

One unique account feature you might appreciate is “Goals with PayPal Savings.” With this feature, you can create customized savings goals for a chosen portion of the funds in your account and visually track your progress to your goals.

Setting up a PayPal Savings account is easy, as long as you already have the other required accounts you need to qualify. Here’s the step-by-step process:

If you don’t already have one, you’ll need to open a PayPal personal account or debit card and have a PayPal Balance account in good standing. You may need to submit your Social Security number, driver’s license, or other identifying documents with your application.
Sign up for PayPal Savings by logging in to PayPal.com or the PayPal app.
Go to the Finances tab on PayPal.com or the Accounts tab in the PayPal app.
Click “Savings” and then “Add Money.”
Choose to add money to “General Savings” or to a specific goal.
Select the amount and frequency of your deposits.
Review and click “Add Money.”

Once your account is set up, you can manage it on PayPal’s website or the PayPal app.

How do you deposit and withdraw money from a PayPal Savings account?

PayPal Savings accounts can be managed directly on PayPal’s website or with the PayPal app, with 24/7 access. To move money in and out of PayPal Savings, you must transfer it to or from your PayPal Balance account, a linked debit card, or a confirmed bank account via your PayPal balance. These transfers are free, and the funds can be made available in seconds, (transfers from an external account may take several business days to complete).

Unfortunately, you can’t transfer funds directly to or from your bank accounts, receive direct deposits, or deposit or withdraw funds at an ATM, by check, or at a physical bank branch.

Read more: 5 ways to transfer money from one bank to another

A PayPal Savings account is worth considering if you regularly keep a balance in your PayPal Balance account, or if you’re earning cash-back rewards through PayPal.

According to the Consumer Financial Protection Bureau (CFPB), it’s not safe to hold a balance in a regular PayPal, Venmo, or Cash App account, since the funds are not FDIC-insured. By moving your funds from a PayPal Balance account to PayPal Savings, you’ll gain FDIC insurance — plus go from earning no interest to earning a competitive interest rate.

Read more: Should you open a PayPal Savings account, according to Reddit?

Still, a PayPal Savings account isn’t the best option for everyone. Although you’ll earn a high rate, you can earn more with other online savings accounts. And if you want to access your savings account via ATM, check, or bank branch, your best bet is to use a traditional savings account instead.

If you’re looking for a high-yield, online savings account that’s easier to access than PayPal Savings, you have plenty of options to choose from. Here are a few examples:

Synchrony High Yield Savings: The rate on Synchrony’s HYSA is comparable to PayPal Savings at 3.5% APY. Funds in this account can be accessed via ATM, and you can transfer money to and from external bank accounts and make mobile check deposits. Plus, there’s no monthly fee.
SoFi Online Bank Account: This combination checking and high-yield savings account allows you to earn up to 4% APY when you set up direct deposits. Right now, you can also earn a new account opening bonus of up to $400. SoFi also rounds up your debit card purchases and deposits the difference to your savings.
Lending Club LevelUp High-Yield Savings: You’ll earn 4% APY if you deposit at least $250 a month to this Lending Club account, or earn 3% APY if you deposit less. The account has no monthly fees and comes with a free ATM card.