Klarna Review: A Buy Now Pay Later Shopping App

Klarna is a buy now, pay later (BNPL) platform that doubles as a shopping app, allowing you to make purchases without paying interest.

Klarna offers a few different BNPL purchase options, including Pay In 4, which is interest-free financing over 4 payments, including a 25% "down payment" at the time of purchase. But interest-free BNPL loans, like the ones offered by Klarna may indulge your temptation to overspend. 

The growing trend, which rose due in part to Covid-related financial hardships, the number of BNPL users is expected to reach 59.3 million. Before you decide to make a purchase using a BNPL option with Klarna, here’s what you need to know.

What Is Klarna?

Founded in 2005, Klarna is an online shopping portal that gives customers more time to pay. The company is headquartered in Columbus, Ohio and provides interest-free financing when customers shop at over 575,000 retail partners. The company may also offer installment loans on larger purchases, but interest rates can be as high as 33.99% APR.

Klarna positions installment loans as an alternative to revolving credit card debt, which is the balance you carry from credit cards that usually come with a variable interest rate.

What Does It Offer?

Klarna is a shopping platform, but it has a unique hook. It offers several different BNPL plans including two plans that don’t require you to pay interest. 

Interest-free Financing Over 4 Payments

Klarna has an interest-free plan called Pay in 4, which requires you to make a 25% down payment. Then you’ll make a payment every two weeks until your item is paid off. The two-week timing is designed to align with pay schedules, so you can make on-time payments.  

Buy Now, Pay in 30 Days

If you’re someone who wants to try before you buy, Klarna’s no-money-down, Pay in 30 plan may be a good fit for you. On this plan, you get an interest-free 30-day loan for purchases made through Klarna. When you decide to keep a product, you’ll pay for it after the 30-day trial is up. If you return the product, you don’t have to pay for it at all.

Pay In Full

You don't have to pay in installments through Klarna. If you wish to pay for your entire purchase up front, you can choose Pay In Full. The benefit of doing this through Klarna is that it offers purchase tracking, order management, and customer support. Because you're paying in full, you don't have to worry about interest or any future installment payments. 

Pay Over Time

Eligible customers can choose to pay in monthly installments for up to 24 months. No funds are due at checkout, but you will pay interest (0% to 33.99%) on the financing. 

Instant Credit Decisions

Each time you apply for a loan, Klarna will perform a soft credit check. It will also verify your personal information, and check your outstanding balances on the platform. 

You’ll know whether you’re approved for Klarna’s credit plans within a few seconds of applying. This instant decision makes the payment options from Klarna almost as easy to use as a credit or debit card.

Installment Loans

If you’re making a larger purchase, Klarna’s interest-free installment plans may not be an option. As an alternative, Klarna partnered with a bank to offer monthly installment loans. 

With these loans, you’ll make equal monthly payments until your loan is paid off. These loans carry a fairly high 19.99% interest rate, which is higher than the average credit card interest rate of 16.65%.  

Despite the high-interest rates, Klarna’s installment loans have a few redeeming qualities. First, the loans won’t trap you in a cycle of revolving debt. 

• After a set number of months, you won’t owe payments anymore. 

• Second, payment history for installment loans is reported to the credit bureaus, which may help you build your credit score.

Negative Information May Be Shared With Credit Bureaus

If you use one of Klarna’s interest-free financing plans, the company won’t report your on-time payments to the credit bureaus. That means your credit score isn’t affected when you use one of these plans. This may be a positive or negative, depending on what your credit situation looks like. 

However, Klarna may report late or delinquent payments to the credit bureaus, which will be a drag on your credit score.

Are There Any Fees?

When you use Klarna’s Pay in 4 plans, you won’t pay any interest, and the late fee is capped at $7 or 25% of the original purchase price. Note that you will pay a service fee (approximately $2) when you spend with a Klarna one-time card at any non-Klarna partner store, or when you create a gift card to pay at some merchants. 

You’ll pay no interest on the Pay in 30 plans, so it's essentially an interest-free loan for 30 days.

If you opt for Klarna’s monthly financing, you’ll pay a 19.99% APR, with late fees up to $35. 

Klarna Plus

Klarna offers a premium subscription, called Klarna Plus. After a one-month free trial, you'll pay $7.99 monthly. With Plus, you'll avoid the service fee when you shop with Klarna, receive up to $80 off at select brands each month, and get $8 off at any Klarna partner store every three months. 

How Do I Contact Klarna? 

Klarna is headquartered at 29 N. High St. FL 300 Columbus, OH, 43215.

If you’re trying to resolve a problem with Klarna, you can call 844-552-7621, or start an online chat (either through the app or the website). You can also reach Klarna’s customer service team by filling out a form on Klarna’s website.

How Does Klarna Compare?

Klarna most closely aligns with Afterpay. Like Afterpay, Klarna offers interest-free financing with reasonable late fees if you fail to make a payment. Both companies earn money when they refer customers to their retail partners. They may even share some of your shopping or in-app browsing behavior with retail partners.

Klarna also offers a short-term installment loan product. This product is comparable to the 3-, 6-, and 12-month financing options from Affirm, a rival BNPL company. Affirm’s interest rates may be lower than Klarna’s 19.99% interest.

The online BNPL industry is competitive, but Klarna doesn’t dramatically differentiate itself from its competitors.

It’s also worth noting that many BNPL companies market themselves as alternatives to credit cards. However, Klarna’s 30-day to 6-week financing period doesn’t stand out compared to some 0% introductory credit card rates. If you know you need to pay off the purchases in monthly installments, a credit card may be a better option.

How Do I Open An Account?

You can download the Klarna app from its website or via the App Store or Google Play. The app prompts you to enter your email address and phone number right away.

After that, you can start shopping through Klarna immediately, but you may not qualify for financing with Klarna. To qualify, you must be at least 18 years old and be a resident of the U.S. Klarna verifies that you have a valid bank account and that you can receive verifications via text before it will issue a loan to you.

Klarna also performs soft credit checks and considers your outstanding balances before issuing new loans to you. This won’t hurt your credit score, even if Klarna doesn’t issue a loan to you.

Is It Safe And Secure?

Klarna has multiple security layers to keep payments and personal information safe and secure. Payments are secured and personal information is encrypted. Klarna shares some personal information with its affiliates including its network of retailers. 

Is It Worth It?

The combination of online shopping, which can be addictive, and interest-free financing seems like it could be a recipe for debt. Despite our best efforts at self-control it can be easy to overspend when you’re spending “future money.” As long as you’re paying yourself first, and saving regularly for retirement and emergencies, there’s nothing wrong with a little online shopping. 

But Klarna isn’t targeting people who are trying to arbitrage a financing deal. Their goal is to help you buy things that you can’t really afford in the first place. Like other BNPL platforms, you may feel tempted to overspend today, leaving you with fewer options tomorrow.

Taken at face value, interest-free financing is great. But if that financing results in spending beyond your means, it means nothing. 

If you need money to make a necessary purchase, you can always sell old items or consider one of these side hustles. Sometimes the work associated with getting the money will keep you from spending frivolously.

Klarna Features