Klarna Review – A Savings App with Buy Now, Pay Later
Joy Wallet is advertiser-supported: we may earn compensation from the products and offers mentioned in this article. However, any expressed opinions are our own and aren't influenced by compensation. To read our full disclosure, click here.
Everywhere you turn online or in-store, it seems as if there’s another Buy Now, Pay Later option. While this has made some large purchases easier on our budgets, it makes you wonder what makes one Buy Now Pay Later company better.
Klarna is probably best known as a financing tool that has recently popped up. When I recently talked to my partner at the dinner table, he told me he used Klarna to purchase my engagement ring from an independent jeweler. Klarna is one of those companies that seems to be steadily working up to being a household name. And since acquiring Piggy in 2021, Klarna has added more features to help consumers save money.
Our Klarna review looks at one of these companies and lets you decide if Klarna is worth a shot.
In this article
What is Klarna?
Klarna is a Swedish company founded in 2005. The concept of Klarna is simple — it offers customers a Buy Now Pay Later solution and makes interest-free installment payments. Klarna also offers financing options geared towards those making larger purchases.
After years of success, Klarna entered the American market in 2015. Since then, it has had over 34 million customers in the U.S. and has grown to over 150 million customers around the globe. While it is similar in concept to other BNPL companies, it sets itself apart by offering a single-use virtual card, so Klarna can be accepted almost anywhere that accepts credit cards.
In 2021, Klarna also acquired Piggy, a discount browser extension. By acquiring Piggy, Klarna launched a browser extension that gives consumers couponing and cashback features and financing options.
Relieve $25k+ in Credit Card Debt or Personal Loan Debt With TurboDebt
- Relieve $25k+ in credit card debt or personal loan debt with this special relief program.
- TurboDebt has a Trustpilot rating of 5/5 based on 1288 reviews
- Subject to qualification and approval. $1,500 monthly income required.
- Apply in 5 minutes. If you qualify, chat online with a friendly online debt representative.
How does Klarna work?
Klarna offers a browser extension that can be added directly from its website. All you have to do is look for the pink button.
When you do this, Klarna will redirect you to the browser store (in my case, it’s Google Chrome). You could also search the browser store directly and download the app.
A pop-up appears when you click the “Add to Chrome” button. The pop-up simply tells you what permissions you give the browser extension by adding it. You can click on the “Add extension” button if you agree.
When you add the extension, you’ll notice a file is downloaded from the browser to your computer. After this is complete, your browser will bring you back to Klarna. From here, you can create your account.
When you click on the “Join Klarna” button, you’ll be brought to a page where you can either create an account or sign in to an existing one. If you used Piggy previously, you could migrate the data from your Piggy account. You can also create an entirely new account with Klarna if you’d prefer.
The account creation process doesn’t take much time. To start, you just need to enter the email address you want the account attached.
Klarna will send a verification code to your email address, so you must enter an email address you have immediate access. Klarna counts down from 5 minutes, and after 5 minutes, you can request a new code if you haven’t received the initial email. I received my email immediately.
You also need to connect a valid phone number to your Klarna account. When you connect a number, you permit Klarna to send you service notifications and verification codes via text. You can opt out of this later if you choose to.
Klarna will text a verification code to the number that you provided. If you don’t receive it, you can request Klarna resend the code. You can also change your phone number and request a code be sent to the new number.
My verification code arrived within a few seconds of entering my phone number. After entering the verification code, Klarna will take you to your profile. At this point, you’ll also see the “download app” button in the top right-hand corner of the screen. When you click on this, you’ll receive a QR code to scan to download the app to your phone.
When you purchase from a merchant that offers financing through Klarna, you’ll see that option when you checkout. If you choose Financing, you can complete a simple application. Klarna immediately reviews your application and gives you a decision about whether you’re approved for financing. You can use the Klarna app to make payments and manage your orders if approved.
How much does Klarna cost?
The cost of Klarna depends on the plan you select. With the Pay in 4 and Pay in 30 options, you will not be charged any interest or pre-payment fees if you can make payments as agreed. The interest you pay with the financing plan depends on the retailer’s offer and the rate you secure. When you use Klarna to finance a purchase, you essentially take out a loan from Klarna to pay for your purchase. Instead of paying back the merchant you purchased an item from, you’ll make payments to Klarna. Klarna charges interest in addition to the principal payments of a loan. Interest rates can vary between 0% and 29.99%.
