Keeping Up With Klarna

Klarna.

If you’ve not heard that name then I can probably guess you’re not a millennial and you don’t do online shopping, right?

No matter your age or whether your a regular online shopper or the occasional website browser, you’ll have heard of the new way to pay with Klarna. Helping you to pay for your shopping in instalments or wait 30 days before your payments it seemingly allows people to buy things that don’t fit into their monthly budget by spreading out the payments or delaying them.

When I first saw Klarna, as I’m sure you can guess, it was during lockdown. No shops open, sunny outside and seriously lacking a loungewear wardrobe, I began to browse the likes of ASOS, Missguided and PLT amongst other big brands looking for the perfect Zoom wear. You know, shirt up top and joggers on the bottom but in a stylish way, rather than looking like a total slob.

A lot of the brands and clothes I looked at were expensive and before I’d only ever been able to buy one or two pieces a month without breaking my bank. I looked at the full basket totalling nearly £60 and thought there is no chance I can justify spending that on clothes when I am not even allowed to go anywhere...in stepped Klarna.

I browsed the options and seriously debated whether I could afford it when I saw it. It’s bright pink logo next to the PayPal option, making all the other payment options seem boring, I clicked just to see what it was all about. Then I saw it. Pay in 3 instalments.

The cave of wonders opened before me. I could pay in three instalments? That was totally in my budget and I could pay for it guilt free without worrying about spending too much money on clothes. An immediate down payment and then with another two months to pay of the rest, I felt elated.

How had someone not come up with this before?

The idea that I could shop til I drop and initially spend only 1/3 of the price sounded like heaven. The more sites I went on, the more Klarna came up as an option. It became something of a safety net. Can’t afford the full payment? Get it on Klarna...

I had multiple orders coming through my Klarna account and with the ability to pause payments if you’d returned an item it seemed to get better and better.

It seems completely harmless.

Is it, though?

Keeping up with Klarna payments can be tricky depending on just how many orders you decide to place with them. There is a limit to how much you can spend (and I set a personal limit of only 3 orders at one time) but I started to realise when I felt like I was constantly having payments for Klarna leaving my account that this could actually be way more dangerous that I’d anticipated.

I knew that using a service like Klarna wasn’t giving me a way to get things for free. I understood the soft credit-checks and what could happen if I didn’t make a payment but I trusted myself and my own boundaries. I knew I wouldn’t let it go that far.

I’m extremely lucky to be very money conscious. Not in a stingey way, but I know my budgets. I know how much I can afford and I plan ahead to make sure I can pay for all the instalments. Not just the first one.

I don’t like living paycheque to paycheque and I’m working on it, but for now...I need to live within my means to be able to live a fun and limitless (kind of) life.

Keeping up with Klarna payments has never been an issue for me, but it could be for some people.

I started seeing articles on Facebook and online talking of people losing their houses through using Klarna and racking up hundred’s of pounds worth of debt. This free and hassle-free way to the top brands can be a way to dig yourself a big money hole and if you’re constantly paying off instalments, are you any better off?

Klarna was actually set up in 2005! Initially it was used in the UK to help people try clothes before committing to buying. More recently, it’s been marketed towards students and many are using Klarna to buy the latest trends and keep up with the ever-changing Instagram influencer style. Just like I had so easily done in April this year.

They do have a limit on spending and track how much goes through your account. For example, you can only rack up an invoice of £800 at one time on Klarna...only. They offer a soft credit check which doesn’t affect your scores but the minute you miss a payment, that’s when it can start to have real-life consequences.

By having the option to spend and quench your shopping thirst immediately with Klarna and repaying the full amounts later, it allows the debt to escalate. Making it harder for people to realise the kind of debt they’re getting into.

The realisation that this wasn’t the pink, fluffy, handy payments app I had started to believe it was, I watched my online spending more carefully and really saw how easy it was to say yes with Klarna.

I do believe that it is a great way to afford something you’ve wanted for a while or a great way to treat yourself, but I don’t think it should become a regular way to pay for your online shopping. The more you use it, the easier it gets to keep using it and then you’ll find yourself with so many payments coming out and leaving you potentially out of budget.

If you’re savvy with your spending and in control of your habits, there is no harm in using a service like Klarna. If you’re someone who can easily get sucked into spending and spending, then thinking later... I’d say this app isn’t for you.

Be careful. Keeping up with Klarna may turn into more of a chase if you don’t track your spends.

If you’re wanting to save money monthly for travelling, a wedding, a house... then maybe Klarna could be a way to afford the things you’d like. It also could be a block that’s keeping you from saving by allowing you to spend more.

I guess that it’s a double-edged sword.

I’ll be honest. I made a payment this morning through Klarna for some jeans from ASOS as good jeans can cost a bit but I did it intentionally with the knowledge that I can asbolutely pay each instalment and save money at the same time.

So, what’s my point?

My point is to be aware when you’re shopping online. Be aware of how these things work. Be aware of the money you’re actually spending and be aware of your own boundaries and limits. Be aware that even though you want that dress, it might not be possible even with Klarna as an option.

Take control yourself and don’t give power to the buy-now-pay-later, because you could end up paying later in more ways than one.

Happy shopping and once again. Be careful.

Keep up with Klarna and you’ll be fine.