Klarna rewards and other good stuff

Bockrocker · ‎04-14-2022

So I really haven't seen much discussion of this around here or other places I frequent. Klarna is a BNPL firm that is well known in Europe and gaining traction here in the U.S. They launched their app about 6 months ago but it's gotten somewhat more interesting now that they have launched their own rewards program in Feb 2022. Through the "Vibes" program you earn a $5 gift card for every $250 you route through Klarna. Among the gift card options are Amazon and Walmart, so roughly cash equivalent as far as I am concerned. 5/250= 2% rewards rate. For the purposes of this discussion I am referring to using the "generate one time use card" method of checkout rather than the "checkout with klarna' option on many websites.

Pros:

2% rewards that stack with whatever you normally get. I.e. Klarna+AOD = 5%

Virtual card protects your real CC number

Virtual card is a Visa, but Klarna allows MC/AMEX/Discover as payment options (Costco etc)

Obscures your purchase information from your credit card (could be useful)

You can change payment method mid-plan

Ability to extend 0 interest purchase by an extra 30 days or so compared to just using your CC

Cons:

Obscuring your purchase information also destroys any category bonuses

Adds an extra step

Could complicate warranty/returns

Does not work with Capital One (who initially said it was predatory, but have since started their own BNPL project)

Misc observations from my testing:

1. Paying off your plan early does not affect the rewards rate, in fact...

2. Paying off plans rapidly increases your Klarna limit. They started me at $600 two months ago, I'm at $1500 now. I have heard the cap is 2k but not confirmed.

3. Klarna cards DO work fine with Cashback portals for stacking additional rewards

4. You CAN use in person through a roundabout way, for instance to get the extra 2% cashback on groceries at Walmart. You make a one time card in the app, then add it to Walmart Pay (or Google Pay) and use your phone at checkout. Unclear exactly what restrictions might apply here.

There are restrictions about rent, gambling, gift cards, money orders, alcohol etc. But my experience thus far is that when you use "checkout with klarna'" they receive an itemized receipt that appears in the app, while using one time card only generates the total charge. So it could very well be that purchasing a gift card with a one time card, from somewhere with an acceptable MCC would work perfectly fine (I have not tested this).

Questions? Comments? Pitchforks?

Adkins · ‎04-15-2022

You won't see them talked about much here in the forums because they are going to report as a CFA, which isn't great for your FICO score. Not so much pitchforks around here as general avoidance.

Last HP 08-07-2023

coldfusion · ‎04-15-2022

@Bockrocker wrote:
So it could very well be that purchasing a gift card with a one time card, from somewhere with an acceptable MCC would work perfectly fine (I have not tested this).

One would want to be careful with doing this as it could end up looking like one was engaging in a type of activity that we don't discuss here and which is known to trigger rewards clawbacks and card closures.

(3/2024)
FICO 8 (EX) 846 (TU) 850 (EQ) 850
FICO 9 (EX) 850 (TU) 850 (EQ) 850

$1M+ club

Artist formerly known as the_old_curmudgeon who was formerly known as coldfusion

House1204 · ‎04-15-2022

@Adkins wrote:
You won't see them talked about much here in the forums because they are going to report as a CFA, which isn't great for your FICO score. Not so much pitchforks around here as general avoidance.

I have had Klarna for over a year and they have never reported to any credit bureau for me. It has been a hidden tradeline.

FinStar · ‎04-15-2022

@House1204 wrote:
@Adkins wrote:
You won't see them talked about much here in the forums because they are going to report as a CFA, which isn't great for your FICO score. Not so much pitchforks around here as general avoidance.
I have had Klarna for over a year and they have never reported to any credit bureau for me. It has been a hidden tradeline.

Right. That may very well be the case so far, but that article + others that have been published recently, are indicating that BNPL products may eventually start reporting at some point.