Klarna, the buy now, pay later service, will start charging borrowers in the UK a fee for any late or missed payments from March 2023.
As a way to prevent borrowers from defaulting, Klarna losing money, and making them look like a responsible lender, Klarna is introducing a late payment fee in the UK.
Other buy now, pay later lenders already charge missed and late payment fees, and stating from 16 March 2023, Klarna will now start charging too.
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If you miss a repayment, they will charge a £5 fee.
Before paying the fee, Klarna will offer you the option to make an automatic payment to catch back up.
They will also give a 7-day grace period before charging you and will send four reminders to make the missed payment.
Fees will be capped at 25% of the order value, with no more than two fees added to each order.
So, if you place an order under £20, the fee will be lower than £5.
Avoid the fee
As a way to avoid the fees altogether, it’s worthwhile turning on their “autopay” setting, so the repayment comes out automatically. You will usually get a notification or email ahead of the payment, and that’s a good opportunity to check your bank to ensure you have enough money to cover the payment.
It’s also worth adding a calendar reminder on your phone to keep on top of your budget.
And if you cannot make the payment, contact Klarna as soon as possible to let them know.
Also, remember that BNPL appears in your credit report, and missed payments may make it harder to get other credit in the future.
According to reports from MSE, when borrowers take a “financial awareness” test in the app, any late payment fees will be waived. However, this is only in place until 27 April 2023.
In Netherlands and Belgium, they have seen on-time payments improve by 20% since introducing the fee, and they hope more UK customers will also start paying on time to avoid a charge.
Klarna will use the money made from late payment fees to help pay off some of the debts of other borrowers who are in deeper arrears as part of their new “Customer Recovery Programme”, according to CityAM.
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