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Klarna Review | The Ascent

Klarna Review | The Ascent
Written by Publishing Team

The most important advantages

interest-free financing

The best part about Klarna is the interest-free financing plans. If you choose the “Pay in 4” or “Pay in 30 Days” option, you can place your order immediately and pay it off over time.

This is ideal for expensive purchases that you want to make ASAP but can increase your budget if you pay in full. However, use this option in moderation so that you do not end up with a debt that you cannot repay. And before placing the order, make sure that you will be able to complete the payments on time.

Available at most US retailers

You can use Klarna to pay for purchases with any online retailer in the United States that accepts debit and credit cards, as well as in stores at participating Klarna partners.

Klarna lists quite a few online merchants in its app. Even if you can’t find the merchant you want, you can enter a URL in the app to visit their site and place your order using Klarna.

Multiple financing plans

Klarna gives you a few different financing plans. It’s a good idea to have flexibility in how you pay for your purchase, and not every purchase is now, a service that pays later gives you a lot of options.

Earn rewards

Klarna offers a free rewards club called Vibe. After you sign up and complete your first purchase as a member, you get a $5 welcome bonus.

You earn 1 vibe for every $1 you spend with Klarna, and you can choose a reward every time you collect enough vibes. Klarna usually offers a bonus every 250 vibrations. Reward options include a $5 gift card from a popular merchant or a one-time discount voucher.

Shop with a virtual card number

The Klarna app allows you to create a one-time card, which is a one-time use virtual credit card number. You decide how much you want to spend, after which you can use your card for a one-time purchase.

Virtual card numbers are useful from a security perspective. Even if your payment information was compromised during a purchase, there is nothing a scammer can do with a virtual card number.

Read more: What is a virtual credit card?

Applying doesn’t hurt your credit card

Klarna runs a facilitated credit check on you when you decide to use any of its financing plans. A soft credit check does not affect your credit score at all.

Learn more: What is the difference between hard and soft credit checks?

There is only one way that Klarna can negatively affect your balance. If you do not make your payments, Klarna may eventually transfer the account to a collection agency. The collection agency usually reports the unpaid debts on your credit file.

What can be improved

Do not build credit

Unfortunately, using Klarna won’t help you build credit. Klarna does not report payment information to credit bureaus. Since your payments won’t appear on your credit history, they also won’t do anything to get your credit score.

Find out what you can do: How to increase your credit score

Late fees

Klarna charges a late fee of up to $7 if you miss a payment in the Pay in 4 plan. The late fee will not exceed 25% of the value of your order. Although there is no late fee for “Pay in 30 Days” purchases, you will be in default and will not be able to use the Service in the future.

Get an extension

Klarna allows you to extend the payment due date once per order in “Pay in 4” and “Pay in 30 Days” purchases. Request an extension if you need more time to pay.

Late fees can cost up to $35 for each month lost in monthly financing plans. The amount of the late fee will not exceed the minimum payment due.

High annual interest rate on monthly financing

Monthly financing on regular purchases is 19.99% APR (Annual Percentage Rate). Depending on your credit score, you may qualify for a much lower rate if you take out a personal loan. Consider all of your options before choosing long-term financing with Klarna.

Check rates from Best Lending: Best Personal Loans

short period without interest

Klarna’s longest-running zero-interest financing plan is the Pay in 4 Plan. With that, you pay the first payment when the merchant completes your order, and the next third at 2-week intervals (or every 15 days if you’re in California). That’s six weeks to pay off your purchases.

While that’s not bad, it’s a lot less than some of the other no-nonsense options. If you have a high credit score, credit cards with 0% APR are probably a much better option. These cards offer 0% upfront annual interest on purchases, and many have an upfront period of 12 months or more.

Compare top picks: Best 0% APR . Credit Cards

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