Update 2/27/22: For every $250 in payments you receive a $5 gift card.
Update 6/9/20: Klarna is adding a rewards program and users will earn 1 point per $1 spent through Klarna. At this stage it’s unclear how much points will be worth.
Original Post from 2016: Recently a few readers have asked me what Klarna is after being offered a financing option for them when looking to get a credit card without a hard pull using the shopping cart trick (works primarily on Comenity Bank cards). Klarna is a financing company that has fairly recently entered the U.S. market with the aims to take market share from traditional store credit card issuers (such as Comenity Bank or Synchrony).
Contents
How It Works
Stores that have partnered with Klarna will give users two options to make payment:
- Pay After Delivery (via Klarna)
- Pay Now by Card (standard payment)
If you choose to pay after delivery using Klarna, the check out process is quite simple:
- Enter e-mail address
- Enter zip code
No traditional credit check is done and Klarna pays the merchant directly for your purchase. You then have 14 days to pay Klarna with a credit card or via your bank account and you will pay no interest. After that period you’re charged 19.99% APY, you can also go onto a planned payment (e.g installment payments from 6 to 36 months) and pay a lower rate.
Our Verdict
There are obvious advantages to stores using Klarna, it speeds up the check out (when a user is applying for credit) process and that would naturally increase conversions. I assume the store also receives a commission or similar from Klarna.
Store credit card’s can be an extremely profitable market segment, so it’s no surprise to see a different approach to this market. We’ve also recently seen Blispay enter the market offering 2% cash back and interest free financing.
Aaaaand it’s dead (seemingly). Gift cards are gone, only rewards currently available are 15% off vouchers and “Klarna deals” – $5 off $20 spend at various retailers, mostly high markup stuff like clothes/makeup. Most interesting is probably Etsy/Instacart.
I chatted with CSR because I thought I must be missing something. Right now I can use one-time Klarna cards, for free, and get Klarna rewards + regular CC rewards. With the new card which links to a bank account I would get only Klarna rewards and eventually incur a monthly fee. He said that basically the only difference was the lack of hassle working with merchants who weren’t Klarna partners. You can just walk into Walmart and swipe your card instead of estimating your purchase, generating a card, adding to wallet, using Walmart pay. He also confirmed the card has all the same category restrictions as the virtual cards (i.e. you cant pay your rent or gamble etc).
Doesn’t sound like anything I’d be interested in, but maybe people with poor credit 🤷
The rewards program is live. For every $250 in payments you route through Klarna, you will earn a reward of a $5 gift card to a merchant of your choice from their 18 current options. They offer Amazon and Walmart among others which is as good as cash as far as I am concerned. $5/$250 = 2% cashback rate, which stacks with whatever credit card rewards you get since you can use that as your payment method within Klarna. Although you lose any category bonuses as the charge on your own card is just “Klarna Inc”.
Besides using integrated “check out with klarna’ options on websites the Klarna app also allows you to generate a one time use card for various merchants they support, which seems easier and allows you to checkout as a guest etc. Unclear if you can stack with cashback sites using this method but probably not as my understanding is the retailers are already paying Klarna a percentage in hopes you are spending more via BNPL than you would normally. But for say, Apple products at Walmart it still might be the best option since most cashback sites would exclude it. The order I did using “checkout with klarna'” included itemized order details and shipping status immediately, the order I did at Amazon using a one time card only includes the total cost and took nearly 24 hours to process by Klarna (manual verification? I dunno).
Klarna gave me a $700 limit or so, although they didn’t ask for SSN so I’m not quite sure what they are basing that on. The standard interest free plan stretches your purchase over 6 weeks (4 equal biweekly payments including one at checkout) which means if it goes onto a credit card you have 60-90 days total before you will have paid the full purchase amount compared to 30-60 days if you put it directly on your own card. I know people think these services are somewhat predatory but as long as I never have to pay interest I will take advantage too 😂
I also just tested, and as soon as the payment plan is up and running in Klarna you can pay off the remaining 3 payments early – you get the full rewards amount and your purchase power goes back to your maximum.
@Bockrr the rewards program has existed for well over a year at 2% earning rate. They just refreshed the appearance of the rewards page in the app in February to make it obvious that you were earning $5 for every $250. That’s all. It was nice to last as long as it did which is far longer than I ever imagined.
Use my invite link and get $20!
https://invite.klarna.com/us/x6a37e7f
I think klarna is nice because you can make your payments every 2 weeks, I believe you can pick every week also, at check out it will go over how your payments are going to be, or how you want them! Then when it’s said and done it doesn’t feel like you really spent that much money on your purchase! Lol tell that to my husband!
Hey Will or Chuck, can you add dates to the Original Post, similar to what you do to the Updated Post headline/summary? I believe it will be extremely useful to know when the original post was written, just like when there are updates. Maybe it is already shown somewhere but I can’t find it? I like to know how old some information may be to see if it still pertains to the present time. Thanks.
Done
Looks like Klarna is starting a rewards program:
https://techcrunch.com/2020/06/09/klarna-launches-rewards-program/