How the installment fee is calculated
Korean card installment fees work like an equal-principal loan: each month you repay 1/n of the principal, and the fee that month is charged on whatever principal balance is still outstanding — so the fee shrinks every month even though the rate stays fixed.
- Principal — the amount being paid in installments
- Annual rate — the card's annual installment fee rate (%)
- Months — the number of installment months
More detail
Why the fee isn't just principal × rate × months
Because the outstanding balance falls by 1/n every month, the fee is really the sum of n shrinking monthly charges, not one flat charge repeated n times. For a 1,000,000 principal at 18% over 3 months, the balance owed before each payment is 1,000,000 / 666,667 / 333,333, giving monthly fees of 15,000 / 10,000 / 5,000 — a total of 30,000, not 1,000,000 × 18% ÷ 12 × 3 = 45,000.
Card tip. If your purchase qualifies for both a paid installment and a promotional interest-free installment of the same length, the interest-free option always costs less — the 'total installment fee' figure above is exactly what you'd save by choosing it.
Frequently asked questions
How much fee do I pay on a 1,000,000 won purchase over 3 months at 18%?
The total fee is 1,000,000 × 18 × 4 ÷ 2400 = 30,000 won, for an average monthly payment of about 343,333 won and an effective fee rate of 3% of the principal.
Why does a longer installment term cost more in total fees?
Because the fee is charged on the outstanding balance every month, more months means more months of interest accruing on unpaid principal. Total fee scales with (months + 1), not with months directly: at 1,000,000 won and 18%, 3 months costs 30,000 won but 6 months costs 52,500 won — 1.75×, not double, even though the term doubled.
Is paying in installments always worse than paying in full?
In terms of total cost, yes whenever a fee rate applies — installments only add a fee on top of the same principal. The main reason to choose installments despite the fee is cash-flow timing, not saving money, unless the installment is explicitly interest-free (0%).
Why is my card's actual fee slightly different from this result?
Some issuers round each month's fee to the nearest 10 or 100 won, or use a very slightly different day-count convention, which can shift the total by a small amount. Treat this calculator's result as a close estimate and check your card's statement for the exact figure.