It is possible to pay through Fiverr, as long as you have $5 or more in your balance. Buying gigs can be a smart way to invest your income in your own business to start out. If you’ve accrued $5, you can buy a $5 gig with exactly that amount. If you wanted to buy (for example) a $10 gig, you’d have to ask the seller to give you two custom quotes for $5 each. You would pay for one of those with your Fiverr balance and the other with PayPal or credit card. If you don’t have a full $5 yet, you’ll need to sell another gig to be able to purchase.
You are absolutely right that it isn’t usually worth it to withdraw a small amount. If you wait until you have at least $50, I think that’s enough to cap the PayPal fee at $1. Getting up to that the first times can be tough, but try submitting bids on buyer requests or put up a new gig to help pull some attention to your page. Search for forum for ways to self promote as well.