Klarna review 2021: What's the catch? | finder.com

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Klarna review: Flexible payments for online shopping

Buy now and pay later without interest — as long as you pay on time.

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Many online retailers offer payment through Klarna, a financing option that allows you to slice up your payments over time. You may qualify for no-interest financing without fees or interest, as long as you fully repay your balance within the allotted time frame.

Though services like Klarna allow for helpful flexibility, there are risks — like the potential to rack up debt and pay a high interest rate if you miss a payment. We broke down the pros and cons of Klarna and how it works, including how making purchases might affect your credit score.

How does Klarna work?

Klarna partners with retailers to offer third-party financing solutions. If a store offers Klarna, you'll see the option to select Klarna at checkout.

The service offers three payment structures:

  • Interest-free payments: Pay for your purchase in four installments, every two weeks.
  • Pay in 30 days: You won't make an initial payment when you purchase your item. You'll have 30 days to cover the balance without paying interest.
  • Financing terms of six to 36 months: Pay for pricier purchases over the course of six to 36 months, with monthly payment installments.

Klarna's interest rates

The Annual Percentage Rate (APR) on standard purchases is 19.99%. However, you can dodge this interest as long as you repay your balance before the expiration date. Typically, Klarna payments are due on the 26th of each month.

See the full Klarna store list here

Features of shopping with Klarna

  • No annual fee. You'll never pay a maintenance fee to use Klarna.
  • Zero-interest options. If you qualify, you'll enjoy zero-interest financing on your purchase.
  • Autopay. Set up automatic minimum payments from your bank account to your Klarna account.
  • Safe and secure. Klarna safeguards personal information and limits the access that employees have to your personal information. If you see an unauthorized purchase on your account, report it to Klarna and, if approved, the company will refund the payment or cancel outstanding balances related to the fraud.
  • Easy-to-use app. Manage your payments, report and manage returns and chat with customer service 24/7 from your smartphone.
  • Payment reminders. Klarna gives you a nudge two days before each payment is due.
  • Hassle-free refunds. Easily request a refund for your order and receive your money within 14 days.

How much does Klarna cost?

You pay no upfront or annual fee to use Klarna. The only situations in which you'll pay more than your total purchase price:

  1. You accept terms with an interest rate.
  2. You're charged the $7 fee for a late payment.

Is Klarna Safe?

Yes. Klarna's buyer protection policy ensures that your goods arrive in the condition described at purchase. If you have a problem with your order, report it so Klarna can make it right.

Klarna stores and transmits your personal and financial details securely both on and offline. And its zero-fraud liability protects you from unauthorized or fraudulent purchases that end up on your account.

Does Klarna hurt your credit?

It could. When you apply for an account with Klarna, it performs a soft credit check that will not impact your score. However, if you're interested in using Klarna's 6-36 month financing option, you'll go through a hard credit check which will show up as an inquiry on your credit report.

And, as always, you'll want to make your monthly payments on time to avoid any negative effects on your credit.

How to sign up for Klarna

You must be at least 18 years old and shop with a retailer that offers Klarna to sign up for an account.

If your purchase is eligible, you'll see Klarna listed as a payment option at checkout. Click Klarna and complete the short application on the next page. You'll know instantly if you're approved for financing.

To use Klarna's app, create an account online with your email or download the app on your mobile device.

Klarna reviews and complaints

The buy now, pay later service has racked up a number of unfavorable reviews from the Better Business Bureau, with a rating of 1.14/5, with many complaints pointing to poor customer service. Shoppers also complained about being charged unnecessarily for products and technical issues with the website.

The company fared much better on Trustpilot with a rating of 4/5 stars. Customers complimented the efficient, streamlined process and easy-to-use website. Others, however, had similar complaints about customer service issues.

Alternatives to Klarna

Not feeling totally sold on Klarna? There are other buy now, pay later options you can check out like Afterpay, Affirm or Quadpay. Be sure to browse our list of all the online stores that allow you to take advantage of interest-free financing.

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