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Klarna Review: Is It the Right ‘Buy Now, Pay Later’ Platform for You?

Kelli Francis

By Kelli Francis

GOBankingRates Score

4.8
Our take: It used to be that if you didn't have the funds to pay for something, like a piece of jewelry, you could put it on layaway. Every couple of weeks, you would bring the store money and they'd hold on to your item until you caught up to the sticker price and took it home. A few decades later, the customer's experience is significantly easier thanks to the concept of "buy now, pay later." Klarna taps into the desire to shop at all the trendy stores without feeling much or any burn in the wallet for at least a couple of weeks.
  • Retail Partnerships
    5.0
  • Customer Service
    4.8
  • Security
    4.3
  • Flexibility
    5.0
How did we calculate this?

Pros

  • Shop at major retailers and brands while enjoying flexible, interest-free payment terms
  • Buy what you want — keep what works, return what doesn't
  • Pay on your choice of terms
  • Get 24/7 chat support in the app

Cons

  • Payment flexibility can lead to impulse buys
  • Loyalty rewards, called vibes, expire every year if unused and the account resets to zero
  • Secure, one-time cards expire within a day and could be confusing to manage if used too often

    What Is Klarna?

    Klarna is a digital shopping platform that allows for flexible payment terms. Users can shop in-store, in-app or online. There are a few payment plans available, so a user can select the one that best fits their needs and preferences, including the option to buy now and pay later.

    Klarna Features

    Here’s a look at some of the features that Klarna offers its users.

    Choose From 3 Payment Plans

    Klarna offers its customers three ways to pay for items purchased on its platform: 

    • Four payments: This method splits the purchase into four interest-free payments. After making your first payment at checkout, you’ll have three additional payments, which will be due every two weeks.
    • 30 days: This plan gives users a full month to try items on at home, interest-free, and pay for what they keep. Payment is not required at checkout.
    • Six- to 36-month financing option: In the event of a larger purchase, such as furniture, Klarna partners with FDIC-insured WebBank to offer longer-range payment flexibility. Payment is not required at checkout, and the annual percentage rate on standard purchases is 19.99%.

    Rewards Club

    Klarna has its own free-to-join loyalty program for frequent shoppers. Reward points are dealt in vibes. Users earn one vibe for every dollar they spend with Klarna. Vibes add up and can be turned into rewards. Vibe earners have access to exclusive retail offerings, sales and special content. Unique experiences may be added to the mix soon.

    One-Time Card

    For added security, users who know they’re going to shop with Klarna can create a one-time card. Each card has a unique identifier, just like a regular credit card would. One-time cards expire after 24 hours, and once used, they follow their own payment plans.

    Chrome Extension

    Klarna for Chrome, the platform’s browser plug-in, allows users to pay in four installments directly from their desktop.

    Is Klarna Right for You?

    If you like to be on trend but are a work in progress when it comes to knowing what you can afford and sticking to a budget, Klarna can help. Get items to your home, evaluate what works with your wardrobe and current cash flow, and make decisions from there.

    Or, for bigger purchases — for example, a parent purchasing a back-to-school wardrobe for multiple children or investing in new furnishings — Klarna’s buy now, pay later approach can provide a gentle way to meet the need of the moment with minimal stress.

    Short-Term Financing That Takes Aim at Long-Term Debt

    Klarna has chosen to marry the thrill of spending and splurging with a predisposition for caution. For some, this strategy may backfire. For others, it may turn out to be a suitable way to indulge while also getting a chance to take a deep breath and update the budget before hanging that new item in the closet.

    Does it work? That’s hard to say, but Klarna is making a good-faith effort to get consumers out from under the hot lights of the dressing room and into slower decision-making from the comfort of home. Regardless of what happens, consumers may stand to benefit from trying programs like Klarna in the hope that more drawn-out decisions and more favorable payment terms will help and not harm.

    Klarna FAQ

    Here are the answers to some commonly asked questions about Klarna.  
    • What is my available credit line?
      • At Klarna, each purchase is handled individually. A variety of factors go into landing an approval, from your account history and established patterns with Klarna to the transaction amount, time of day and more.
    • Is there a minimum that I must spend with Klarna?
      • Yes, it's $10.
    • Does shopping with Klarna impact my credit score?
      • If you choose Klarna's short-term payment programs and pay in four installments or in 30 days, your shopping activity on Klarna will not impact your credit score. If you select a longer-term financing option, Klarna reserves the right to run a credit check, which will surface on your credit report as an inquiry.
    • What if I miss a payment?
      • Klarna will try to collect it a second time and if that doesn't work, the amount will be added to your account balance, plus a late fee of up to $7 if you're using the four-payment option. If you're on the 30-day payment plan and don't pay on time, your account will be moved to default status. You won't be able to use Klarna in the future. Should you choose the longer-term financing option and fail to pay, you'll face a fee of up to $35 for both late payments and returned, or bounced, payments. In the case of missed payments or failure to pay, the service may involve a collections agency.
    • What is Klarna's approach to privacy protection?
      • Klarna's one-time card is designed to protect your private information, but beyond that, the company takes a security-minded approach to safeguarding its computers, files and buildings. There are internal limits imposed on employee access to customer records as well.

    About the Author

    Kelli Francis

    Kelli Francis

    Kelli Francis is a writer and content strategist. She started her career with a degree in journalism from the University of Oregon and went on to work in some of the industry’s busiest newsrooms, from The Seattle Times to MSN.com, WebMD and Yahoo. In nearly a decade at Yahoo, she worked as an assistant managing editor at Yahoo Finance, specializing in personal finance content; a producer for Yahoo News; and a managing editor on Yahoo’s home page team. A perennial seeker, Kelli is currently expanding her knowledge of all things finance as a student at The American College of Financial Services. She is also the very proud mom of a wonderful and unstoppable 7-year-old with Autism Spectrum Disorder.  

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