Sezzle vs Klarna

Both Sezzle and Klarna are very familiar names in the Buy Now Pay Later space. They offer very similar payment terms and both are available with many merchants. They key differences is that Sezzle reports to all three major credit bureaus whereas Klarna does not. For those who are looking at a BNPL app that also buids your credit score, Sezzle is the obvious choice over Klarna.

In this comparison, we will look at both BNPL apps in greater detail and help you pick between the two.

What is Sezzle?

Sezzle is a Buy Now Pay Later app that allows you to make purchases from their 48,000 merchant partners and pay over time at 0% interest rate for the most parts. Sezzle offers their app users the option to Pay-in-4, Pay-in-2, and a monthly payment option. Both the Pay-in-4 and Pay-in-2 option have no interest rate (ie 0% APR). The monthly payment option allows you to pay for a purchase over 3-48 months at an interest rate between 0% and 34.99%.

Here is an explaination of how the Pay-in-4 method works for those of you who are unfamiliar with BNPLs. Let's take an example where you purchase something for $100. In the Pay-in-4 method, you will pay at 25% downpayment (which is $25) at checkout and the next 3 equal installments (also $25) in two weeks intervals. That means a standard Pay-in-4 plan is paid off in 6 weeks.

With Sezzle you have to set up two default payments - one for the downpayment and the other for installments. You can use either a debit card or credit card as default payment method for downpayments. For instalment payments, you can use bank accounts, debit or credit cards as payment methods.

Sezzle reports to all three major credit bureaus (TransUnion, Equifax, Experian) if you sign up to Sezzle Up from your app. The program is free to join.

Sezzle Anywhere - Sezzle's Virtual Card

Sezzle also has a virtual card that you can use anywhere Visa is accepted. It can be used both in-store and online. There is a monthly subcription fee for Sezzle Anywhere that varies with different users. Many have reported that they are charged $17.99/month.

What us Klarna?

Klarna is a Buy Now Pay Later app with over 200,000 worldwide retail partners. They offer the usual Pay-in-4 and Monthly Pay payment plans for their app uses as well a pay-in-1-month plan which requires no downpayment. For their monthly payment plan, you can pay over 3-36 months with interest rate ranging from 0% to 21.9%.

Klarna accepts debit cards and major credit cards (Visa, Mastercard, Maestro and Discover) as payment methods.

Unlike Sezzle, Klarna does not report loans and installment payments to any credit bureaus.

Klarna Card

The Klarna Card is both a physical and virtual card that can be used anywhere Visa is accepted. There is no annual or monthly fee and Klarna does not charge any foreign transaction fee. Users of Klarna card can either pay the purchases in full and at the end of the monthly statement at 0% interest or pay over time (3 or 6 monthly payments) with interest.

Similarities

Both Sezzle and Klarna are similar in the following ways:

Both have Pay-in-4 and Monthly Pay Payment Plans

Both Sezzle and Klarna have pay-in-4 and monthly payment plans which are standard in the BNPL industry. Both Pay-in-4 plans also do not charge any interest rates.

No Hard Inquiries

Both Klarna and Sezzle do not perform any hard inquiries. Rather they do only perform a soft credit check which has no impact on your credit score.

Differences

Sezzle is different from Klarna in the following ways:

Sezzle reports 3 major credit bureaus

Sezzle reports your intallment loan and payments when you sign up for Sezzle Up (which is free). In contrast, Klarna does not report to credit bureaus.

Both have slighly different terms for their monthly payment options

Sezzle has a slightly longer term for their monthly financing option. Sezzles' monthly pay option allows you to pay over time from 3-48 months. Klarna's monthly payment plan allows you to pay over time from 3-36 months.

For the monthly payment plan, Sezzle may charge an interest rate of anywhere between 0% - 34.99%. For Klarna, the interest rate will be between 0% and 21.9%. Klarna has a lower maximum rate than Sezzle.

Both also have different payment options

Aside from the standard Pay-in-4 and Monthly Payment options, both Sezzle and Klarna also have other payment methods.

Sezzle has the Pay-in-2 option and Klarna also has the Pay-in-1-month option with no downpayment.

Klarna has more retail partners

Klarna has over 200,000 retail partners worldwide while Sezzle has 48,000 partners.

Klarna has a better credit card

Unlike the Sezzle Anywhere virtual card, the Klarna Card is both a physical and virtual card. It is also better than Sezzle because it has no annual fee or monthly and also does not charge any foreign transaction fee.

Which is better? Sezzle or Klarna?

Sezzle and Klarna is actually very similar and on the surface, they resemble other BNPL apps. They both have the standard Pay-in-4 and Monthly Payment options. Aside from these 2 standard payment methods, both also have other payment options that are unique to themselves. Klarna, though, has significantly more retail merchant partners than Sezzle. If that is an important factor for you, then Klarn would be my choice.

However, Sezzle reports your installment loan and payments to all three major credit bureaus (TransUnion, Equifax and Experian). If you want a BNPL app that also builds your credit, then Sezzle should be your choice.