Klarna

Klarna is a buy now, pay later (BNPL) company: it lets you spread the cost of shopping, most commonly by paying in three instalments or by delaying payment for around 30 days, usually with no interest if you pay on time¹. Alongside those short-term options, Klarna also offers longer-term credit through Klarna Financing and a Klarna Credit Card, and it has launched a card with both debit and credit options alongside a digital wallet called Klarna balance¹.

Buy now, pay later is now one of the most common ways to pay at online checkouts. Klarna sits alongside Clearpay, PayPal and others as one of the main short-term BNPL providers, offering payment after 30 days or spread over three or four months². The market is also changing: new rules taking effect in 2026 bring buy now, pay later agreements under fuller oversight, with affordability checks before lending and Section 75-style protections for shoppers⁴.

What Klarna offers: pay later, instalments, financing and a card

Klarna's core products are its short-term buy now, pay later options. The best known is paying in three instalments: you pay the first instalment at the checkout and the remaining two at set intervals, with no interest charged if you keep to the schedule. Klarna also offers a pay-after-delivery style option, giving you around 30 days to pay once your goods arrive. Klarna and Clearpay are two of the main providers offering these short-term plans³, and BNPL more widely is offered through many providers including Klarna, Clearpay, PayPal and Amazon².

For higher-value purchases, some retailers offer Klarna Financing. This is a longer-term credit product, typically used for larger amounts repaid over a longer period, and it can charge interest. Klarna and PayPal are unusual in offering both longer-term lending products and short-term BNPL products⁷. Klarna scrapped late fees on its Financing product in 2021 as part of an overhaul of its service⁸.

Klarna also has a card. The Klarna Card offers debit and credit options, plus cashback for members, and you can read a full guide on the Klarna Card page. You don't automatically receive a physical card: you get a virtual card you can add to your phone's wallet, with a physical card available only with a Klarna membership¹. If you are weighing up a card of any kind, our credit cards guide explains how they work, and our loans guide covers longer-term borrowing.

Klarna has also introduced paid membership tiers, which bundle features such as cashback and, at the top tiers, insurance benefits including travel and rental-car cover. These carry monthly fees, and Klarna's own site sets out the current prices and what each tier includes¹.

How Klarna's late fees and charges work

For its short-term BNPL options, Klarna charges a late payment fee of £5 for any payment made more than seven days after the due date, and this is capped at two late payment fees per order⁵. The same figure is given in guidance for Scotland and for England and Wales, so the position is the same across Great Britain⁹. By comparison, Clearpay charges £6 for each late instalment and a further £6 if the payment is still outstanding seven days later, capped based on how much you borrowed⁵.

The wider point about charges is that they only bite if you miss payments. Buy now, pay later options like Klarna can add fees if you miss payments, which means you may end up paying more than you would have if you bought the item upfront¹⁰. Interest-free instalments are only interest-free on schedule.

Klarna's Financing product no longer charges late fees for missed repayments, following changes Klarna made in 2021⁸. For today's fees on any Klarna product, check Klarna's own website, as charges can change.

From 2026, the rules around BNPL charges tighten. Under the new legislation, BNPL providers have to carry out upfront affordability checks to ensure shoppers can manage the debt they are taking on⁴, and providers must contact you promptly if you miss a payment, explain the consequences and give you reasonable notice before taking further action¹¹.

Who can use Klarna and what the credit check involves

To use Klarna you need to be 18 or over and a UK resident, and each purchase is approved individually: being accepted once does not guarantee acceptance next time. For anything you buy using BNPL, a lender will carry out a credit check to make sure you can afford the repayments².

The type of check matters. Most of the big providers, including Klarna, PayPal and Zilch, only run soft credit checks on their short-term BNPL products⁴. A soft check does not affect your credit score. Some providers carry out soft checks and some carry out hard checks, and a hard check leaves a mark on your file¹². Clearpay says it performs soft credit checks for new customers⁴. Klarna's longer-term products, such as Financing, involve a fuller assessment: when you apply for this kind of credit, the provider checks your credit record with a credit reference agency to see if you are creditworthy¹³.

