Klarna is a “buy now, pay later” provider that offers a pay-in-four plan in addition to longer financing options. Its pay-in-four plan comes with no interest and no fees if you pay on time, though it charges a late fee for missed payments.
Klarna partners with popular retailers like Macy’s, Sephora and Etsy, so you can opt in to Klarna directly at checkout. You can also download the Klarna mobile app to shop anywhere online and in some stores.
» COMPARE: The best buy now, pay later apps
Klarna at a glance
Loan amount | Varies. (Average purchase amount: $140.) |
Payment structure | Pay-in-four plan. |
Interest | 0%. |
Availability | Available online and in stores. |
Conducts soft credit check | Yes. |
Minimum credit score | None. |
Late fee | Up to $7. |
Other fees | Klarna may charge a service fee when you use a one-time card at a nonpartner retailer. |
Option to reschedule a payment | Yes. |
Pauses account when payment is missed | Yes. |
How does Klarna work?
Klarna pay-in-four
Klarna offers a pay-in-four payment plan, which lets shoppers split their purchase into four equal installments to be paid every two weeks, with the first due at checkout.
For example, if your purchase costs $200, you would pay $50 at checkout. The three remaining $50 payments would each be billed to your payment method every two weeks until you’ve paid in full. You can use a debit card, credit card or bank account for pay-in-four with Klarna.
Installments are interest-free, but the company charges a late fee of up to $7 if you miss a payment. Late fees are capped at 25% of the total purchase amount. After two failed attempts to acquire payment, Klarna will also pause your account so you can’t continue using the service. This can help keep you from overextending yourself.
There's no penalty for making a payment early or paying off your balance in full before the final due date.
Other Klarna payment options
Klarna offers other financing options besides pay-in-four, including an interest-free option to pay in full in 30 days. Instead of paying at the checkout, shoppers have 30 days after the item ships to pay for their purchase. This plan allows online shoppers to try out items before they have to pay anything, according to the company.
Klarna also offers monthly financing, with terms up to two years. These loans may charge interest up to 33.99% APR.
» MORE: What to know about the new Klarna credit card
Is Klarna a good idea?
Whether you should use Klarna depends on your financial situation. Weigh the pros and cons below to decide whether it’s the right fit for you.
Where Klarna stands out
Interest-free financing: Klarna’s pay-in-four can help you spread out the cost of a purchase without incurring interest, which is hard to find among other types of credit products, especially those that have no minimum credit score requirement.
Multiple payment plans: While some buy now, pay later (BNPL) lenders offer only a pay-in-four plan, Klarna offers multiple payment types, which could help you finance a bigger purchase. Longer payment plans aren’t a fit for everyone, though, especially because they tend to charge interest.
Rewards program: Klarna’s free rewards program is unique among BNPL providers and may help you get more out of your purchase. Once you download the Klarna mobile app, you can join the rewards program and earn one point for every dollar you spend. Points can be cashed in for rewards, which are redeemable at select retailers. You may also receive access to special offers and deals.
Ability to reschedule payments: Klarna lets you push back one payment per order by 14 days for no additional fee. This flexibility can help you avoid a late fee if you’re short on cash for an upcoming installment.
Where Klarna falls short
Charges late fee: If you’re 10 days overdue on a payment, Klarna may charge a late fee up to $7. Not all BNPL lenders charge fees, even for a late payment, and incurring fees can add significant costs to a BNPL purchase.
Charges service fee: Klarna may charge a flat fee when you use a one-time card to make biweekly payments with an online retailer that’s not a Klarna partner. A one-time card, which you create in the Klarna mobile app, lets you use Klarna at any online store that accepts a Visa card. Klarna doesn’t disclose how much the fee is but says it’ll be included in your first installment.
Klarna offers a monthly subscription service called Klarna Plus, which waives service fees, among other benefits. However, the subscription costs $7.99 per month and may not be worth the cost for some shoppers.
