DEFINITELY have it transferred to your bank account first, Dave. If you try to pay for an item with the remaining balance in your Paypal account AND you do get "burned" by a seller, you will play heck trying to get that money back, EVEN IF Paypal awards the claim in your favor. They'll send you an email saying (in so many words): "We awarded the outcome in your favor, but unfortunately we are unable to transfer the money to your account at this time. We will try our best to get it, etc., etc., etc." But believe me, only on rare occasions will you see that money.
I've had it happen to me and in my case, I only had a little money in my Paypal account and the rest of the money came from my bank account. Well, after winning my claim, I received all of the money that was taken from my bank account, but the $20 that was used from the original balance in my Paypal account was not able to be recovered. So the lesson is: NEVER pay for an item using your Paypal account that still has a current balance in it -or- pay with your credit card that is linked with your Paypal account.
Very interesting---I always used my paypal balance to pay--good wisdom here--might have to change