As featured in The Wall Street Journal, Money Magazine, and more!

PayPal Lowers Money Market Fund Rate

This article was written by in Saving. 2 comments.

There is a lot of talk on the internets about online savings accounts raising their interest rates for customers; here’s something a little different.

PayPal has been offering for a while a pretty high interest rate — over 4.25% — on money held in their money market fund. Unlike money market accounts and savings accounts, your money isn’t insured by the FDIC, but in reality, there’s little chance of your money losing value. Anyway, the company just sent out a communication to alert their customers that they are lowering their interest rate.

I will generally keep any money from transactions in my PayPal account for a maximum of a few days. I try to get the funds into ING Direct or Emigrant Direct as soon as possible. Continue reading for the full text of the email, if you discarded it thinking it was junk mail as many messages purporting to be from PayPal tend to be.

PayPal’s Money Market Fund has delivered competitive returns, with no minimum investment or balance required. As a result, over the years, many investors have placed their money in the Fund.

Even as the Fund has grown, PayPal has continued to pay the costs of administering the Fund � without any reimbursement. However, beginning March 1, the Fund will start to reimburse PayPal for a portion of its expenses, which include legal, technical, compliance and advisory services, and related charges that are customary for mutual funds. As a result, the yield of the Fund will be reduced by 0.25% (one quarter of one percent).

PayPal’s Money Market Fund will continue to have no minimum investment or balance. And you’ll continue to have the same immediate access to your money. (Note: Redemptions can occur only on business days.)

Thanks for being part of the Money Market Fund.



Updated February 6, 2012 and originally published January 30, 2006.

Email Email Print Print
About the author

Luke Landes is the founder of Consumerism Commentary. He has been blogging and writing for the internet since 1995 and has been building online communities since 1991. Find out more about Luke Landes and follow him on Twitter. View all articles by .

{ 2 comments… read them below or add one }

avatar 1 Anonymous

Some people had problem with Paypal freezing their account. They lost access to their money and had to verify information that Paypal requested. I’d rather put my money into HSBC which is yielding 4.80% right now.

Reply to this comment

avatar 2 Luke Landes

That’s a promotional rate at HSBC, by the way. That doesn’t take anything away from the fact it’s high.

Reply to this comment

Leave a Comment

Note: Use your name or a unique handle, not the name of a website or business. No deep links or business URLs are allowed. Spam, including promotional linking to a company website, will be deleted. By submitting your comment you are agreeing to these terms and conditions.