From July 2026, affordability checks become a legal requirement across the market. Before offering BNPL, providers will have to carry out affordability checks, proportionate to the amount borrowed¹¹. BNPL providers will run an affordability check for all purchases and will reach out to you if you miss a payment¹².

You can prepare by checking your own record first. You have the legal right to check your credit report for free with all three main credit reference agencies¹⁴, and our credit scores guide explains how to do it and what lenders see.

How Klarna affects your credit file

Klarna started reporting to Experian and TransUnion in June 2022⁶. That means your existing, late and unpaid Klarna balances can be visible on your credit file¹⁵. Equifax is the main agency Klarna does not report to, so what a lender sees can depend on which agency it uses.

The effect depends on how you use it. Payments made on time show a well-managed account; missed payments show the opposite. Your credit file will show if you did not make your agreed payments, and this impacts your credit score¹⁶. If missed payments continue, the account can go into default, and a default is recorded on your file¹⁶.

If things escalate, the consequences reach further than your score. A county court judgment (CCJ) can make borrowing harder or more expensive while it is recorded on your credit files¹⁷, and a CCJ can also affect renting and even employment opportunities¹⁸. This is why bills from companies such as Klarna are important not to ignore¹⁹.

Because Klarna borrowing can appear on your file, it can also matter when you apply for bigger credit such as a mortgage: a lender reviewing your file may see your Klarna balances when assessing affordability. Keeping up with payments is what protects how your file looks.

Using the Klarna app: shopping, cashback and the Klarna balance

The Klarna app is where most of the brand now lives. You can browse retailers, create digital cards to use at checkouts, manage your payments and see what is due and when. Klarna balance is a digital wallet that lets customers store e-money, add or withdraw funds, and earn cashback on certain Klarna purchases¹. Members on the Plus tier earn cashback when they pay in full with Klarna balance¹.

Klarna's membership schemes sit on top of this. The tiers carry monthly fees and bundle features such as cashback and, at the higher tiers, insurance benefits: the Premium tier includes global travel insurance, and the Max tier adds comprehensive travel, rental-car and cancel-for-any-reason insurance¹. Klarna does not underwrite this cover itself; the insurance is provided through arrangements Klarna makes with insurers, and the policy documents set out who provides it. Our insurance guide explains how to check a policy.

One caution applies to any wallet feature: money held with electronic money institutions is not covered by the FSCS¹, so a Klarna balance is a spending tool rather than a place to hold savings. Our savings guide covers where protection does apply.

Buyer protection, returns and paused payments

Your rights when something goes wrong sit with the retailer first, and Klarna operates alongside them. For online purchases, you have a 14-day right to cancel, and the retailer refunds you the cost of the goods and the standard delivery cost you paid²⁰. Refunds are due within 14 days of the date you returned the goods or cancelled the service²¹. High street shops do not have to accept returns unless an item is faulty, but online purchases are covered by the cancellation rules²¹.

For faulty goods, the Consumer Rights Act gives you the legal right to reject goods that are of unsatisfactory quality, unfit for purpose or not as described, and to a full refund within 30 days of receiving the item, regardless of where you bought it²². Any terms saying you must cover the cost of returning an item do not apply where the goods are faulty²⁰.

Where Klarna itself is involved, the position has changed. BNPL users now benefit from strong rights, such as those under section 75 of the Consumer Credit Act, making it easier to obtain refunds for issues like faulty goods²³. For BNPL agreements treated as Deferred Payment Credit, Section 75 is available, so you may be able to get a refund from the lender if something goes wrong with what you have bought, the same protection you would have with a credit card²⁴. Under the rules on cancellation, a firm must return any sums it has received from you, without undue delay and no later than 30 calendar days, when a contract is cancelled²⁵.

