What to Do if You Spot a $1 Charge in Your PayPal Account (Scam Alert!)

You may have seen some small and surprising charges pop up from your PayPal account to your credit card and wondered what was going on. Why did someone charge a dollar to your account that now appears in your PayPal transaction history?

It may look like a scam (and none of us want to be even more stressed about our finances). Or perhaps you might be worried that someone has accessed your account information. But you probably don’t have to be concerned.

So what is going on here? This is what you need to know about those dollar charges.

That dollar amount in your PayPal account

PayPal can be a great asset for things like online payments and other transactions. Perhaps you use it to send money to friends and family. The PayPal Pay with Rewards program even lets you use credit card rewards to shop online.

However, when you add a credit or debit card to your PayPal account, you might notice a charge to your credit card for a small amount of money that shows up in your account PayPal transaction history. But why?

When you add or change a credit or debit card within your PayPal account, the company checks to make sure the new card works for your account. That means PayPal may make a temporary charge to the card for up to a dollar in order to verify that the card works and is in good standing.

And yes, it could be “a temporary charge of up to $1,” according to the company’s website. In other words, it might be a dollar, but you could also see charges of 28 cents or 72 cents to test your new card, for example.

The good news is that the amount is only a pending charge. Once PayPal verifies that the new card is in good standing, the pending charge is automatically removed. You no longer have to worry about it.

Other companies may charge you

PayPal isn’t the only company that uses this type of method of charging some money on your cards to test them.

These types of pre-authorizations can be found at places like gas stations, which may perform a quick charge to make sure your card is valid, or that you are not going over the amount you are allowed to charge on the card. You may also see charges like this for hotels and rental cars while you’re traveling.

Sometimes, these temporary charges are in amounts far above $1. But with all of these potential charges, remember that you won’t have to actually pay them. These are just temporary charges that may show up as a small blip in your account and should never hit your wallet. The charges will likely stay listed as “pending” on your account until they disappear, and you won’t be on the hook for any of them.

Just be aware that a small charge like this may linger. PayPal, for example, says it may be a good idea to contact your credit card provider to have them remove any temporary charge that remains on your account for more than 30 days. And in fact, you should contact your credit or debit card provider if any of these small charges from certain companies don’t disappear from your account.

What to do if you think it’s a scam

If you see a $1 charge appear in your account and it comes out of the blue — for example, you have not done anything like add a card to your account or modify an existing card — you might have more reason to be concerned.

In those situations, you should check with PayPal to try to find out what might be behind the charge. Also, check with your bank or credit card company to see if they have any insight into why the charge appeared.

While it usually is not a concern, there are times when these small charges may indicate that you are a victim of identity theft. Your best bet may be to check with your credit card or debit card company to see if it has discovered any unusual activity on your account. If the issuer suspects identity theft, it can issue you a new card.

Also look for suspicious activity on your other financial accounts, such as your checking accounts, online savings accounts, investments accounts, and credit card accounts.

By law, you have the right to access one free credit report annually from each of the major credit-reporting agencies. And for the rest of 2022, the agencies are allowing people to check their reports weekly for free. So, check your credit report regularly.

By checking your report, you can spot any activity that you did not authorize and that might be a red flag that your identity has been stolen or that you’re being scammed. To get access to your report, go to the official credit report website.

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Remember to be cautious with private data, including personal, medical, or financial information. You should protect important documents in a secure location, and avoid carrying your Social Security card except when you need it. At all other times, leave it at home in a safe space.

Bottom line

Don’t automatically fret if you see small charges pending on your PayPal account or credit card account. They may be there simply as a temporary check to confirm that your account is available for use.

However, keep a cautious eye on these accounts if the charge lingers, or if you see any other unusual activity. The last thing you need is more money-related stress in your life (here are moves to make to eliminate financial stress). And remember that keeping an eye on your credit report can also help you spot fraudulent activity before it gets out of hand.