Microsoft has announced that Xbox 360 gamers who live in the US can now use PayPal as a method of payment for the Xbox Live Marketplace.

This announcement comes via Major Nelson who confirmed that “You can use PayPal to buy Microsoft Points without having to associate your credit card information to your Xbox LIVE account.”

You will have to sign up for PayPal first if you haven’t done so already and then take steps to associate your account with Xbox Live. It is possible to associate multiple PayPal accounts with your Xbox Live account.

“It’s pretty easy and just like adding a credit card to your account. Sign in to Xbox.com and head to the account summary page. From there choose ‘Manage Payment Options’ (from the left navigation menu) then click ‘Add a new PayPal Account.’ Follow the instructions and you’ll be set up in no time.”

Remember that only Xbox Live users in the US can use PayPal and that you can only use PayPal to purchase Microsoft Points on Xbox.com, you cannot use your PayPal account to purchase Microsoft Points on the Xbox 360 console.

Thanks Major!