One older trap is worth knowing. Using a credit card through third-party payment systems can break the chain between you, the creditor and the retailer, losing Section 75 protection on items costing more than £100, and buy now pay later schemes such as Klarna and Clearpay have been listed among the systems that can do this²⁶. The 2026 changes to the rules on BNPL are designed to close this gap for BNPL purchases²³. If you return an item, Klarna can pause your payments while a return or dispute is sorted, and the refund cancels or reduces what you owe.

Missing a payment: what happens next

If you miss a payment on short-term BNPL, the missed amount is added to your next scheduled payment, and missed payments can be shared with credit reference agencies⁹. You may be charged a penalty fee if your payment is late or missed, and your provider may pass information about the missed payment to credit reference agencies, which will affect your credit score¹². Missed payments can also affect your ability to keep using Klarna⁸.

Under the rules that apply from July 2026, your provider must contact you promptly, explain the consequences and give you reasonable notice before taking further action. It must also offer appropriate support and signpost free debt advice if you show signs of financial difficulty¹¹.

If payments stay unpaid, the process resembles any other debt. The lender may issue a default notice if you keep missing payments, and can then take further action to collect the debt, possibly using a debt collection agency or applying for a county court judgment²⁷. A CCJ can make borrowing harder or more expensive while it is recorded on your credit files¹⁷, and it can affect your credit score, borrowing, renting and employment opportunities¹⁸.

If you are struggling, free help exists. StepChange, National Debtline and Business Debtline all give free debt advice, and MoneyHelper signposts free options. BNPL debt is normally a non-priority debt, but ignoring it leads to the consequences above¹⁹. Our debt guide sets out the help available.

Complaints, and why the Financial Ombudsman may not always be available

The first step in any complaint is to complain to Klarna itself, through its app or website. Klarna has introduced an internal complaints adjudicator as an interim step until its customers can access the Financial Ombudsman Service¹. If a firm does not send you a final response letter within eight weeks, or you are unhappy with its response, you can bring the complaint to the ombudsman²⁹.

Access to the ombudsman depends on what your complaint is about. Historically, Klarna users could not complain to the Financial Ombudsman Service about buy now, pay later, because BNPL firms were not yet within the ombudsman's scope⁸. As the new rules take effect, this changes. Separately, customers can already take complaints about their Klarna balance or debit card functionality to the Financial Ombudsman Service¹. The ombudsman's general rule is that if you deal with a firm that is not authorised or does not have permission for the activities you need, you will not have access to the Financial Ombudsman³⁰, so the product you are complaining about determines your route.

For complaints about goods rather than lending, Consumerline in Northern Ireland offers an online service to make a complaint against a trader, report a fraud or ask about consumer rights³¹. Our consumer protection guide covers these routes in more detail.

How your money is protected with Klarna

Money held with electronic money institutions is not covered by the FSCS¹. That means a Klarna balance is not protected the way a UK bank account is: there is no FSCS compensation scheme sitting behind it. Instead, as an e-money firm, Klarna must hold customers' e-money separately from its own business funds, so the money is safeguarded day to day, but if the firm failed you would be claiming your balance back through the administration process rather than from the FSCS. This is the standard position for all e-money firms, not just Klarna³².

By contrast, FSCS protection applies to products it covers: for example, certain qualifying temporary high balances up to £1.4 million are covered for six months in protected deposit accounts, such as money from the sale of a house³³, and FSCS covers insurance claims at set levels, including 90% for warranty claims³⁴. None of that applies to a Klarna balance.

For purchases, your protection is the consumer law and Section 75 rights described above²³, and for longer-term Klarna products such as Financing, the full consumer credit framework applies. You can check a firm's status yourself on the FCA Register³⁰. In practice, a Klarna balance works as a spending tool rather than a place to keep money you would want protected; larger sums sit in FSCS-protected accounts.