Also, to use Klarna, the company has moved to a subscription-based model, meaning you'll pay $7.99 per month in order to use its services.
You should be aware that Klarna does charge late fees. For the Pay in 4, there is up to a $7 late fee. The financing plan has a $35 late fee charge for late payments.
Relieve $25k+ in Credit Card Debt or Personal Loan Debt With TurboDebt
- Relieve $25k+ in credit card debt or personal loan debt with this special relief program.
- TurboDebt has a Trustpilot rating of 5/5 based on 1288 reviews
- Subject to qualification and approval. $1,500 monthly income required.
- Apply in 5 minutes. If you qualify, chat online with a friendly online debt representative.
Klarna Features
Klarna offers several features and keeps adding new ones as time progresses.
Pay with Klarna
Arguably, the most well-known feature of Klarna is its financing. If you’ve done online shopping recently, there’s a good chance you’ve seen a “Pay with Klarna” option on at least one merchant’s website. Klarna offers flexible payment options that can work with your budget, no matter the size of your purchase.
Pay in 4
Klarna’s Pay in 4 option allows you to split your purchase into four interest-free payments. This option is available for both online and in-store purchases. With this payment method, you’ll make one interest-free payment every two weeks. As long as you repay on time, there are no fees and no impact on your credit.
Pay Now
With Klarna’s Pay Now option, you can pay the full purchase balance using your credit or debit card. It might seem like this is an unnecessary extra step, but by using Klarna to make your purchase, you can earn rewards for the money spent.
Pay in 30 Days
The Pay in 30 Days option is great for consumers who want to try a product before committing to their purchase. For merchants and products that offer this option, no upfront payment is needed when you purchase. Instead, Klarna pays the merchant in full. You have up to 30 days after your purchase to repay Klarna for the purchase. Best of all, there is no interest or fees as long as you pay on time.
In-store shopping
There are thousands of retailers offering Klarna at checkout. Popular retailers like Macy’s, Sephora, and H+M offer Klarna, so you can choose the option within seconds and know exactly what your Pay in 4 obligations will be.
With the Klarna app, you can shop in-store at any participating retailer. Before purchasing, you must use the app to select your shopping retailer. You’ll also set a spending budget to review your payment plan. For each shopping trip, you’ll make a one-time card that will expire after a specific period. The card can be added to your Apple or Google Wallet. Then, once you’re ready to make your purchase, you can use your Apple or Google wallet to pay using Klarna.
Browser extension
Klarna’s browser extension combines financing features with coupons and cashback features. When you add the browser extension, Klarna will automatically find the best coupon codes for you when shopping online. The best code is automatically applied to your purchase. The browser extension also allows you to use the Pay in 4 features at checkout.
Klarna app
The app is highly rated and offers complete account management options. You can download and use the Klarna app for more than just financing. When opening the app, you can explore collections, including trends in certain categories. You can also find shopping inspiration that is tailored to your taste.
When shopping using the Klarna app, you can split your online purchases into smaller payments using Pay in 4. You can also track your packages and process returns using the app. When you process a return, Klarna will pause your payments.
Rewards club
Klarna’s rewards club is a free way to get perks on the shopping that you’re already doing. As a rewards club member, for every $1 that you spend with Klarna, you’ll earn 1 point. After collecting points, you can redeem them for rewards from top brands such as Amazon, Sephora, and Starbucks. You’ll also get access to exclusives and deals as part of your rewards club member perks.
Klarna card
The Klarna card is a physical VISA card for in-store or online purchases using the Pay in 4 financing option. For $4.99 per month, you can enjoy interest-free purchases using the card.
Klarna financing
Receive a loan for the purchase, which must be paid in full within 24 months. The standard interest rate is 19.99%, although some retailers offer rates ranging from 0% to 29.99%.
Transparent credit checks
Klarna provides information regarding credit checks in plain language. It breaks down the credit check requirements with the following:
- No credit check performed
- Signing up for Klarna
- Downloading the app
- Soft credit check performed:
- Choosing the Pay in 4
- Choosing the Pay in 30 option
- Hard credit check performed:
- When you apply for the monthly financing
No minimum credit score required
You do not need a minimum credit score to be approved for an installment plan or financing loan. You need a positive credit history of making payments on time.
