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PayPal to introduce £9 a year fee for 'inactive' accounts – act now to dodge it

PayPal is set to introduce an annual fee of up to £9 for users whose accounts have been inactive for a year or more – but you can avoid the charge by logging into your account before this month's deadline. 

From 16 December 2020, if you have cash in your account but it has been inactive for over 12 months, you'll be charged a fee which is the lesser of £9 or your entire PayPal balance. PayPal defines "inactive" as an account where the user hasn't sent, received or withdrawn money, or logged into their account.

However, the fee won't be applied to those who don't have any money in their PayPal account, or whose balance is negative (even if a credit or debit card is linked to the account).

Update 7 December 2020: When details of the inactivity fee were initially revealed in October, PayPal said the charge would be up to £12, although this has since been reduced to up to £9. PayPal refuses to explain why it's changed the fee, but the information below on how to avoid it still stands.

For 40+ tips to slash the cost of buying online, see our Cheap Online Shopping guide.

How can I avoid the fee?

If you have a PayPal account but don't regularly use it, you can avoid the fee by simply logging into your account – or making a transaction – by 11.59pm on 15 December 2020.

This means you will have been "active" in the previous 12 months, so you won't be charged.

At this point, if you don't use your PayPal account and don't want to risk being charged in future, you can simply close the account. Once you're logged in, go to 'Settings' and select 'Close your account' at the bottom of the 'Account' tab – though note you'll need to do this online, as you can't close accounts through the app.

We've heard from some users who have struggled to log in because they've changed their phone number since they last used their account, so haven't been able to complete PayPal's mobile verification checks. If you're having difficulty accessing your account to avoid the fee, Paypal says you can ring its customer service number on 0203 901 7000 for help.

You can also keep the account open but transfer any money you have there into another account, as you won't be charged if your PayPal account doesn't have a balance. PayPal says it has no plans to close inactive accounts that don't have balances. 

If you're an irregular PayPal user but still want to keep your account open and hold a PayPal balance, it could be worth adding a note to your diary on a certain date every year reminding you to log in to your account. This will ensure you're not charged the fee in future.

PayPal says it will warn inactive customers that they could need to pay a fee, by sending them notifications 60 days, 30 days and then seven days before the fee is set to be charged.

It's worth pointing out that if you only use PayPal to accept cash from eBay sales, the online auction giant is phasing out PayPal for sellers from now until the end of 2021, although buyers can continue to use PayPal and other methods to send payments.

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