Credit Building > Klarna vs Clearpay: Understanding Your Buy Now, Pay Later Options

Klarna vs Clearpay: Understanding Your Buy Now, Pay Later Options

Wollit Team1 minute read · Updated 18th February 2025

Buy now, pay later (BNPL) services have become increasingly popular for online shopping in the UK. Two major players, Klarna and Clearpay, offer ways to split purchase costs into installments. But how do they compare, and what should you know before using them?

How Do These Services Work?

Klarna offers several payment options:

Pay in 30 days: Try items before paying
Pay in 3: Split cost into three interest-free payments over 60 days
Financing: Spread costs over 6-36 months (up to 18.9% APR)

Clearpay keeps things simpler with one main option:

Pay in 4: Split purchase into four equal payments over six weeks
No interest if you pay on time
Payments align with typical pay cycles

Key Differences That Matter

The main distinction lies in flexibility versus simplicity. Klarna provides more payment options, making it suitable for larger purchases and different financial situations. Clearpay focuses on a straightforward four-payment approach, which some find easier to manage.

When it comes to fees, there's a notable difference in approach. Clearpay charges £6 for missed payments (capped at £36 or 25% of order value). Klarna doesn't charge specific late fees but warns about potential credit score impacts from missed payments.

Klarna operates globally with more retail partners, while Clearpay primarily serves the UK market. This means Klarna typically offers more shopping options but might feel more complex to navigate.

Understanding the Risks

While BNPL services can seem convenient, they come with potential drawbacks:

Payment management becomes more complex as you use multiple BNPL services. Missing payments can affect your credit score and lead to fees. It's easy to lose track of total spending when splitting multiple purchases.

A More Structured Approach to Credit

If you're looking to build your credit score, consider whether BNPL services align with your financial goals. While they offer shopping flexibility, they don't always contribute positively to your credit profile.

Wollit's Credit Builder offers a more structured approach to improving your credit score. Instead of managing multiple payment schedules, you make one simple monthly payment that's reported to all major credit reference agencies. This helps build your credit profile in a controlled, predictable way.

Making Your Choice

When deciding between Klarna and Clearpay, consider:

How often you shop online
Whether you prefer multiple payment options or simple installments
Your ability to track and manage payments
The potential impact on your credit score

Remember that while BNPL services can be useful tools, they work best when used sparingly and with careful planning. If building credit is your primary goal, consider options specifically designed for credit improvement.