PayPal is awesome. It’s convenient and helps me pay securely for lots of stuff I buy online. I also use it to sell stuff online to people in Singapore, so I have lots of SGD in my PayPal account.
PayPal charges a currency conversion fee so the exchange rate that PayPal gives will always be worse when using your PayPal balance than when deducting it from your credit or debit card. You might think it’s a small amount since the difference is probably in decimals, but it really adds up.
For example, I recently bought something for 25USD. The preview price PayPal showed in SGD for using my PayPal balance is SGD32.58. I paid with my debit card and it cost just SGD31.45. That’s $1.13 saved by not using my PayPal balance. I’m sure you can calculate on your own how much you would save if it’s a larger purchase. It’s not exactly the same percentage difference every time, but 3.5 – 4% seems to be the norm.
So if have a choice between your VISA/Mastercard credit/debit card and PayPal balance, always pay with your cards.