Klarna review: Multiple repayment options — but you’ll pay a late fee if you fall behind on your payments

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How Klarna works

Klarna is a buy now, pay later (BNPL) lender that allows you to defer the full cost of an item until a later time. You’ll make the first of four payments when you purchase the item, then will pay off the rest over six weeks. Your payments will be due every two weeks. 

Choose between two payment options when you check out, Pay in 4 or Pay in 30 days. With the first option, you split the cost of your item into four interest-free payments paid every two weeks, with the first payment due when you get the item. With the second option, you’ll receive an invoice for the item due in 30 days, and you’ll have to pay off the item by then. 

For some large purchases, you may also see the option to get financing over a longer period, usually between six months to two years. Some items come with no interest charges, but it depends on the item and the individual store you’re buying from. 

Pay with Klarna through its app, on a partner store online, or in person at a mall or store. There are thousands of retailers that allow you to use Klarna to finance your purchases. Some popular companies include Abercrombie & Fitch, H&M, and Shein. Klarna also has a Google Chrome extension which allows you to Pay in 4 anywhere from your desktop.

There’s no cost to use Klarna — as long as you pay on time. 

If you fail to make a payment for 10 days after its due date, you will pay a late fee of up to $7. This fee won’t exceed 25% of the installment payment amount. Additionally, if you are late on a payment with the Pay in 30 purchase option, you will be in default and unable to use the service in the future. Avoid this at all costs. Klarna may employ a debt collection agency to get the unpaid money and report default information to credit bureaus.

If your payment is returned — for example, you have insufficient funds in your bank account — Klarna will charge you up to $27, though the amount won’t exceed the installment payment amount. 

Klarna will run a soft credit check when you use the application to buy something. A soft credit check allows a lender to see your credit history without impacting your credit score. If you choose a long-term financing option, Klarna may perform a hard credit inquiry, which does impact your credit score. 

To use Klarna, you need to be a resident of a US state or territory. You also need to be at least 18 years old, have a valid bank account, and have a positive credit history.

Pros and cons of Klarna

Who is Klarna best for?

Klarna is best for borrowers who want to take advantage of spreading out the cost of an item over several installments – and who can fit those payments into their budgets. You also won’t pay interest on Pay in 4 or Pay in 30 payments, so the overall cost of your purchase will be less than putting it on a credit card or taking out a personal loan. However, you might pay interest with long-term financing. 

How Klarna compares to other buy Now, pay Later apps

Payment plans offered Split over four interest-free payments, pay in 30 days with no interest, make larger purchases from 6-24 months with interest	Payment plans offered Split over four interest-free payments, six months with interest, or 12 months with interest	Payment plans offered Split over four interest-free payments
Late payment fee $7 if you miss a payment by 10 days or more	Late payment fee None	Late payment fee $8 if you miss a payment by 10 days or more
Klarna	Affirm	Afterpay buy now pay later

Klarna and Afterpay charge late fees, while Affirm doesn’t. The late fees are relatively small, but if you are worried you might fall behind on your payments, this may be a factor that’s important to you. 

You’re able to use the “pay in four” option with all three companies, meaning you pay for your item over four installments. Additionally, each company has thousands of retailers they have partnered with, making buy now, pay later a great choice for many items. 

How trustworthy is Klarna?

Klarna is a Better Business Bureau-accredited company and has an A+ rating from the BBB, a nonprofit organization focused on consumer protection and trust. The BBB evaluates companies based on responses to customer complaints, honesty in advertising, and openness about business practices. 

Keep in mind that a top-notch BBB rating doesn’t mean you’ll have a great relationship with Klarna. Ask friends and family who have used Klarna about their experiences with the app. 

Klarna hasn’t been involved in any recent controversies. Between its clean history and excellent BBB rating, you might feel comfortable using the service. 

Frequently asked questions

What’s the downside of Klarna?

On its face, Klarna might seem a little too good to be true, as you can get an item with four-interest free payments, spreading out your cost over multiple paychecks. While it can be a good option for borrowers who budget properly, be careful. 

Klarna may lead you to spend outside your means — higher cost items may seem more affordable when you break down their cost into four segments. You also might be tempted to buy things you don’t need, just because they appear cheaper than what you’d normally expect to pay. 

Does Klarna report to credit agencies?

Klarna may report to credit agencies — but that will likely only happen in the case you miss a payment or default on your financing. In that way, it’s a lose-lose proposition for you, as you won’t see a boost to your credit score with on-time payments, but you will get dinged if you fall behind. 

Can you return items on Klarna?

Yes, you are able to return items on Klarna. To do so, follow the return instructions from the store where you purchased the item. Then, let Klarna know you’ve returned the items, making note of the tracking number. Finally, check your Klarna app for refund updates. 

How do buy now, pay later companies make money?

Merchants usually pay BNPL companies a percentage of the purchase amount or a flat fee, depending on the company. Some BNPL companies, like Klarna, also make money off of late fees. Additionally, with Klarna’s long-term financing, the company can make money off of interest payments.