Ideal for large purchases
Since you have three options with Klarna, it is ideal for large purchases. It’s possible to break up a large purchase into multiple, smaller payments without any interest, making it easier for you to stick to a budget.
Relieve $25k+ in Credit Card Debt or Personal Loan Debt With TurboDebt
- Relieve $25k+ in credit card debt or personal loan debt with this special relief program.
- TurboDebt has a Trustpilot rating of 5/5 based on 1288 reviews
- Subject to qualification and approval. $1,500 monthly income required.
- Apply in 5 minutes. If you qualify, chat online with a friendly online debt representative.
Who should use Klarna?
Online shoppers
Klarna is the perfect app for people who prefer to shop online. By downloading Klarna’s browser extension, you can automatically receive the best deals and coupons online without any extra effort. Klarna also allows you to finance online purchases from several merchants with ease.
People who want short-term financing options
Klarna is perhaps best known for its financing options. When you use Klarna, you can give yourself the flexibility to make payments on purchases on your own time. Klarna even allows interest-free options to give you extra time without extra expense.
Who shouldn’t use Klarna?
People who want to build credit
Klarna does offer financing, but that doesn’t mean you can use Klarna to build credit. To build credit, your lender must report your payment activity to the major credit bureaus. Klarna does not report on-time payments to the credit bureaus. However, it may report missed payments to the credit bureaus, which makes it even more important to stay on top of your payments if you use Klarna financing.
People currently with high debt
You should also avoid Klarna if you struggle to make payments for your other bills and debt since you simply add on more debt until the purchase is paid off. If it’s a struggle to make the payments in 4 installments or 1, a better approach would be to save until you have the money to pay outright.
Pros and cons
Pros
- Interest-free installment or financing options
- No pre-payment penalties or fees
- Used at thousands of retailers
- Highly-rated mobile app for full account management
Cons
- Late fee charges
- On-time payments are not reported to the credit bureaus
- Standard APR is 19.99% for the financing option, which may be too high compared to other products
Klarna vs. competitors
App | Features | Cost | Available on | Installment options available | Credit check required |
Klarna | Financing, money-saving browser extension, rewards club | Free; interest charges on some financing | Android; iOS; desktop | Options include Pay in 4, Pay in 30, or a financed loan up to 36 months | Yes, soft credit check for installments and hard credit check for financed loan |
Affirm | Options include Pay in 4, no hidden fees, no late fees, Debit+ card, savings account | 0% for pay in four, but monthly payment plans up to 30% | Android; iOS; desktop | Determined by merchant but there are four-week interest-free options or monthly installment options | Yes, soft credit check, but approval is not based on credit score |
Afterpay | Short-term, interest-free payments and other special financing options | Free when you pay on time | Android; iOS; desktop | Pay in four payments within six weeks | No |
PayPal | Short-term, interest-free payments and other special financing options | No, plus no interest or late fees | Android; iOS; desktop | Pay in four interest-free installments | No |
Affirm
Affirm offers a range of installment options, from four weeks to monthly payment plans. The interest rate on the plans varies and depends on the retailer offering Affirm. Interest is anywhere from 0% to 36%, but Affirm is widely available at some of the world’s most popular retail sites, including Wal-Mart and Amazon.
Afterpay
Afterpay does not offer as many BNPL options as Klarna. You have one option, requiring you to make all payments within six weeks. If you miss a payment deadline with Afterpay, you’ll be charged a late fee, which is capped up to 25% of the order value.
PayPal
PayPal is another player in the BNPL marketplace, offering a Pay in 4 installment plan too. You make the first payment at the time of purchase, and then the three remaining payments are charged every two weeks. The payments are interest-free, but the plan amount is small. You can only use PayPal for some online retailers; the approval amount is $30 to $1,500.
FAQs
What merchants use Klarna?
Currently, there are over 5,000 merchants who offer Klarna as a payment option. This makes it even easier for you to take advantage of Klarna at checkout and breeze through the payment process. Popular merchants include Sephora, Macy’s, FootLocker, and Lululemon, to name a few.
Should I use Klarna?
