Klarna will begin charging late payment fees from March 16th
The large Buy Now Pay Later (BNPL) firm, Klarna, will begin charging late payment fees for missed payments on orders placed on or after March 16th. Here is everything you need to know.
What are late payment fees?
As the name suggests, these fees will be incurred by a customer who misses any repayments for products or services purchased using Klarna’s buy now, pay later option. These charges will come into effect on March the 16th and will only affect products bought on or after this date.
Buy now pay later services have boomed in popularity over recent years, with the number of monthly active users on the Klarna app increasing by over 200% year-on-year in early 2021 (Statista, 2022). Many shoppers have also used BNPL to help with the rising cost of living and many supermarkets have introduced their own version of the interest-free credit.
Although, on the surface, Klarna’s buy now pay later offer may seem irresistible, concerns from the likes of Martin Lewis have been voiced. In particular, BNPL is making it extremely easy for customers to spend beyond their means and in turn, be unable to meet their agreed repayments.
Just a few weeks prior to this, Klarna posted a yearly loss of $1bn. This is the largest loss reported by the company and some have speculated this could be the driving force behind the new late payment fees. However, these fees are not unusual, with other buy now pay later firms such as Clearpay charging an initial £6 fee for missed payments.
How much will Klarna late payment fees be?
Klarna has confirmed they will be charging customers a £5 late payment fee. This will be added to accounts where payments have been unpaid for the 7 days after the due date. If this remains unpaid, an additional £5 will be added to the outstanding total
This means that Klarna can charge a total of £10 for missed payments. However, the buy now pay later firm has confirmed that there will be no surprises when the fees hit your account. In the 7 days after a missed payment, Klarna will send multiple notifications to encourage you to pay our outstanding balance before the additional fees are applied.
Should you need to, Klarna does offer the option to extend the grace period from 7 to 10 days, giving you extra time to pay your balance.
Is Klarna safe to use?
We have spoken before about the dangers of buy now pay later schemes, including:
- Encouraging customers to spend over their means;
- Failing to make your repayments;
- Missed repayments showing on your credit file;
- And falling into debt.
These points can seem daunting to many, so it is no wonder people are asking ‘is Klarna safe?’.
In theory, yes, it is. But with any credit option you must ensure you are using it wisely.
Klarna and many other BNPL firms offer credit options at an interest free rate so, if you know you can comfortably make your repayments, they can help to spread the cost at no additional expense.
However, if you are unsure if you can meet your repayment terms you should avoid this option, especially for non-essentials. Once your payments are missed, not only will you incur the late payment costs, but it is easy for customers to then slip into a cycle of debt. In December 2022 alone, 12.9% of those who came to us for debt advice did so because they borrowed more than they could afford to repay.
Debt help for buy now pay later
If you have missed a repayment and slipped into debt, we can help. Our online debt advice tool offers free, impartial and no-obligation debt advice online. This means there is no need for you to call up or book a face to face meeting with an advisor, unless this is your preference.
The debt advice tool will simply ask you to fill out your details, for example how much debt you are in and your monthly/ weekly income, and use this to work out which debt solution could be the best option for you.
Don’t struggle with debt alone, access our online debt advice tool here.