What is Klarna? Buy now, pay later - pros and cons

Many web pages will show you an option “buy now, pay later” with Klarna on the checkout. You are not bound to provide your bank card details. This service accumulates all your online purchases and allows you to pay 30 days from the date purchased. This option is convenient if you plan to return something or have your credit card in another room. To use Klarna, you have to set up an account here. Do not forget to log in to your Klarna account to pay your invoices before the due date!

Klarna is connected to your bank account once you do a set up, and you are due to pay all the invoices accumulated at Klarna service. Many choose this service if they are considering returning an item, as you can also register a return. Upon your return is reported, your payment is paused till the company you bought from confirms the amount due. If you have a bad experience using credit cards (or a strong negative opinion against using them) or trying to avoid having any debts, we advise against using Klarna.

Before setting up an account with Klarna, you must have a Swedish personal number, a bank ID, and a Swedish bank account.

Pros:

1. Multiple Repayment Options: Klarna offers various repayment plans, including "Pay in 30," and longer-term financing options, providing flexibility to suit different financial needs.

2. Interest-Free Installments: It allows you to split your payment into several equal, interest-free installments, making it easier to manage larger purchases without incurring additional costs.

3. Rewards Program: Klarna runs a rewards program that can offer benefits similar to those of a credit card, potentially providing additional value for frequent users.

4. User-Friendly App: The Klarna app is designed to be user-friendly, allowing you to manage payments, track spending, and even shop directly through the app.

   
   

Cons:

1. Late Fees: Klarna charges late fees if you miss a payment deadline. These fees can add up and make your purchase more expensive than initially planned.

2. Credit Reporting: Missed or late payments are reported to credit bureaus, which can negatively impact your credit score. This reporting can happen almost immediately if you miss the deadline for the "Pay in 30 Days" method.

3. Interest on Long-Term Financing: Longer-term financing plans come with an annual interest rate, which can increase the overall cost of your purchase.

4. Potential for Overspending: The ease of deferred payments can encourage overspending, leading to financial strain if not managed carefully.

Using Klarna can offer significant benefits, especially in terms of payment flexibility and interest-free options, but it's essential to be aware of the potential drawbacks, such as late fees and the impact on your credit score.