Klarna balance and the Klarna Card, assessed on who holds the deposit

Most assessments on this desk begin with a payment schedule. This one begins with a question that has no schedule attached: when you move your own cash into a payments app, which company is holding it? Klarna’s US legal index carries three documents under that one product name, and two of them are contracts with a different company on the other side.

What the published documents say

One name, two counterparties

The deposit agreement is unusually direct about who is on the other side of it. It says it “defines the relationship between you, the depositor” and WebBank, “the provider of the Klarna balance Account and the Klarna Card”, and that the account is held at WebBank, Member FDIC. Every “we” in it is the bank, not the app.

Published in the same index is a second contract, the Klarna balance Terms & Conditions, which is between the customer and Klarna Inc. and which opens by calling Klarna balance “a gift card account”. The funds in it are, “[u]nless otherwise required by law or permitted by this Agreement”, “nonrefundable and may not be redeemed for cash”. The carve-out leads, and is never sized. The words FDIC and insurance do not appear in the document at all.

One product name, two entities, and a very large difference in what the customer is holding — and the index does not tell a reader which of them they signed.

The insurance sentence, read closely

Section M does three things well and one thing that stops short. It names the bank. It says plainly that “Klarna is not an FDIC-insured bank and deposit insurance only covers the failure of WebBank”. It adds that loans obtained with the Klarna Card “are not insured by the FDIC and are not deposits”, closing the obvious confusion for a card that does both jobs.

Then it says deposits “are eligible for pass-through deposit insurance coverage if certain conditions are satisfied”, without saying what the conditions are. It also warns that money made available before WebBank receives it “may not be FDIC insured until actually received by WebBank” — a window in which the balance shown in the app is not the balance at the bank.

We have set out elsewhere why the entity holding the money is the first question to ask a neobank. Klarna answers it. It is the follow-up — under exactly what conditions — where the reader is asked to take eligibility on trust.

The rate table has moved, and the fees have not

The Rates & Fees document effective 1 June 2026 carries membership tiers at $4.99, $9.99, $19.99 and $44.99 a month above a free Standard tier. Until 2 July 2026 those tiers bought an Interest Rate Booster — 3.23% on Max — taking that tier to 3.24% interest and a 3.28% APY. The same document states that on and after 3 July 2026 the Booster no longer applies and every tier, Standard to Max, earns 0.01% interest at 0.01% APY. The fees are unchanged: as published today, the top plan costs $539.88 a year and earns the rate the free one earns.

The clause that decides what a deposit is for

Section J grants the bank “a right of setoff to, and a security interest in, all of your accounts” for a debt owed to it or any of its affiliates that is “due or overdue”, and says it need not give prior notice except as law requires. A carve-out excludes debt “created under or in connection with a consumer credit card plan”; whether the card’s instalment loans sit inside it is a question for the separate loan agreement.

The structural point survives either answer. The card runs in debit mode against the balance and, once a loan is approved, in credit mode instead — and the disclosure box at the top of the same agreement prices that credit at up to 35.99% APR on Installment Loans, with a late fee of up to $7 and a $1.29 to $5.99 origination fee on Pay in 4 Installments with Fee.

What Klarna Inc. is, on its own filings

Klarna’s licence page lists state money-transmission, consumer-lender, instalment-lender and collection-agency licences — the permissions of a lender and a money transmitter. On 6 July 2026 the company announced applications to the Utah Department of Financial Institutions and the FDIC to establish Klarna Bank USA, a proposed Utah-chartered industrial bank. That is an application, not a licence, and it was still open as this was written: on 12 August 2026 the Independent Community Bankers of America and the Bank Policy Institute wrote jointly to the FDIC opposing it and asking the agency to pause processing industrial-bank deposit-insurance applications. Klarna’s press index records no decision through 28 August 2026. The bank here is WebBank.

Pros and cons

Verdict

What the score measures is the paperwork, not whether the account is worth having. Where Klarna writes about WebBank it is clear and specific. Where it writes about Klarna balance it has let one phrase cover a bank deposit in one document and a gift-card account in another.

The practical reading is short. Find out which agreement you accepted, because only one mentions a bank. Then read section J, because a deposit that secures a debt is doing a second job nobody showed you at sign-up. Nothing here is advice.

One last thing about the card. It is a debit card until it is not: switch it into credit mode and the purchase becomes a loan on a separate agreement, at that agreement’s APR and late fee, with whatever collections and credit-file consequences your provider and your market attach to falling behind. The plastic does not change. The product does.