Klarna Card: Works like a debit card, but offers a BNPL feature

The Klarna Card is a unique combination of a debit card and buy now, pay later (BNPL) options. The card allows you to pay for purchases in full using your Klarna balance, or you can use the Klarna app and opt into one of Klarna's payment plans for your upcoming purchase.

While the card is available with Klarna's free membership tier, access to any true benefits will require a paid membership; higher-tier plans translate to more rewards. CNBC Select takes a look at where the Klarna Card could fit into your financial life, and if it's a good fit for you.

The Klarna Card doesn't offer a welcome bonus.

The exact benefits and perks of the Klarna Card will depend on the membership tier you sign up for:

Standard

• Cost: Free
• Interest on Klarna balance: 0.01%
• Klarna exclusive merchant deals: N/A
• App purchase deals: N/A
• Cash back: None
• Waived fees: None

Member

• Cost: $3.49 per month, first month free
• Interest on Klarna balance: 2.82%
• Klarna exclusive merchant deals: N/A
• App purchase deals: N/A
• Cash back: 0.5% back on up to $5,000 a month when you pay in full with your Klarna balance
• Waived fees: On two Pay in 4 purchases per month

Plus

• Cost: $7.99 per month, first month free
• Interest on Klarna balance: 3.22%
• Klarna exclusive merchant deals: Up to $80 per month (activation required)
• App purchase deals: One $8 discount every three months at any partner merchant (activation required)
• Cash back: 1% back on up to $5,000 a month when you pay in full with your Klarna balance
• Waived fees: On all Pay in 4 purchases

What this card offers is flexibility to pay for a purchase in full or over time, and you can make that choice at checkout. There are three main payment plan options:

• Pay in 4: Split your purchase into 4 interest-free payments. The first payment you make at checkout and other payments are automatically paid every two weeks.
• Pay in 30 days: Pay up to 30 days later with no fees or interest when you pay on time.
• Pay over time: Payment terms of six to 24 months.

All the credit checks required for these offers are soft pulls.

The free plan doesn't offer much, with no cash-back rewards, only 0.01% interest on your Klarna balance and doesn't even come with a physical card, just a virtual one. Even the most expensive plan only offers 1% cash back on your purchases, and would cost almost $90 for the first year, including the free month. The paid plans offer elevated interest rates on your Klarna balance, which is a nice bonus. However, having to manually activate each deal in the Klarna app for up to $80 in merchant deals could get a little repetitive.

Earning

You're Klarna Card will earn varying levels of cash back depending on your membership tier. You can earn up to 1% cash back on your purchases. If you pay for the highest membership tier, you'll also have additional opportunities to earn cash back at select merchants.

Redeeming

You can use the funds in your Klarna balance to pay for purchases or Klarna services, such as Pay in 4 payments. You can also withdraw funds from your Klarna balance to a connected bank account.

While the Klarna card itself has no annual fees, it has paid membership levels with additional benefits. If you select a payment plan via the Klarna card, there may be additional fees or interest.

Klarna Card vs. PayPal Debit Card

The PayPal Debit Card offers up to 5% cash back, which is high for a debit card. You can select from one of five categories, including restaurants and groceries, up to $1,000 a month in spending. The rewards you earn can be redeemed for straightforward options, like cash back or gift cards.

While this card offers a stronger rewards program, it doesn't offer any kind of BNPL option. You can load the PayPal Debit Card from a bank account or debit card, and even set it to auto-fund on a set schedule or when your PayPal balance dips below a certain amount. The PayPal card is likely better for those looking to maximize their rewards, instead of paying over time.

Klarna Card vs. U.S. Bank Split™ World Mastercard®

While the U.S. Bank Split™ World Mastercard® is a credit card, it offers a similar payment plan feature to the Klarna Card. All purchases are automatically split into a three-month interest-free payment plan. You can extend purchases of over $100 to 6- or 12-month payment plans for a fixed 1.5% monthly fee (based on the original amount).

The U.S. Bank Split card doesn't require a paid membership to earn greater benefits and has no annual fee. Its main feature is the ability to split purchases. It doesn't offer rewards or a welcome bonus, but it comes with certain World Mastercard protections.

The Klarna Card could be an interesting option for people who value the ability to make purchases using a payment plan and always pay on time. However, BNPL plans can be expensive if you're not vigilant about payment dates because of the potential fees and interest.

For those who'd prefer to get more valuable rewards or better additional benefits and protections, there are better options available.

At CNBC Select, our mission is to provide our readers with high-quality service journalism and comprehensive consumer advice so they can make informed decisions with their money. Every credit card review is based on rigorous reporting by our team of expert writers and editors with extensive knowledge of credit card products. While CNBC Select earns a commission from affiliate partners on many offers and links, we create all our content without input from our commercial team or any outside third parties, and we pride ourselves on our journalistic standards and ethics.

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* Information about the U.S. Bank Split™ World Mastercard® has been collected independently by CNBC Select and has not been reviewed or provided by the issuer of the card prior to publication.