Payments aren’t reported to the bureaus: BNPL lenders don’t typically report payments to the three major credit bureaus (Equifax, Experian and TransUnion) for pay-in-four plans, and Klarna is no different. Showing a history of on-time payments to the bureaus can help you build credit, which opens the door to more affordable financing options.
Collection practices: If your loan is outstanding for long enough, Klarna may send you to a debt collection agency, which not all BNPL providers do. Klarna says this is a last resort — less than 1% of Klarna transactions end up in collections — but it’s something to note. Having a debt in collection can hurt your credit score, though it’s less clear how BNPL debts affect credit.
What to know about 'buy now, pay later'
You can now use “buy now, pay later” to check out at most retailers. The type of payment plan — and whether it charges interest or fees — depends on the BNPL provider, so it’s important to pay close attention to the loan terms you’re offered at checkout.
For some users, BNPL is a smart way to break up a purchase, especially if you get a zero-interest offer and are positive you can afford the installments. Getting approved may also be easier compared with credit cards or loans because there’s no minimum credit score requirement.
But BNPL is still a form of debt, and there are risks. The Consumer Financial Protection Bureau released a study in September 2022 raising concerns about inconsistent consumer protections, the ease of debt accumulation and overspending, and data harvesting and monetization. Another CFPB study from March 2023 identified BNPL users as more likely to show signs of financial distress.
BNPL pros | BNPL cons |
|---|---|
|
|
NerdWallet recommends using BNPL only for necessary expenses. Though BNPL can be a convenient and low-cost payment option, you’re still taking on debt, and it’s rarely a good idea to go into debt for a nonessential purchase.
How to get approved for Klarna
To be eligible for Klarna, you’ll need to be at least 18 years old, be a U.S. resident, provide a valid payment method and be able to receive verification codes to your phone via text.
According to Klarna, each purchase is an individual approval decision, so you may be approved for one purchase but not another. Klarna looks favorably on applicants who show positive credit history with the company, meaning they don’t miss or delay payments.
Does Klarna check credit?
Klarna performs a soft credit check, which doesn't hurt your credit score. Klarna doesn't disclose a minimum credit score requirement, and borrowers with fair or bad credit (689 credit score or lower) may be eligible to use Klarna’s payment plan.
How does Klarna compare?
Klarna is similar to pay-in-four plans offered by Afterpay and Sezzle, which charge no interest and no fees if you pay on time. Afterpay and Sezzle also offer monthly financing options, which may come with interest.
Interest | Terms | Fees | |
|---|---|---|---|
Affirm 5.0 NerdWallet rating |
|
|
|
Afterpay 4.0 NerdWallet rating |
|
|
|
Apple Pay Later 4.5 NerdWallet rating |
|
|
|
Klarna 4.0 NerdWallet rating |
|
|
|
PayPal 4.0 NerdWallet rating |
|
|
|
Sezzle 4.0 NerdWallet rating |
|
|
|
Zip 3.5 NerdWallet rating |
|
|
|
How to get Klarna
Download the Klarna app or Klarna Chrome extension
If you want to use Klarna, you can download the mobile app, where you can create an account and start shopping. Klarna also offers a Chrome extension, which lets you use the pay-in-four plan while shopping in the Chrome browser.
Shop with Klarna online and in stores
Some retailers have Klarna integrated into their online checkout flow, which means you can opt in to a Klarna payment plan on the retailer’s site.
If you want to shop in person, look for the store in the Klarna app and then create a digital card, which you can save to your mobile wallet and use to check out at the store. Some stores may also offer a QR code that you can scan at checkout to pay with Klarna.
Alternatives to Klarna
If you have good or excellent credit (690 credit score or higher), you may consider a 0% APR credit card. These cards offer introductory periods of up to 21 months and charge no interest during that period. You may also receive a sign-up bonus or access to a rewards program.
If you’re looking to fund a large, essential purchase, you could apply for a personal loan. Personal loans have fixed interest rates and longer repayment terms, and there are options for borrowers with fair or bad credit (689 credit score or lower).
You can pre-qualify with NerdWallet below to see your loan options. Pre-qualifying doesn’t affect your credit score.
