BUY-now-pay-later firm Klarna has launched an interest-free contactless credit card – but shoppers need to get clued up on it before choosing whether to take one out.
Previously, shoppers have only been able to use Klarna's service when buying purchases online – but the card will let you use the service shopping in stores too.
However, experts have warned about the card encouraging debt among shoppers.
Klarna's new card will let you delay paying for your shopping for up to 30 days interest-free and with no fees if you make a late repayment.
The firm said that 400,000 consumers had already signed up to a waiting list, showing "strong demand for a new approach to credit".
After this point, shoppers could see their credit scores hit and debt collectors come knocking if they don't clear their debt.
It comes as an estimated eight million adults have debts from BNPL purchases, according to credit reference agency Credit Karma.
The average debt per person stands at £538 per person, with £4billion owed in total.
So, is it worth it? We explain all you need to know about Klarna's new card.
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What is Klarna's new card?
Klarna's new card sounds a lot like a normal credit card, but there are some key differences.
With credit cards, you can spread your payments if you need or want to – but it means you'll likely have to pay more interest in return.
But Klarna's card doesn't charge you any interest fees using the card.
MoneyComms personal finance expert Andrew Hagger said that this is a smaller time period to pay your debt back compared to a standard credit card, which could put pressure on your finances.
"Using a standard credit card and paying off in full can actually give you up to 56 days free credit with the likes of Barclaycard," he said.
If you don't pay the balance on your Klarna card back within 30 days, you won't be charged a late payment fee.
But failing to pay it back could land you in financial trouble – we explain below.
'Easy' to rack up debt
A concern that charities have previously raised about BNPL schemes is how shoppers can easily find themselves in debt and unable to pay back what they've spent.
The Sun has spoken to Brits like Tabby Smith who was left £1,500 in debt and homeless after her use of BNPL services snowballed.
While a quarter of Brits using BNPL have been left unable to pay for monthly essentials like food, rent of bills due to repayments.
Personal finance expert Sara Williams from blog Debt Camel said Buy Now Pay Later schemes like Klarna's new card "makes it too easy to accumulate a lot of debt that has to be paid very soon".
She added: "[This could] possibly [be] more debt than you can afford.
"People who are finding bills and essential expenses too high would do better to talk to a debt adviser than use this new card."
What happens if you're struggling to repay
If you're struggling to repay what you've borrowed on your Klarna card, you could be referred to a debt collection agency.
You are at risk of this happening if you do not clear your debt in 30 days.
It comes as Citizens Advice warned last year that one in 10 BNPL users have been referred to debt collectors after they were unable to make their payments.
Your Klarna card will also be frozen until you pay back what you owe on it – which means you won't be able to use it until you clear your debt.
Think about your credit score
If you're over 18 years-old, you'll be able to apply for a Klarna card – but you'll have to go through a number of affordability checks.
Klarna will look at your income and do a soft credit check to decide whether to approve your application.
Mr Hagger said that while a soft credit check doesn't damage your credit score, you should be aware of how your use of BNPL could affect it if you can't afford to pay back what you spent.
"Consumers can sign up for this card and numerous other BNPL products from different companies without the lenders being aware of these multiple credit applications," he said.
"This could store up possible financial issues and result in write offs or bad debts further down the line – both of which would crucify a borrower's credit record for years to come."
If you're looking to build up your credit history, this card won't help you do that, Credit Karma UK and Canada head of partnerships Akansha Nath said.
He said that those who repay on time "won't see any benefit to their credit score as they would with a traditional credit card".
"So if you're looking to use credit to build a record of sensible borrowing and improve your credit score – this isn't for you," he said.
"Customers who choose to use this card need to be aware of the basics of using credit wisely and borrow only what you can afford and pay back on time.”
Klarna head of UK Alex Marsh said: "Unlike a credit card, we never charge interest or late fees so consumers only ever owe the cost of their original purchase.
"We re-evaluate the amount consumers can spend on a daily basis and we freeze the card as soon as a payment is late, to stop consumers from getting further into debt.
"These controls don’t exist on traditional credit cards because if everyone paid off their credit card bill on time, the lenders would go out of business."
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