Klarna review: should you use a buy now, pay later service?

Adam Rozsa

If you’re new to buy now pay later services, you may well be wondering about how Klarna¹ works as a financing option. This review will cover key information - including questions like how does Klarna work, is Klarna safe? As long as you make your payments on time, Klarna can offer a smart way to spread the cost of buying items you need. All you need to do is download the app and link your debit card or one of your credit cards to get started.

However, as with all forms of credit, there are risks and penalties if you don’t keep up with your payment plan. Klarna is also only available for purchases made in the US - so if you’re shopping internationally you’ll need an alternative. Read on to learn all you need to know.

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📝 Table of contents

How does Klarna work?

Klarna describes itself as ‘the shortcut to shopping’² . That means you can buy items you need now, and pay later. There are different options which can mean you repay the costs of your purchase in installments, at a later date, or through a financing plan. Here are the details you need to know.

Klarna Pay in 4

If you make purchases with Pay in 4, you’ll be able to split the cost of your transaction into 4 equal payments which you repay over time. All you have to do is link your chosen credit or debit card, and the repayments will be deducted according to the Pay in 4 payment plan.

The first repayment (25% of the cost of the transaction) will be made on the day of purchase - or the day of shipping in some cases when you shop online. The subsequent repayments are scheduled every 2 weeks, or every 15 days if you’re a California resident.

There’s no interest to pay on the transaction amount. This may make it more affordable to buy items you need by splitting the upfront cost into smaller segments - but it’s important to note that there are additional potential costs to consider, as follows:

SituationFees to understand when using Klarna Pay in 4
Late repayment fee - if your repayment is 10 days or more lateKlarna fee - $7. This will not exceed 25% of the repayment due³
Returned item fee - if your repayment by check or ACH is stoppedKlarna fee - $25³
Your own bank’s feesYour own bank or card provider may impose fees - these are outside the control of Klarna

Finally, if you do not fully repay the amount borrowed from Klarna, you may go into default. In this case, you authorize Klarna to use debt collectors to retrieve the amount owed from you.

Klarna Pay in 30

Klarna’s Pay in 30 option lets you make purchases and then pay 30 days later. Basically, Klarna will make an advance to the merchant to pay for your items. 30 days later, Klarna will send you a digital invoice which you have to pay to cover the cost of the transaction. There are no interest charges or fees to pay as long as you repay the amount on the date specified.

However, if you fail to make the repayment on time, you’ll pay a late fee of up to $27⁴. This fee will not exceed the amount you owe. In the event that you go into default by missing repayments entirely, you’ll not be able to use the Klarna service again, and your debt will be passed to a debt collection agency. You can expect to hear directly from the debt collectors about how they’ll reclaim the money, and the details may also be passed to credit bureaus. Not good news.

Klarna 3 - 36 month financing

Klarna also offers longer term financing through its partnership with WebBank. You’ll need to sign a credit agreement to access this option, and agree to a payment plan which includes interest repayments. There are also other potential fees you’ll want to know about:

SituationFees to understand when using Klarna financing
You don’t pay off your total balance in a given periodYou’ll pay 19.99% on the balance of standard purchases⁵
Late repayment fee - if your repayment is 10 days or more lateKlarna penalty fee - Up to $35⁵
Returned item fee - if your repayment by check or ACH is stoppedKlarna penalty fee - Up to $35⁵

As with the other Klarna options, you risk going into default if you stop making repayments entirely. In this case, your details will be passed to debt collectors to retrieve the money.

Where and how can I use Klarna?

As long as you shop responsibly, using Klarna can be a great way to spread the cost of purchases you make in person and online. However, it is only available for transactions with US retailers⁶. If you love to shop with international ecommerce sellers to get the best deals on new trends, Klarna may not be for you.

If you want to send payments or shop online from stores overseas, you need Wise. You can send cross border payments which use the real mid-market exchange rate with no markup and no hidden fees - which can be up to 7x cheaper than using your regular bank. All transactions are made online or in the Wise app - so it’s just as fast and convenient as using Klarna.

Even better, get a smart multi-currency account from Wise which comes with a linked debit card to let you hold, send and spend 50+ different currencies. That means that no matter where in the world you like to spend your money, you’ll always know you’re getting the best available deal on currency exchange.

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Does Klarna check your credit score?

