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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Quick Take

• Klarna offers flexible payment options.

• For those who can pay on-time within four installments or in 30 days, there’s no interest.

• Klarna also offers monthly financing for larger purchases, though these plans may carry annual percentage rates (APRs) of up to 35.99%.

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 has three different payment options:

• Pay in 4: Split your purchase into four interest-free installments due every two weeks, as long as payments are made on time.

• Pay in 30: Pay the full balance within 30 days after your order ships, with no interest if the payment is made on time.

• Financing: Pay monthly over six to 24 months. Interest may apply, with APRs ranging from 0% to 35.99%.

Klarna Costs and Fees

• Late fee: 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.

• Monthly financing: Financing long-term comes with interest rates of 0% to 35.99%.

• Service fees: If you used a non-partnered store, then you may be charged a service fee of $1.29 to $5.99 per purchase.

• Subscription tiers: Klarna offers multiple membership tiers — Klarna Plus, Klarna Premium, Klarna Max. Costs range from $9.99 to $44.99 per month. Each tier offers different perks and potential fee reductions.

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.

Afterpay

Klarna has twice as many retailers as Afterpay. Afterpay offers Pay in 4, or the option to pay monthly, with terms ranging from three to 24 months. Afterpay’s APRs for monthly financing are comparable to Klarna’s.

Sezzle

Unlike Klarna, Sezzle reports positive payment history to all three credit bureaus. Also, Sezzle has higher purchasing limits and is more flexible in its payment schedule than Klarna.

Zip

You can use Zip anywhere Visa is accepted. However, Zip has more limited options in terms of payment structure compared to Klarna. Zip is better for everyday purchases, while Klarna is ideal for brand and luxury shopping.

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. The first two options 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?

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

Does Klarna charge interest?

Klarna doesn’t charge interest if you make on-time payments with the Pay in 4 or Pay in 30 options. However, if you arrange for monthly financing, the APRs go up 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?

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

How much can I spend with Klarna?

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

Photo credit: Csondy / iStock