If you use your credit card as the funding method when you send money by paypal you will be able to do a chargeback if the goods never come or are damaged.
high res version1. First, go to paypal.com and login2. If you’ve already registered a credit card with your paypal account, then skip to step number 3. If you haven’t registered a CC with your paypal, I’ll show you how. (This is also how you edit CC information, should you ever need to do so.)
2a. After you’ve logged in, under the “My Account” tab, select the “Profile” sub-tab. 
2b. In the middle column, “Financial Information,” select “Credit Cards.”
2c. On this screen, you’ll see any credit cards you’ve registered with paypal listed, and buttons the Add, Remove, Edit, and Make Primary. Chances are you’ll want to select “Add”. You can use Edit to update information for an existing CC and Remove to, well, remove a CC.
2d. After selecting “Add,” simply follow the instructions and fill in the required info. The page says confirming your info only takes about 30 seconds after you complete this page, but seeing as I don’t have a second CC to register and I don’t remember how long it took my card, I can’t confirm that. I’m pretty sure it will be quick though, so you can probably begin using it almost right away. 
3. Now, how to actually pay with your credit card when making a paypal transaction. Select the “Send Money” tab, and for the purposes of the HM, select the sub-tab “Pay Anyone.” (I don’t have any ebay auctions to pay for presently, but I don’t think using a CC to pay for an ebay auction would be much different than this process.)
3a. Fill in all the required info regarding your payment. (Note: Credit card payment only seems to be available if the value of the payment exceeds the funds present in your account, I think. Or that’s how it seems to be working for me to say the least. This makes me think that it will use your account funds first, then move to the CC?) Click “Continue.”
3b. The next page is the “Check Payment Details” page. About in the center of this page you see the “Source of Funds” section with a link to “More Funding Options.” Click “More Funding Options.”
3c. The “Funding Options” page lists all available sources for you to pay with. Select “Credit / Debit Card” and then from the drop-down menu be sure to select the card that you with to pay with. Then, select “Continue.”
3d. The next page is a confirmation screen. Select “Yes.”
3e. You are now returned to the “Check Payment Details” screen and you should see beneath “Source of Funds” a listing for your CC and how much it will be charged. (This was my first time going through this as well. I’m almost certain it will remove funds from your paypal account first, then move to your CC. I don’t know if you can re-configure this or not.)
3f. If you are certain all the payment details are correct then select “Send Money” and your payment should be underway.
Edit: Just an after thought. If you go back to it looks like you can use debit cards in the same manner as credit cards through Paypal if they are Visa or MasterCard. Maybe that’s an alternative for people who don’t have CCs?
This excellent guide was written by darkwaffle and he took all the screengrabs too. Edited by OEA Design. Props!
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the paypal website has changed slightly, but this guide should hopefully still help you pay more safetly.
Also make sure not to open an email that comes from paypal if they send you something that requires an action. Some of these are phishing scams! Most email filters will send these to the junkbox but some slip by. What I like to do is open my account in a seperate window by typing it into the address bar in the browser. This way you dont end up typing your info in a false site owned by a scammer.
Pay Pal desperately tries to get you to pay with your bank account because then Pay Pal doesn’t have to pay your credit card company and, more importantly, you’ve lost one level of protection in the US for damaged, non-delivered or bad goods. But Pay Pal tries to make you think — fraudulently — that an automatic deduction from your bank account protects you more. Oh, the lying beastards.
Paypal thought about it and got this ideea: WHY allow pople to use two funding sources for one payment? NO, let’s take two fees for two payments.
NOW if the amount to pay exceeds your balance, you won’t be able to pay with balance credit card. You will only be able to pay using your card as a funding source.
I had to make two payments because of this: one to send my balance and the second to send the rest of the money from my card. NOT FAIR!