Klarna Review: Is Klarna Safe to Use in 2024?

In this Klarna review, I’ll cover how it works, whether it’s legit, and what customers have to say about the platform.

What is Klarna?

Klarna is a financial company that offers buy now, pay later payment plans for online and in-store purchases. You can use these plans to shop at popular retailers like Macy’s, Sephora, and Etsy.

Founded in 2005 in Stockholm, Sweden, Klarna is now available in 17 countries.

Almost 150 million consumers used Klarna in 2021. There are over 20 million Klarna users in the US alone, making it the company’s largest market.

Klarna’s financing model is similar to companies like Affirm, Afterpay, and Zip (formerly Quadpay), which also offer short-term loans at checkout.

Klarna has a mobile app:

• iOS
• Android

And, it has a browser extension for Chrome, which you can get here.

How Does Klarna Work?

Klarna’s most well-known financing option is its Pay in 4 plan, which allows customers to split any purchase into four interest-free installments.

Pay in 4 isn’t the only financing option available through the company.

Klarna offers three different financing options, which include:

Pay in 4

Klarna Pay in 4 allows you to split your purchase into four equal installments due every two weeks. You pay 25% upfront at checkout. After the first payment, your next three payments are due over the course of the next six weeks.

For example, if you have a $100 purchase, you would pay $25 at checkout. Then, the three remaining $25 payments would be billed to your debit or credit card every two weeks until you’ve paid the full $100.

So, with Pay in 4, the first payment is due at checkout, and the remaining three payments are scheduled every two weeks.

Installments are interest-free, provided you make all payments on time. Otherwise, the company may charge you a late fee.

If your installment is late, you will only be charged one late fee per late installment, meaning the most you could be charged is $9.

Pay in 30

With Pay in 30, you don’t have to pay an installment at checkout. Instead, you have 30 days after the item has shipped to pay for your purchase.

Like Pay in 4, Pay in 30 is interest-free, and as long as you pay the full balance within the 30-day period, the company won’t charge any fees.

If you fail to make full payment by the due date, you will be in default and unable to use the service in the future.

Pay in 30 is a good option if you want to make a purchase before your paycheck arrives.

Using Pay in 30 is also a smart way to try out items risk-free because if the item arrives and you decide you don’t want it, you can return it without having parted with any cash.

Financing

The Financing option is more like traditional lines of credit. Klarna provides credit options offered in partnership with WebBank (Member FDIC).

With this option, you get a range of term lengths to choose from to pay off your purchases. You can spread the cost over up to 36 months.

APR ranges from 0% to 19.99%. This can be a good option for larger purchases that require more than 30 days or 6 weeks to pay off.

Other Features of Klarna

Klarna offers several other useful features, including:

One-time Card

Klarna provides a One-time card, which is a virtual single-use card you can use to shop at any prepaid card-accepting online store in the U.S.

Each time you create a One-time card on Klarna, you will receive a unique card number that you can use at the store’s checkout, just like you would with a regular credit card.

This card is particularly handy if Klarna isn’t available at a particular online shop. Each One-time card follows a specific payment plan, such as Pay in 4, Pay in 30, or Financing, which you can manage and pay in the app.

Klarna Rewards

Klarna has a rewards club that you can join to access various bonuses. You can earn 1 point for every $1 you spend with Klarna, which you can later redeem for rewards.

Members also enjoy other benefits, such as exclusive deals and offers. Not only do you get rewards from Klarna, but you can also earn rewards from the store you shop at, allowing you to double up on loyalty points, discounts, and other perks.

As a member, you can get a $5 welcome reward after completing your first purchase.

Refer a Friend

Klarna also has a refer-a-friend program where you can earn money for referring people to the service. You can earn up to $300 by referring friends.

Invite a friend to Klarna, and as soon as they join its rewards club and make their first purchase, they will unlock a $30 Amazon.com gift card.

For each friend that unlocks their reward within 30 days of your referral, you’ll receive a $30 Amazon.com gift card. Since you can earn a referral bonus with up to 10 friends, this means you can potentially earn up to $300!

Is Klarna Legit?

Klarna is a legit company that’s been accredited by the Better Business Bureau (BBB) since 2015. It has an A- rating on the platform.

Klarna Customer Reviews

Here’s how customers rate Klarna:

• Trustpilot: 4 stars, which is an “Excellent” rating.
• BBB: 1 star
• App Store: 4.8 stars
• Google Play Store: 4.6 stars

As you can see, the company is generally well-reviewed by customers on most platforms. This indicates that it’s a legit service that many people enjoy using.

