Key takeaways
- Klarna, best known as a buy now, pay later app, is bringing its credit card to the US.
- The credit card is a departure for the BNPL service, which can be used to spread out payments interest-free and without a hard credit inquiry.
- You can add your name to a waitlist for now, but details about the card -- including its APR -- are limited.
Klarna is staking a claim in enemy territory. The popular buy now, pay later service is taking on credit cards with its own offering, and you can now join a waitlist to apply before the Klarna Card* becomes available in the US.
The new card will let you earn 10% cash back on purchases made in the Klarna app with no annual fees or foreign transaction fees, according to a company press release.
Since Klarna and other BNPL apps arrived on the scene in the early 2010s, they’ve become a popular alternative to high-interest credit cards. These services offer a way to split up a purchase into interest-free payments, typically spread over six to eight weeks.
Klarna recently released the results of a survey, touting that 96% of purchases made in the US using Klarna were paid early or on time. By comparison, according to the survey, 41% of credit card users carry balances from month to month.
The Klarna Card is already available to customers in Germany, Sweden and the United Kingdom. Here’s what to expect when the Klarna card hits the US.
What is the Klarna Card?
The US version of the Klarna Card will be issued by WebBank. It’ll only be available to US residents 18 and older who’ve previously made a purchase through Klarna and repaid on time at least once.
The card’s features look similar to other no-annual fee credit cards, despite the company promoting it as a “healthier and more sustainable” option for people who want flexible payment options.
The Klarna Card’s benefits include:
- No annual fee or monthly fees
- No foreign transaction fees
- Earn up to 10% cash back on eligible purchases in the Klarna app
- Monitor spending in the Klarna app
- Access to Klarna’s AI Assistant
The Klarna Card is accepted more widely than the BNPL service -- it can can be used anywhere Visa is accepted. But unlike Klarna’s BNPL options for purchases, which only require a soft credit inquiry, the Klarna Card will require applicants to pass a full credit check with a hard inquiry on their credit reports, which can ding their credit score.
The company says the new Klarna credit card will be rolled out to eligible applicants on the waiting list in the coming months.
How will the Klarna Card stack up?
Details on the new US Klarna Card are scarce so far. The company has yet to disclose the card’s interest rates and other fees that could apply, for example, including late fees and returned payment fees.
The main benefits of the Klarna Card appear to be its lack of an annual fee and foreign transaction fees, access to shopping through the Klarna app and the ability to earn 10% cash back on eligible purchases.
Although that rate is a lot higher than most cash-back rewards, the best rewards credit cards let you earn cash back or rewards points on every purchase they make -- not just one category.
‘Flexible’ payment options?
The press release trumpets the Klarna Card’s “flexible payment options,” which it describes as the option to pay your monthly statement in full on or before the due date at zero interest or “to pay over time or move a purchase to the next statement with interest.” But those options sound a lot like most credit cards.
The majority of credit cards offer a grace period when your statement balance is due, during which you can pay your balance in full and avoid credit card interest. You can also pay your credit card bill early, or you can carry the balance on a card to the next statement period with interest.
Should you get the Klarna Card if you use the app?
Since Klarna hasn’t released any information about the Klarna Card’s APR, it’s hard to compare how its interest rate stacks up to the BNPL options. Klarna’s installment plans include two interest-free options: Pay in 4 (four payments over six weeks) or Pay in 30 days, along with monthly financing ranging from 0% to 33.99%.
For those with limited credit, BNPL services like Klarna offer the potential to spread out payments without having to apply for a credit card. The Klarna Card requires an application and hard credit inquiry, but also offers cardholders the potential to build their credit score by using the card responsibly. Klarna’s BNPL option is also only available at 500,000 global retailers, whereas the Klarna Card, could be used at more than 130 million merchants in more than 200 countries and territories where Visa is accepted.
*All information about the Klarna Card has been collected independently by CNET and has not been reviewed by the issuer.
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