PayPal customers warned they could be charged new £12 yearly fee - what you need to do

PayPal is set to start charging customers from December 16 as part of its crackdown on dormant accounts.

Customers with inactive accounts will be charged £12 a year, with the money automatically taken from their accounts in December.

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What is an ‘inactive’ account?

An inactive account will be identified by PayPal if the owner has not logged on to the account or used it for sending, receiving or withdrawing money for at least 12 months in a row.

Accounts containing no money will not be charged, so if you have an idle account that is not linked to a bank account, you will not be charged the fee.

Accounts with less than £12 in them will see the remaining funds taken.

What PayPal has said

PayPal has said it has no plans to close accounts after the charge, so if you have a log-in that is empty and not currently linked to a bank account, you will not be charged.

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In a statement, PayPal said: “We are establishing an inactivity fee for accounts that have been inactive for at least 12 consecutive months.

“This provision does not apply to PayPal users registered in Ireland and to personal accounts registered in Hungary."

The new charge was first flagged by consumer expert Martin Lewis in September.

Customers won’t be charged until 16 December 2020 because of the terms and conditions signed when joining the shopping service.

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How to avoid being charged

To avoid being charged, users will need to log into their PayPal accounts, or make a transaction before 15 December 2020.

If you do not actively use your PayPal account and don’t want to run the risk of being charged, another safe option is to close your account.

This can be done by going to ‘Settings’ and selecting ‘Close your account’ at the bottom of the ‘Account’ menu.

Another option is to keep the account open, and transfer any remaining funds in it to another bank account. This will leave you with a balance of zero and will help you avoid the new fee.