Yes, you can use PayPal as a savings account but I would not suggest it to you specifically if you actually use sites that feed from PayPal (e.g. eBay, Half.com, etc.). The reason PayPal pays great interest is that the average customer has little to none existent discipline with money, you are likely to spend it more freely on bids at eBay or at other websites. If you do not use these websites that PayPal feeds, it is a great place to store cash that takes several days to make liquid, which can hamper your desire to spend. Some other places you can try are ingdirect.com and emigrantdirect.com; they offer competitive rates while being inaccessible by debit/ATM card or merchant website.