"Backup funding" - is it a myth???

[neurolepsia]

When I opened my PayPal account I used a credit card as a primary source of funding... no problem. I read a topic stating this was not possible anymore, I understand, HOWEVER,

I have my bank account as my primary source, with my credit card as "backup funding."

I barely ever have a balance on the bank account linked to paypal, and I always assumed, since PP states "if you do not have sufficient funds, the amount will be deducted from your backup source"

or something to that effect.

Which is perfect and I took as a given, yet, today I got a notice that reads:

"You recently attempted to transfer funds from your bank account.
Your bank has declined the funds transfer because your account did not have sufficient funds available. We will automatically re-attempt this transfer in 3 business days. Please fund your bank account immediately to ensure this transaction can be completed."

WHAT IS THE MEANING OF BACKUP SOURCE?

I HAVE ONE.

My credit card has an available balance, and now my bank is charging me a fee that I could REALLY do without because of this returned payment. 

I believe this happened to me once before and I re-submitted my settings thinking it could have been a system (or my own) error. They are in order: my bank is my primary source, my credit card, the secondary.

I would not attempt to make payments if I thought, much less, KNEW they would be declined.

Please help.

[Xray · Accepted solution]

I think what you need to do is, whenever you want to use PayPal to purchase an item or to send cash, you need to specify which source of funds you want to use. You must select either your primary (default) source or your backup source. If you backup source is a credit card, PayPal will try to talk you out of using it, but just ignore their message and continue on with your backup funding selected. That way you should never have the problem of them attempting to use your primary source.

I don't believe that PayPal will automatically use your backup source if your primary source is not availabloe (maybe someone from PayPal can chime in here and confirm that). So, you must explicitely select which source you want PayPal to use.  Hope this helps!

[neurolepsia]

Thanks, Xray, that really does help. I will definitely do that next time I need to (*takes note*).

It's frustrating because there's been a balance in PP account since right after the payment was declined, and they tried to charge it from my bank account twice aftwerwards, every day.

So I know ended up paying more in fees than what the initial payment actually was. 

Of course both the bank and PP benefit from this (the fees!) and won't allow us to edit the source after the payment's been declined. Bah. 

But thanks again, you've been very helpful!

[hellokittypb]

I've been having this problem recently--paid for some items on Ebay, went out of town, paid for some more on my smart phone, and came home today to find a letter from my bank with two insufficient fund charges on my account. Can't wait to hear about the 3 other payments I sent out. 

What I think has happened for me is my old bank, Wachovia, did not charge a fee if a Paypal charge was denied and went on to backup funding via my credit card. Now that Wells Fargo switched me over this month as part of their merger with Wachovia, suddenly I am receiving letters saying I'm being charged $35 each time Paypal is denied. As soon as my pending charges are settled, I am SO removing my bank account from Paypal AND looking into a new bank if possible. I think what is new here for me is Wells Fargo charging a new type of fee that I have never encountered before. Can only imagine that it's the BANKS' way of finding a way to stick it to us with fees to pay back all of their TARP loans.