For those of you who use paypal and have the paypal debit card (it's a mastercard that works as a debit card so it takes money out directly from your paypal account existing balance), if you exceed your balance will it start deducting from your bank account? Or will it just reject the transaction?

I think it will take funds from the first method of your account (usually bank)..if that fails probably secondary method (CC)..but I'm sure someone with one could say for sure as I do not have one and am just guessing..

i believe it rejects, but it has been a while since I last used it

This happened to me once and they gave me a few days to put money into the account to cover the amount.

It pulls it from your main account.

I found this by accident recently when I made a purchase without knowing my PayPal balance. The difference was deducted from my bank account, while the transaction proceeded and was processed normally at the time I placed it. It was less than $20, so I don't know if there's a flag on what's considered acceptable.