Klarna Review: How It Works, Fees and Is It Worth It?

Klarna is a financial technology company that launched its app in 2018. The platform offers buy now, pay later (BNPL) options that allow consumers to spread purchases over time instead of paying up front. Depending on the plan, shoppers can pay in four installments, within 30 days or through monthly financing.  Some users may turn to BNPL services like Klarna as an alternative to personal loans for smaller purchases.

Find out more about Klarna and whether it could be a good fit for you.

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Key Takeaways

• Klarna gives you flexible payment options across more than 675,000 retailers, including Pay in 4 installments, Pay in 30 days and monthly financing for terms of six months to two years. Short-term plans stay interest-free when you pay on time, while monthly financing APRs run from 0% to 35.99%.

• Signing up uses a soft credit check that won't hurt your score, but monthly financing payments get reported to credit bureaus and missed payments can trigger late fees up to $7 or send your account to collections.

• Choose Klarna if you want to try items before paying through the 30-day window or split smaller buys without interest. Skip it for large multi-year purchases where a credit card or personal loan could offer a lower rate.

Summary generated by AI, verified by MoneyLion editors

Klarna: At a Glance

• Payment options: Pay in four installments, pay within 30 days or financing

• Annual percentage rate (APR) range: 0% to 35.99%

• Late fees: Up to $7.00 and capped at 25% of the original order

• Service fees: $0 for partner stores and up to $5.99 for one-time cards

• Credit check: Soft credit pull for short-term plans and long-term financing

• Credit reporting: Monthly financing may be reported to credit bureaus

• Availability: U.S. and Canada

• Best for: Try before you buy shoppers who want to take advantage of the 30-day window

• Not ideal for: Large multi-year purchases where the APR exceeds what you could get with a credit card or personal loan

What Is Klarna?

Klarna is based in Stockholm and was founded by three Swedish entrepreneurs. In 2012, the company reached a valuation of $1 billion. Klarna launched its app in 2018, offering users tools for budgeting, shopping and flexible payment options.

How Klarna Works

Klarna offers a few ways to handle payments, including a short-term interest fee plan or long-term financing.

• Pay in 4: Pay in four installments that are due every two weeks. This plan is interest-free as long as payments are made on time. Typically, you can cover purchases from $35 to $2,500.

• Pay in 30: You pay in full within 30 days after your order ships. Covers an amount up to $1,000.

• Financing: You pay monthly for terms of six months to two years. The APR can be between 0% to 35.99%.

Klarna Costs and Fees

Here’s a breakdown of Klarna’s main costs and fees:

Eligibility and Credit Impact

• Age and residency: You must be 18 years or older and live in the U.S. or Canada.

• Payment methods: You need a valid debit card or credit card.

• Credit check: Soft check for the installment plans and monthly financing.

• Credit reporting: Monthly financing payments are reported to the credit bureau.

• Collections risk: If you have multiple missed payments, then your account may be reported to collections.

Pros and Cons of Klarna

Like most BNPL services, Klarna comes with both benefits and trade-offs.

How To Sign Up for Klarna

Getting started with Klarna is simple. Follow these steps to create your account.

1. Download the Klarna app on your phone.

2. Create your account by entering your legal name, phone number and email address. You must be at least 18 years old and a resident of the U.S. or Canada.

3. You’ll be asked to verify your identity for a soft credit check. You'll likely be asked to provide the last four digits of your Social Security number.

4. Link a payment method, such as a bank account, credit card or debit card.

How To Use Klarna

If you’re shopping at a partnering retailer, you can select Klarna as your payment method and choose the plan that works best for you.

If you’re using Karna anywhere else, open the app, search for the store and select “Pay with Klarna.” The app will generate a virtual code that you can use like a credit card at checkout.

Klarna vs. Other BNPL Apps

To see whether Klarna is the right fit, it helps to compare it with other BNPL services.

Who Klarna Is Best For

Klarna may be a good fit for shoppers who fall into the following categories:

• Those who want to shop at global retailers like Nike and Sephora

• Those who have the discipline to pay their bill within 30 days

• Those who want flexibility in payment options

• Those who want built-in shopping tools

Final Take

• Klarna offers access to more than 675,000 retailers, along with flexible payment options.

• Shoppers can choose to Pay in 4, Pay in 30 days or monthly financing.

• Payment plans are interest-free when payments are made on time, while monthly financing can carry APRs as high as 35.99%.

• You can also pay for purchases in full by linking a payment method to the app.

• The Klarna app is rated 4.8 out of 5 stars on Google Play and 4.9 out of 5 stars in the App Store.

Klarna FAQs

Here are answers to some of the most common questions about Klarna and how its BNPL service works.

Is Klarna legitimate?

Yes, Klarna is a legitimate financial technology company that’s regulated and is a member of the FDIC via its partner banks.

Does Klarna charge interest?

Klarna doesn’t charge interest if you pay in full within 30 days. However, if you arrange for monthly financing, the APR is from 0% to 35.99%.

What happens if I miss a payment?

If Klarna cannot collect a payment after two attempts, a late fee of up to $7 may be charged. Total late fees will not exceed 25% of the order value.

Can Klarna send you to collections?

Yes, if the account remains unpaid, it may be sent to collections.

How much can I spend with Klarna?

Klarna doesn’t give a credit limit. Instead, it gives you purchasing power based on the individual transaction. New users may get lower purchasing power, while more seasoned users may receive higher amounts.

Does Klarna do a hard credit check?

No, Klarna only performs a soft credit check for installment plans.

Does Klarna report to credit bureaus?

Yes, if you opt for monthly financing, Klarna may report to the credit bureaus.

Can I use Klarna anywhere?

You can use Klarna in the United States and Canada.

Key Terms

• Buy now, pay later (BNPL): A type of installment loan that lets you buy now and pay over time, often in a few fixed payments with little or no interest.

• Annual percentage rate (APR): The yearly cost of borrowing money, including interest and certain fees, shown as a % so you can compare loan costs.

• Soft credit check: A review of your credit file that does not affect your credit scores.

• Late fee: A charge a lender or card issuer may add if your payment is overdue or not received by the due date.

• Credit reporting company: A business that collects your credit history and creates credit reports that lenders may use when reviewing your application.

Photo credit: Csondy / iStock