Here are a few positive customer reviews:

• “Klarna is great. When I order anything, I always use Klarna. They always remind me when my payment is due, and the amount I pay every month is very low. I used to use a payment plan with another company, but since I learned about Klarna, it has been a great experience. The customer service is also great!”
• “I missed 2 payments and was looking at missing 2 more. The thought of late fees stressed me as I didn’t want to get behind any further. I asked for a one-week extension, which was happily granted. However, I was also offered several other payment arrangements if I needed more time or reduced payment amounts. I dealt with Chad via the chat line. He was fast and helpful.”
• “Excellent!! Klarna is so easy to use and the customer service is excellent. Every so often, you get rewards for paying on time or completing payments. The credit increase is great because they give you time to grow and allow you to move payment dates.”
• “Life-saving app. This app has helped me get necessary things for my home and essential items. The pandemic hit everyone so hard, and I wasn’t able to make large purchases as I once was due to pay cuts. This app still allows me to get home and garden items and clothes that are essential. I do appreciate and love this app.”

Klarna Pros & Cons

Let’s take a look at the pros and cons of the company.

Pros

There are quite a few pros, including:

• No-interest financing options are available.
• Many retailers accept Klarna, and even if they don’t, you can use the One-time card at prepaid card-accepting stores.
• Only a soft credit check is run with Pay in 4 and Pay in 30, so it won’t affect your credit score.
• Well-reviewed by customers on platforms like Trustpilot, the Google Play Store, and the App Store.
• According to many reviewers on Trustpilot, Klarna is quite flexible with providing extensions if you are unable to pay by the due date.
• You can increase your spending limit over time. Your spending limit is called Purchase Power (Learn more about Purchase Power and how to increase it in the FAQ section below).

Cons

Klarna also has some cons:

• If you don’t make payments on time, you’ll be charged late fees.
• Monthly Financing plans require a hard credit check.
• Doesn’t help you build credit.

FAQ

Here are some answers to common questions that customers have about Klarna:

Is Klarna Trustworthy?

Yes, Klarna is well-reviewed by customers on most platforms and is accredited by the Better Business Bureau (BBB).

Does Klarna Run a Credit Check?

For Pay in 4 and Pay in 30 plans, Klarna performs a soft credit check, which does not impact your credit score.

Klarna runs a hard credit check for its Financing plans. Hard inquiries can negatively impact your credit score in the short term. A hard inquiry will stay on your credit report for two years but typically affects your credit for only a few months.

Who is Klarna Good For?

Klarna is best suited for people who:

• Don’t want to pay any interest. Traditional lines of credit, such as credit cards, often come with interest. Pay in 4 and Pay in 30 plans are interest-free.
• Need to purchase something now but can’t quite afford it at the moment.
• Can pay off purchases within a short period, such as 30 days or six weeks.
• Prefer not to impact their credit score with a hard credit check (note that hard credit checks are required for Financing plans).

What is the Catch with Klarna?

There is no catch with Klarna if you make your payments on time and in full. However, you need to be cautious with buy now, pay later plans, as it’s easy to overextend yourself and struggle to pay them back.

What Stores Accept Klarna?

Tons of stores accept Klarna, including H&M, Nike, Sephora, Petco, Wayfair, and Etsy. If Klarna isn’t available at a store, you can use a One-time card instead. This works like a regular credit card for your purchase, and you can then follow the terms of the payment plan you chose, such as Pay in 4 or Pay in 30.

Is Klarna Available Globally?

According to Klarna, here’s where it is available:

• Klarna Checkout: Available in Sweden, Norway, Finland, Denmark, Germany, Austria, the Netherlands, Great Britain, and the USA.
• Klarna’s Payment Methods as Individual Products: Available in Sweden, Norway, Finland, Denmark, Germany, Austria, the Netherlands, Belgium, Switzerland, France, Italy, Poland, Spain, Portugal, Great Britain, Hungary, Czech Republic, Slovakia, the USA, and Australia.
• Klarna In-Store: Available in Sweden, Norway, Finland, Denmark, Germany, Austria, the Netherlands, Great Britain, and the USA.

What is the Downside to Using Klarna?

Klarna runs a soft credit check for its Pay in 4 and Pay in 30 plans. While this does not impact your credit score, it may result in some potential customers being declined due to poor or limited credit history.

Additionally, missed payments may be reported to credit bureaus, which can impact your credit score. Therefore, be sure to make payments on time and in full.

Finally, it’s easy to overuse the buy now, pay later financing offered by companies like Klarna. If you make all your payments on time and use BNPL sparingly, you should be fine. However, if you have poor credit or limited credit history, you may find that borrowing limits with Klarna are lower.

Can I Pay Off Klarna Early?

Yes, you can pay off Klarna early. With Pay in 4, you can choose to pay off the balance or make an installment earlier. You can also pay off your balance earlier with Pay in 30 or extend the due date for a fee if needed.

What Happens if I Don’t Pay Klarna Back?

If Klarna is unable to collect the payment on the scheduled date, it will attempt to take the payment again. If the second attempt also fails, the missed payment will be added to the next scheduled payment amount.

It’s important to note that missed payments and unpaid debts may be sent to debt collection.

Does Klarna Charge a Fee?

