Klarna, a financial service best known for its buy now, pay later app, announced on Tuesday it's launching a new debit card with BNPL features.
The new debit card lets people load funds onto the card and use it like a debit card, or access a buy now, pay later plan.
BNPL plans are typically popular as an alternative to credit cards, but the Klarna Card seems to be combining debit, credit and payment plans into a single card. However, the paid features likely aren't worth it, and it lacks some key protections that credit cards offer.
This isn't the BNPL service's first foray into the cards territory. Klarna launched the Klarna Credit Card, a no-annual-fee card that works more like a charge card, in 2022 and issued a US version in 2024.
The company said it's currently testing the debit card in the US with plans for a wider rollout in the US and Europe later this year. Here's what we know about it so far.
How the Klarna debit card works
The new product will offer a mix of features similar to those of both a credit card and a debit card.
You can load funds onto the Klarna Card and use it like you would a standard debit card, but you're able to select if you want to finance a purchase at the point of sale by using either Klarna's Pay-in-4 or Pay Later plans.
Klarna told CNET that using Pay-in-4 will incur a charge of $1 to $3, which will be added to the down payment. Pay Later allows people to pay off a purchase up to 30 days after it's made.
If you're going to use BNPL, I'd recommend not opting for the Pay-in-4 option with the Klarna card, since others like Afterpay, Affirm and even Klarna itself don't charge you money to initiate a BNPL installment plan that's paid off in four payments.
Anyone can be approved for the Klarna Card and use it as a debit card without any credit check required.
However, if you want to finance a purchase with a BNPL plan, you'll undergo a soft credit check at the time of purchase. That may cause a slowdown at the register, but we'll see. Klarna also confirmed your activity won't be reported to credit bureaus at this time.
The Klarna Card will work with Visa's Flexible Credential program, which allows you to save multiple forms of payment behind one credential, locked with your biometric. It acts like a payment hub with all of your eligible payment methods.
Wait, isn't that how a credit card works?
You might be thinking, isn't that just a credit card with extra steps? In terms of not having to pay right away, yes. However, the Klarna Card differs from credit cards because it doesn't charge interest, nor does it report activity -- either positive or negative -- to the credit bureaus. You're also limited to extending how long you have to pay off a purchase by a month.
There are typically restrictions on which purchase types and merchants you're able to use Klarna's BNPL plans, whereas a credit card typically offers unfettered access to the kinds of purchases you're able to finance. If you choose to use the Klarna Card's debit payment, you may have fewer restrictions than you would when using Klarna's BNPL plans.
Are Klarna's cash-back rewards worth it?
Once the card is fully released, it will offer a free tier and two paid tiers, according to the press release. The paid tiers -- Member and Plus -- will cost $3.49 and $7.99 monthly, respectively, and will include merchant discounts and cash-back rewards.
Member
- 2.82% APY on Klarna account balance.
- 1% cash back when you pay in full with your Klarna Card.
- 2x rewards on Pay-in-4 at non-integrated partners.
Plus
- 3.22% APY on Klarna balance.
- 2% cash back when you pay in full with your Klarna balance.
- 10x rewards on Pay-in-4 at non-integrated partners.
If you're after cash-back rewards, you don't have to pay for them. Many credit cards offer cash-back rewards for free -- as long as you pay your bill in full each month -- and some debit cards like the Discover Cashback Debit card also come with rewards for no monthly fee. However, depending on the cash-back rate, the tier's fees might wipe out any value you'd get from them.
It's nice that Klarna lets you earn a fairly competitive APY on your balance -- the 3.22% APY the Plus tier offers is similar to many top high-yield savings accounts right now -- but having to pay $7.99 a month for this APY is a steep price.
For reference, if you deposited $250 a month onto your Klarna card and didn't spend it, you'd have $3,000 at the end of the year. You'd earn approximately $44 in interest (depending on how often it's compounded), but you'd have paid nearly $96 a year for this card.
Should you use this card over a standard credit card?
There are some purchase types you shouldn't finance with BNPL, like food or your bills, especially if you'll accrue interest by doing so. The same could be said for credit cards, but as long as you pay off the balance right away, you won't have to worry about interest charges.
Neither of Klarna's financing options linked to its new card charges interest. If you're looking for extra time to pay off a purchase but aren't interested in using credit, this is one alternative.
However, a standard rewards credit card does everything the Klarna Card can, only better. The Klarna card's fees to unlock rewards aren't really worth it, and you'd end up paying more than you'd earn from the card's APY.
"I'm much more in favor of using a credit card for purchases than debit cards or BNPL short-term loans," said John Ulzheimer, a credit expert formerly of FICO, Equifax and Credit.com and founder of creditexpertwitness.com. "Using a debit card-based BNPL isn't 'credit,' so there are no credit-building or credit-rehabilitation benefits."
Ulzheimer said that debit cards lack fraud protections, like liability protections for unauthorized purchases, making them less secure. The Klarna Card's connected wallet is FDIC-insured, but that covers bank failure and not fraudulent charges.
How to sign up for the Klarna debit card
The company is currently testing the Klarna debit card in the US. Once it's available, Klarna said there will be no wait list, so you'll be able to sign up to use it immediately.
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