Klarna may be a useful financial tool to help you when you need to make a larger purchase and can budget for the installment payments. However, if you have to finance a purchase, you may be better off applying for a personal loan with a lower interest rate or using a credit card with a 0% introductory APR if possible.
Are cashback apps a scam?
Cashback apps might seem like a scam to some people. Why would companies give away free money? The truth is that cashback apps are usually operating as affiliate marketing companies. Klarna and other savings apps help consumers save money for free, but they charge the retailers a fee to use their service. The thing to understand is that Klarna is as much a service for businesses as it is for customers. By working with Klarna, merchants can give their consumers more choices when paying for their products. Some of Klarna’s payment methods can even help consumers feel more confident in their purchases and keep them returning for more.
What browsers can I use to download Klarna?
As of April 2021, Klarna’s browser extension is available through Google Chrome and Microsoft Edge. The company plans to roll the app out as a browser extension for Firefox and Safari in the future. You can also use Klarna on the go by using your mobile device. The Klarna app is available to download on both iOS and Android devices. By downloading the app to your mobile device, you’ll open up your savings opportunities even more because you can use the app to make in-store purchases using Klarna.
What happened to the Piggy app?
Klarna acquired Piggy in 2021, so it no longer exists as its entity. However, you can find all the functionality Piggy offers through Klarna’s mobile app and browser extension.
Will using Klarna hurt my credit score?
Using Klarna correctly will not hurt your credit score, but it could be reported to the credit bureaus if you fail to make your payments on time with the loan option. If you pay on time as agreed, then it is not reported.
Relieve $25k+ in Credit Card Debt or Personal Loan Debt With TurboDebt
- Relieve $25k+ in credit card debt or personal loan debt with this special relief program.
- TurboDebt has a Trustpilot rating of 5/5 based on 1288 reviews
- Subject to qualification and approval. $1,500 monthly income required.
- Apply in 5 minutes. If you qualify, chat online with a friendly online debt representative.
The bottom line
Klarna offers several savings opportunities for the average consumer. Since many of us do most of our shopping online these days, browser extensions are almost a way of life when it comes to saving money. Using savings browser extensions eliminates the need to seek out the best deals and coupons every time we shop. It takes a few clicks to install a browser extension that can scan the internet for you, so you know you’re getting the best deal when you checkout. Since acquiring Piggy in 2021, Klarna has become a serious contender in money-saving browser extensions.
In addition to its coupon and cashback features, Klarna offers unique financing opportunities. With Klarna, you can purchase from your favorite stores without putting all the money forward. Of course, you can use credit cards, too, but Klarna offers a separate option that does not require a hard credit pull or a revolving line of credit. Klarna offers more flexibility in its payment structure than most credit card companies. You can use Klarna financing as a no-interest way to pay for your purchase over several weeks. You can also use Klarna to manage your orders and make returns when necessary.
Klarna only seems to improve as time passes, and several new features have been added over the last few years. Since creating a Klarna account is free, there’s no harm in becoming a member to see what Klarna can do for you.
Additional reporting by Sara Coleman.
Joy Wallet is an independent publisher and comparison service, not an investment advisor, financial advisor, loan broker, insurance producer, or insurance broker. Its articles, interactive tools and other content are provided to you for free, as self-help tools and for informational purposes only. They are not intended to provide investment advice. Joy Wallet does not and cannot guarantee the accuracy or applicability of any information in regard to your individual circumstances. We encourage you to seek personalized advice from qualified professionals regarding specific investment issues. Featured estimates are based on past market performance, and past performance is not a guarantee of future performance.
Our site doesn’t feature every company or financial product available on the market. We are compensated by our partners, which may influence which products we review and write about (and where those products appear on our site), but it in no way affects our recommendations or advice. Our editorials are grounded on independent research. Our partners cannot pay us to guarantee favorable reviews of their products or services.
We value your privacy. We work with trusted partners to provide relevant advertising based on information about your use of Joy Wallet’s and third-party websites and applications. This includes, but is not limited to, sharing information about your web browsing activities with Meta (Facebook) and Google. All of the web browsing information that is shared is anonymized. To learn more, click on our Privacy Policy link.
Images appearing across JoyWallet are courtesy of shutterstock.com.
Writer
Ashley Hart is a lead copywriter and digital marketing expert covering finance, law, real estate, music, entertainment, health and wellness.
Share this article
