You’ve got the cash. You could swipe your card today, pay off a $1,700 bill and move on. But Klarna is offering to split the purchase into four interest-free installments, letting you keep your money parked in a high-yield savings account a bit longer.
On paper, that sounds like a form of free optimization. But is there any real downside if you’re not financially stressed?
In many cases, yes — and the risks have less to do with the math and more to do with how Buy Now, Pay Later (BNPL) products are designed to feel effortless and easy to ignore.
Klarna’s popular “Pay in 4” option involves four equal payments, every two weeks, typically with no interest.
In an Achieve Center for Consumer Insights survey of BNPL users, 34% said their primary reason for choosing services like Klarna was the ability to pay over time without paying interest (1) — a key draw even for shoppers who could otherwise afford the purchase outright.
Convenience and ease of approval are other common motivators for using this type of service. (1)
So, for a financially stable shopper with money in the bank, that logic seems airtight. But the convenience can mask some less obvious structural risks.
BNPL is frictionless by design, which is partly why some people miss payments even when they can afford them.
LendingTree notes that 42% of BNPL users had at least one late payment in the past year. (2) This can be for a number of reasons, including autopay failures, forgotten accounts or switching banks or cards.
Unlike a credit card bill you see every month, BNPL payments are spread across multiple retailers, each with its own schedule. That means a failed debit, expired card or closed account can quietly push you into delinquency.
Klarna warns that missed payments could result in late fees and collections activity. (3)
BNPL plans are often presented at checkout as a quick, interest-free way to “split” a purchase rather than as a traditional loan. But regulators note that these plans are still a form of credit with more conditions and fewer protections than credit cards (more on this later).
It’s important to know that services like Klarna may report some payment activity to credit bureaus, particularly when accounts become delinquent or default (4).
That means your $1,700 purchase — which you might never risk missing on a traditional credit card — can still hurt your credit if a technical glitch affects autopay or you miss paying for another reason.
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“Phantom debt” describes BNPL obligations that don’t appear in traditional credit reports, even though they’re real liabilities.
Because most BNPL loans are not fully reported to credit bureaus, lenders and consumers may see an incomplete picture of how much debt someone is carrying.
People who use BNPL services also carry higher credit card balances than non-users. In fact, the Consumer Financial Protection Bureau (CFPB) found that average credit card utilization was roughly 60–66% among BNPL borrowers, compared with about 34% for people who never used BNPL (5).
This suggests BNPL use frequently occurs alongside high credit obligations.
In other words, you may feel debt-free while quietly stacking obligations across Klarna or other similar services, but that perception may not reflect reality.
BNPL also removes some of the consumer protections you’re likely used to.
For example, the CFPB (6) notes that BNPL plans have historically left consumers unsure whether they can receive a refund if something goes wrong with a purchase. This is in stark contrast to credit cards, which have long‑standing, legally mandated protections that let cardholders dispute unauthorized charges and initiate refunds quickly.
Because many shoppers “don’t know if they will get a refund if they return their product” when using BNPL, this prompted new guidance to extend credit‑card‑style protections to BNPL users. (6)
Likewise, Consumer Reports Advocacy points out that BNPL users often face a more complex refund process because the services do not automatically provide the same “chargeback” rights that come with traditional credit cards. (7)
So, if that $1,700 item is back-ordered, defective or returned, you may still have to keep paying Klarna while the merchant sorts things out.
Behavioral research (8) shows that the BNPL structure — breaking a purchase into small, interest‑free installments — alters how people perceive cost, making purchases feel less expensive and encouraging higher spending than traditional payment methods.
This effect occurs even when buyers can afford the item up front, because deferred payments reduce the psychological “pain of paying.” It’s how even disciplined savers end up juggling multiple “harmless” BNPL plans at once.
If you can afford the $1,700 purchase, Klarna is unlikely to derail your finances. There’s no shame in using BNPL if you use it responsibly.
The important thing is to understand the hidden risks that aren’t obvious from the marketing you see. BNPL is still debt, after all — just quieter, easier to forget, less protected debt.
It’s best to pay upfront when you:
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Don’t want to track another autopay
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Value strong dispute rights and refund protections
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Already using BNPL plans elsewhere
And consider BNPL only if you:
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Set calendar reminders in addition to autopay
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Keep a running list of every installment plan
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Are willing to accept reduced protections in exchange for small interest gains
Keeping your cash in savings for a few extra weeks might earn you a few dollars. The trade-off is a system built to make debt feel like nothing at all — until it isn’t.
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Article sources
We rely only on vetted sources and credible third-party reporting. For details, see our editorial ethics and guidelines.
Achieve/PR Newswire (1; LendingTree (2); Klarna (3); (4); Consumer Financial Protection Bureau (CFPB) (5); (6); Consumer Reports Agency (7); ScienceDirect (8).
This article provides information only and should not be construed as advice. It is provided without warranty of any kind.