You may also be worried about how Klarna affects your credit score. The instant approval process Klarna offers - known as a soft credit check - doesn’t have any impact on your credit score. That means that applying for the Pay in 4 or Pay in 30 services won’t make any difference to your credit record.

If you’re applying for financing, the credit check is known as a hard check, which means it’ll be reported to credit bureaus and will show as an inquiry on your record.

It’s important to note that even with Pay in 4 and Pay in 30, you may run into credit issues if you are late in making repayments or go into default. Klarna’s terms and conditions do allow them to notify credit bureaus, and call out the debt collectors in this situation. Keep on top of your payments to avoid any issues down the line.

Should you use Klarna? Pros & Cons

Not sure if Klarna is for you? Here are some pros and cons of the service.


  • Delay or spread the costs of your purchases - if you choose Pay in 4 or Pay in 30 you don’t need to pay any interest as long as you repay on time
  • Credit checking for the Pay in 4 and Pay in 30 service won’t impact your credit score
  • Access Klarna user content and exclusive deals through the Klarna app


  • Late fees can be applied - and defaulting will result in your case being passed to debt collectors
  • Can be used for purchases in the US only
  • Making on time payments won’t be reported to credit bureaus - so you won’t improve your credit score by using Klarna

Alternatives to Klarna

Klarna isn’t the only buy now, pay later option out there. Quadpay offers a similar service to the Klarna Pay in 4 - although the terms, processes and fees may vary slightly to Klarna based on the state you live in. All you need to know about how Quadpay works is in this handy guide.

You can also check out Affirm, which offers loans for purchases in traditional and online stores. There’s interest to pay on the amount you borrow, with tenures over 1 to 48 months. Read more Affirm reviews and product information here.

Finally, there’s also Afterpay - a good solution if you want to make repayments over 6 weeks while earning loyalty points. Get Pulse Reward points when you make on time payments, to unlock new features in the app. Learn how Afterpay works to help you decide if it’s right for you.

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Frequently asked questions

Got questions? We’ve got answers.

Is Klarna legit?

Klarna was set up in 2014, and now operates across a range of global markets. At the time of writing, Klarna US has a 4.4/5 star rating on Trustpilot⁷ - and the Klarna app for Android gets 4/5, with the Apple version hitting an impressive 4.8/5. So yes, Klarna is trusted by users, offers an easy interface, and is all in all pretty legit. Just check out the terms and conditions - and any potential fees - if you’re considering using Klarna’s services.

Does Klarna really work?

Klarna offers several different products including interest free loans for purchases, and credit for longer term financing. If you make your repayments on time with Pay in 4 or Pay in 30, there really is no catch. You may pay interest through the financing products depending on how you use your account, though. And of course, if you overstretch yourself and ultimately can’t make your repayments there’s the risk of fees and ultimately, default. If you default your file will be passed to debt collectors to retrieve the payments owed.

Why did I get declined for Klarna?

Klarna offers credit on a case by case basis. That means that purchases you try to make may be declined, even if you’ve previously been approved⁸. This may be because of the value of the orders - if the basket value is too high, it may not go through. It may be because you have a high outstanding balance - in this case, paying off previous loans may help. Or it may simply be that you’ve not been a Klarna customer for long enough to be eligible for more credit yet.

Klarna may also decline payments if you’ve tried to buy many things in a short space of time. This is for fraud prevention purchases.

Is Klarna better than Afterpay?

There’s not really a straight answer here. The right provider for you will depend on the type of purchase you want to make. Read our full overview of Afterpay vs Klarna here, to help you work out which will work best in your situation.


1]Klarna - Main Website
2]Klarna - Buy now pay later - How it works
3]Klarna - Terms
4]Klarna - Legal Terms
5]Klarna - Terms (2)
6]Klarna - Stores
7]Trustpilot - Klarna US Reviews
8]Klarna - Why was my purchase not approved with Klarna?

All sources checked on 30 June 2021

*Please see terms of use and product availability for your region or visit Wise fees and pricing for the most up to date pricing and fee information.

This publication is provided for general information purposes and does not constitute legal, tax or other professional advice from Wise Payments Limited or its subsidiaries and its affiliates, and it is not intended as a substitute for obtaining advice from a financial advisor or any other professional.

We make no representations, warranties or guarantees, whether expressed or implied, that the content in the publication is accurate, complete or up to date.

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