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What are the risks of associating your PayPal account to your bank account?

  • Idea: Get a 2nd checking account and link PayPal to that one, not the one your paycheck goes into. Of course, this only makes sense at banks where you don't need to park much in the account for it to be fee-free.... – Paul Mar 21 '11 at 8:47
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Paypal is not a bank and not regulated like a bank. If Paypal even suspects fraud, it can freeze your account and dip into your bank account to claim funds. It'll be 180 days before you get your money back, even if you are found innocent. That's 180 days of no interest. Unlike a bank, it is near impossible to contact Paypal. There are tons of horror stories on Paypal shafting even long standing members suspecting fraud.

I'm not against using Paypal, but do practice caution. I posted an article on how to link your bank account to Paypal.

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