Evaluating Klarna’s Buy Now Pay Later Payment Options in 2023

With Klarna, you can make purchases at Macy’s, Wayfair, and Sephora online or in-store and spread out your payments over time.

It’s very similar to Zip and Sezzle, two other startups that offer zero-interest, short-term loans at the point of sale.

While NerdWallet always encourages paying for things in full, BNPL plans can make sense for those who are purchasing a critical item and have the budget to make the monthly payments.

The Klarna process explained

You can split the cost of your order into four equal payments, with the first due at checkout and the remaining three due every two weeks, using Klarna’s pay-in-four payment plan.

If you spend $200, for instance, you’ll only have to fork over $50. Your debit or credit card will be charged every two weeks for the remaining three payments of $50 until you have paid the full $200.

Although there is no interest on the payments, there is a late fee assessed after 10 days. If an installment is late, the fee is the lesser of $7 or 25% of the payment due. If Klarna is unable to successfully collect payment twice in a row, your account will be temporarily disabled.

Avoid late fees by paying off your balance early without incurring any fees for doing so.

Klarna provides more flexible payment plans than just “Pay in 4” by offering “Pay in 30” with no interest. Customers can delay payment on their orders for up to 30 days after they have been shipped. The company claims that its plan will encourage more online purchases by allowing customers to try products without first having to pay for them.

When you shop at participating stores, you can use Klarna’s traditional loan option to spread out your payments over as long as two years. APRs on these loans can go as high as 24.99%.

Is Klarna worth it to you?

When it comes to BNPL loans, you can trust Klarna. However, NerdWallet advises that BNPL loans be used exclusively to help pay for an emergency. Before you accept Klarna’s loan terms, you should give them great consideration.

You may want to choose Klarna if you: Have an excellent track record of making payments on time Since Klarna’s only price is for payments that are late, it’s possible to utilize the service for free if you never end up missing a payment. Klarna could be an attractive financing alternative if you know you can afford the payments.

Find a rewarding BNPL plan if you… You can join Klarna’s free rewards program and start collecting points immediately after downloading the mobile app. Rewards can be purchased with points and redeemed at participating stores.

Do you, as a BNPL customer, want the peace of mind that comes with a buyer protection policy? Klarna offers this to its customers, a feature not offered by other BNPL providers. With Klarna, you can register a dispute if something goes wrong with your purchase (for example, it never arrives) and the payment will be held until the problem is fixed.

When using Klarna, you shouldn’t do the following: Like most BNPL lenders, Klarna does not share payment information with major credit reporting agencies. Establishing credit through regular on-time payments to the bureaus can lead to lower interest rates and more favorable loan terms in the future. Instead of a BNPL strategy, a credit card or loan might be a better choice if you want to build your credit.

Sometimes lack sufficient funds: If Klarna is unable to successfully collect payment from your debit or credit card, you may be charged a late fee and/or a penalty cost by your financial institution. Loans that haven’t been paid back after an extended period of time may be turned over to collections. Even while your credit might take a hit if a BNPL lender sends your account to collections, this isn’t the case for all of them.

When and how to apply for Klarna?

You must be at least 18 years old, a U.S. resident, offer a valid payment method, and have a phone that can receive text messages in order to use Klarna.

Klarna states that their approval decision is made separately for each purchase, so you may be authorized for one but not another. Applicants that have a good payment history with Klarna, as demonstrated by the absence of late or missed payments, are given preference.

Neither New Mexico nor Hawaii citizens can use Klarna’s Pay in 4 option.

Can I use Klarna without worrying about a credit check?

A soft credit check is one that Klarna may run, but it won’t affect your credit score. Borrowers with low or nonexistent credit may still be able to use Klarna’s payment plan, as the company does not publish a minimum credit score requirement.