There is no annual fee for using Klarna. However, some services and payment options may incur additional costs. There are no fees for Pay in 4 or Pay in 30 plans.

However, if you don’t make your payments on time, late fees may apply. There are also fees associated with Monthly Financing, which charges 0% to 19.99% APR.

What is the Highest Klarna Limit?

There is no predefined spending limit when using Klarna. Instead, an automated approval decision is made each time you make a purchase with Klarna.

To see your estimated spending amount, log in to the app and navigate to Purchase Power. Follow the prompts to check the estimated amount you can spend on your next purchase.

Purchase Power is an estimated amount based on various factors, including your payment history with Klarna and your outstanding balance. The company notes that this amount isn’t guaranteed and may change depending on the store and the payment option you choose.

So, Purchase Power essentially acts as your spending limit with Klarna.

How Can I Increase Purchase Power on Klarna?

Klarna recommends the following to increase your Purchase Power over time:

• Maintain a good payment history
• Always pay on time
• Make payments towards your outstanding purchases

The company states that its Customer Service cannot process requests for spending limit increases.

If you have overdue or failed payments, your Purchase Power will not be available. Ensure you settle any overdue or failed payments to restore your Purchase Power.

Is Klarna Better Than Afterpay?

Afterpay, like Klarna, offers buy now, pay later financing. You might be wondering which one is better.

Here’s how Afterpay is rated by customers on a few different platforms:

• Trustpilot: 9 stars, which is an “Excellent” rating.
• BBB: 2 stars
• App Store: 9 stars
• Google Play Store: 7 stars

Afterpay is rated slightly higher by customers than Klarna, indicating that users have a positive experience with the service. However, Klarna offers more payment plan options, such as Monthly Financing, while Afterpay is better suited for smaller purchases.

Another advantage of Klarna over Afterpay is its One-time card, which allows you to use Klarna anywhere that accepts prepaid cards.

Both Afterpay and Klarna are legitimate platforms, making either a good option for buy now, pay later financing.

Klarna Alternatives

There are several financing options you might consider as alternatives to Klarna, including:

0% Interest Credit Cards

If you have good credit, you might qualify for a 0% interest credit card. These cards typically offer 0% APR during an introductory period, which can be up to 18 months. You might also receive a sign-up bonus or access to rewards.

Credit cards can be advantageous for building credit, as most lenders and credit card companies report on-time payments to the credit bureaus, unlike Klarna.

Friends and Family

If you need to make a purchase but don’t have the funds available, consider asking a friend or family member for a loan.

Low-Interest Personal Loan

If you are considering Klarna’s Monthly Financing plan, a low-interest personal loan might be a better option. You could find a personal loan with a lower APR than Klarna’s. If you qualify for a lower rate, you could save money in the long term.

Personal loans can also assist in building credit.

Layaway Programs

With a layaway program, a store allows you to place a deposit on an item to “lay it away” for future pickup.

Layaway is a retail purchasing method where you can put a deposit on items, and the retailer will hold the item for you. You pay the remainder of the cost in installments, and once you’ve paid off the balance in full, you can pick up the item from the store.

This can be especially useful when you are short on cash.

Layaway can serve as a good alternative to buy now, pay later programs like Klarna. The main downside of layaway plans is that you don’t get to take the item home immediately. With Klarna and credit cards, you receive the item right away and then pay off the cost over time. In contrast, with layaway, you make payments over time, but the item remains with the retailer until you’ve completed all payments.

Another advantage of layaway plans is that they don’t require a credit check. Stores typically require a deposit to place an item on layaway, which varies by location but is usually around $10 or 20% of the purchase total.

Not as many stores do layaway now as they used to, but some still offer this type of financing.

Other Buy Now, Pay Later Apps

If you like the buy now, pay later financing model offered by Klarna, you might want to explore other BNPL options, such as:

• Afterpay
• Zip (formerly Quadpay)
• PayPal Pay in 4

Closing Thoughts

Overall, Klarna is a good option if you’re looking to split the cost of payments into installments that you can pay off over time.

If you don’t have the money at the moment, or just want to keep it in your bank for a little while longer, using a service like Klarna that allows you to pay off your purchases at a future date can be a good idea.

Online reviews of Klarna are mostly positive, with users praising its ease of use, excellent customer service, and its ability to help them buy the items they need when they need them.

While Klarna is a legitimate company and definitely worth considering, it’s important to use buy now, pay later (BNPL) financing with caution.

It might seem appealing to make a purchase and pay only a portion of it with Pay in 4, or none of it upfront with Pay in 30. However, remember that you will need to repay the full amount eventually.

Before using Klarna or any BNPL service, ensure that you can afford to make the payments when they are due. Failing to do so can result in late fees, and missed payments may be reported to credit bureaus, affecting your credit score.

When used responsibly, Klarna is a valuable tool that can be a great addition to your financial toolkit!