Should I have a separate bank account for PayPal?

I've been using PayPal for years, with no problems. However, I've started to wonder if it might make sense to establish a separate bank account to use just for PayPal transactions.

I like the convenience of just being able to have funds for a purchase come right out of my checking account rather than using a credit card -- especially when buying something inexpensive. And I like being able to transfer the funds from a sale right into my account. Consequently, I wouldn't want to use PayPal without having it linked to a bank account.

That said, in my increasingly paranoid old age -- or is it simple wisdom? -- I've begun to imagine that something could go wrong. If PayPal is going to be able to remove all sorts of money from my linked account because of some odd mistake or whatever, I'd rather it weren't from the account I use for my living expenses.

Am I being overly nervous? What do most of you folks do?

Thanks for any advice on this.

-- Howard
I always have. If something goes South with a transaction, or- if someone hacks their system, they can't take anything from your main account. Transfer funds into it to purchase/out of it immediately, when received. Call it a type of, "firewall." In God we trust(all others pay cash).
I always use a credit card for Paypal purchases and, in at least one case, it saved me a lot of grief (and I actually MADE money!). I was one of about 30 people who purchased custom-built tube amplifiers from a seller on that auction site who was in WAY over his head. In a nutshell, the guy made a feeble attempt to produce several of the amps, and the rest of us were stiffed.

I filed a claim with my credit card company and, after they investigated, I was reimbursed the entire $480. In the meantime, the seller hired an attorney who promptly paid us all back. As an added bonus, when I notified the credit card company that I was paid and asked them how to return their money, they informed me that the case was closed.

So, I was actually paid $480 for getting ripped off!

I have heard enough PayPal horror stories that I got a separate bank account just for PayPal years ago, just in case anything should happen. I wouldn't want some scammer to have access to my main bank account through PayPal. Knock on wood, so far it hasn't really been an issue, but it's better to be safe than sorry.
Yes! Only keep enough to cover expenses. A hacker can put in fake addresses along with yours, (you should periodically check your paypal information, look it up thru editing to make sure you only have your address in there) and make purchases that you are charged for, send them to a vacent lot or empty building, then the post office driver will take them back to the local post office, where the crook will try to claim it a few days later. It's getting to be like telling a person with an STD to be careful next time. Watch out!
When PayPal makes a mistake, its your fault, not theirs.
Paypal is a Jive Turkey!!
I mostly just go to Wallmart or similar store and pay cash for PayPal MyCash Card. You can load up to $500.00 at a time and the funds go straight into your PayPal account
Of course, more people are realizing that they need to actively practice cyber hygiene, including spreading the risk by diversifying bank relationships.
I used to have a special bank account for PayPal transactions but closed it when the bank imposed new minimum balances for cost-free accounts and it became too impractical to maintain the PayPal one. Since then I use a credit card and have had zero problems. Overall, in hundreds (probably well over a thousand) transactions, I have had zero PayPal problems. As far as I'm concerned, PayPal is the best thing since sliced bread.
Yes, have a separate account. They can freeze money in your account for ANY reason and it is not restored till they say so. This never happened to me in all the years I have used them but it did happen to a friend. They froze $2000 dollars of his money because of a sale that the person tried to rip him off. They said they never recieved product but it was proved they had. PayPal still froze the money for weeks after.
Hevac, apparently this is a new Paypal policy. I sold an item, received an INSTANT PAYMENT and I shipped the item. Paypal emailed me to say there would be a 21 day hold on my funds.
Buyer gave me good feedback, but still I had no money available. After 3 emails to Paypal, a real person finally told me she would release my money since I was in good standing with them. She said that the HOLD is now standard procedure.
"As far as I'm concerned, PayPal is the best thing since sliced bread."

Until you have a problem. They lost over $5000 on me. And I mean really lost it and not some type of hold. The only thing they knew for sure is that it wasn't their fault. They had record of the deposit into my account from a sale, but not where it went after it disappeared. Paypal goes by the "It's only money" standard when it comes to your money. When its their money, they adjust the standard to better suit their needs. After about 2 weeks of talking to the call centre, I finally got my lawyer involved. It took him a few days, but he got me my money. After it was all over, even the lawyer was shocked. He said he finally met bigger scumbags than him. And that's saying a lot because my lawyer really is a huge scumbag. Haven't used PayPal since.