Klarna – Buy now pay later in easy, interest-free installments

By   |   Verified by Yvonne Taylor   |   Updated Aug. 31, 2022

Finty Review Klarna
  • Klarna offers a simple repayment plan with no interest.
  • Doesn't perform a credit check when you sign up.
  • Widely available in-store and online.

Are you looking for a way to finance a small purchase with an online or offline retailer? Klarna offers you a convenient alternative to charging it on your credit card. With Klarna, you get access to a micro-loans facility and a chance to pay off your purchase in four easy installments.

This post looks at everything you need to know about applying for a point-of-sale loan with Klarna.

How does Klarna work?

Klarna is a "Point-of-Sale" loans company. Founded by Sebastian Siemiatkowski, Niklas Adalberth, and Victor Jacobsson in 2005, the company has headquarters in Sweden. In 2019, Klarna had revenues exceeding $750 million.

To start with Klarna, download the app and register an account. Link your credit card or debit card, and wait for Klarna to send you an approval email with your credit limit.

After your approval goes through, you get to take what you want on credit and repay it in four easy installments. There's no interest or APR on the outstanding amount due, and you make your first installment due at point-of-sale (kind of like a downpayment).

Klarna also offers other financing options, besides the “Pay in 4” plan. You can choose to pay in full in 30 days, still interest free, or you can opt for 6-36 month financing at a 19.99% APR. The 30-day payment option may be useful if you want to try out goods before you pay, perhaps returning some, but the 19.99% financing option is really no different to using a credit card.

Late payment fees

Although Klarna is interest free, it will still charge you a fee – currently $7 – if you are late with your payment. Payments are automated from the card you linked to your Klarna account, so being late means that payment was unsuccessful after two attempts by Klarna to take the installment payment from your account. You could end up paying the late payment fee several times.

Who is Klarna for?

Klarna is for people who need instant access to finance. You might not have a credit card, or you might not be eligible for a card – in both situations you can benefit from using Klarna. Klarna loans let you access instant cash for your purchases.

With Klarna, you can save the limit on your credit card for other purchases and use the interest-free credit facility to fund your purchase.

What is the Klarna Ghost Card about?

The Klarna "Ghost Card" is a virtual credit card number you input at checkout with your retailer. The "ghost card" links to your Klarna account, giving you the option to take your purchase in four easy installments, with the first payment due at the point-of-sale.

Who accepts Klarna?

Some of the top online and physical retailers offering Klarna POS loan services include the following stores and brands.

  • Macy's
  • Foot Locker
  • Sephora
  • Etsy

There are hundreds of online and offline retailers working with Klarna; check the company's website for a full guide, or look for the Klarna logo at participating retailers.

Klarna and your credit score

When you opt for “Pay in 4”, or to pay in 30 days, Klarna will perform only a “soft” credit check on the personal details you provide. Unlike the “hard” credit check made by credit card companies, there will be no impact on your credit score because a soft check is not visible to credit reporting agencies and won’t end up as a record in your credit history.

If you choose the 6-36 month payment option, Klarna will do a hard credit check, and your score could go down slightly.

And your score could drop if you default on your repayments, because Klarna may report your default to credit agencies.

Is it better to use Klarna or a credit card?

For some people, Klarna is a good alternative to a credit card. If you don’t qualify for a credit card (maybe because you’re just starting out) or your credit limit is not high enough to buy the item you want, you still get time to pay with Klarna.

Applying for a Klarna account is much quicker than applying for a credit card. There are fewer details to supply, and the response is instant.

What’s not so good about Klarna is that you have to make a down payment when you choose the “Pay in 4” option, unlike a credit card where you get to receive the goods without paying anything upfront. Klarna also won’t help to improve your credit score, because they don’t report your good payment behavior to credit agencies.

Pros and cons


  • Easy financing at point-of-sale and accepted at many top brands online and offline.
  • Custom credit limits and options to lift your limit.
  • "Pay in 4" option for easy, structured payments so you don't have to worry about building up a balance.
  • No hard credit check for “Pay in 4” and pay in 30 days.
  • No impact on your credit score when you apply.
  • Accepts America Express and Discover cards, so you can still earn rewards points.


  • Klarna charges you penalty fees for late payment, which can add up if you don't manage your account properly.
  • Your Klarna credit limit may decline with late payments.
  • The minimum purchase limit is $10, so you can't put your morning coffee on Klarna.

Alternatives to Klarna in the USA

Afterpay. Afterpay is another popular POS finance solution. Its payment by four installments plan and late payment penalties are very similar to Klarna’s, but it doesn’t offer 30-day payment or longer-term financing.

Quadpay. As the name implies, Quadpay lets you take your purchase on credit and make four payments to settle your outstanding balance. It's a similar setup to Klarna and Afterpay.

Sezzle. Sezzle is another point-of-sale financier for smaller amounts. With Sezzle, you get a similar payment structure to Klarna, giving you options to pay off your balance in four payments, but the late payment fee is higher.

Affirm. Affirm is a leading online and offline point-of-sale financing company. With Affirm, you can get approval on loans up to $17,500. You also get flexible repayment terms, with options for 3, 6, and 12-months. However, Affirm does report to the credit agencies, and late payments can affect your credit score.

Compare other services like Klarna using our buy now pay later comparison.


Do Klarna run a credit check when opening an account?

Yes, Klarna runs a "soft" credit check to confirm your identity when opening an account. They don't run any hard credit checks that might affect your credit score. Klarna, also don't report your positive repayment information to the credit bureaus, but they may report negative information.

How do Klarna make money?

Klarna doesn't charge you any interest or APR on your outstanding balance (unless you choose 6-30 month financing). The company makes its money from fees it charges to retailers. Read more about Klarna's business model here.

What are the account funding options?

You can link your Klarna account to your credit card or debit card and make automated payments to your account from your card. It's a seamless payment process and works with Visa, MasterCard, Amex, and other leading card issuing authorities.

Is it possible to earn rewards points while spending with Klarna?

Klarna does offer a rewards program – Vibe. $1 spent = 1 Vibe. Vibes can be exchanged for gift cards with popular retailers.

Can I request a credit limit increase?

Yes, Klarna will increase your credit limit based on your purchase and repayment history. If you want to increase your credit limit at the point-of-sale, you can contact customer service and ask them to lift your limit. If approved, it activates immediately, allowing you to use the credit on your purchase.

What happens if I miss a payment?

If you miss a payment, Klarna will try and rebill the following day. If the second attempt bounces, they charge you a $7 late fee, and they add the outstanding payment amount to your next payment date.

How do I close my Klarna account?

To close your Klarna account, you'll need to pay off your outstanding balance and wait ten working days to clear the payment. After settling your account, remove your payment information from the app. Contact the marketing team and get them to remove you from the mailing list, and ensure they delete personal data they have on file.