RetireJapan

Sorry if this is the wrong place for the post.
I’m not very good with calculating interest and working stuff out like this.
I have a basic Rakuten credit card. Aside from 2 huge payments (an aircon and an ebike), I’ve always paid for everything in one payment.

But I want to figure out how much I’ll actually be charged for splitting up payments for some things just to smooth the impact of my monthly spending (as in, if one particular month I have a few biggish payments necessary).
On the Rakuten site it says that if I split something into 3 instalments, the interest will be ¥2.04 per ¥100.
Am I right in assuming that that means if I for example split a ¥10,000 payment into 3 instalments, that I’ll actually pay ¥10,204?
Is there a quick calculation for the price of a product I can do to work out the “real” cost after interest?
Again, sorry for being dumb. Just never had a credit card before living in Japan and never had to work this out before, and want to know if it’ll be financially worth it to pay a little extra for some things to pay over many months instead of blowing it all in one go.
Thanks in advance.

10000 becomes 10204 for 3 payments, correct. This works out to 12% yearly interest which is way way more than you can earn investing normally.

Rakuten's fees become more and more onerous the higher the amount and the more payments you split them into (max 36 times, 15% interest).

Here is their official simulator: https://www.rakuten-card.co.jp/adjustme ... imulation/

Standard advice is to not do this if you can help it. It is never more cost efficient unless you literally do not have the money to pay it.

Better way to do it is to plan for big purchases in advance, and save up the payments in monthly installments *before* you purchase.

Thanks for the replies.
This was mainly for big purchases for things I’m going to need soon but no way I’m going to be able to save up for anyone this year (another aircon, probably a new fridge as old one was third hand when we got it and too small now and on its way out). I don’t have the luxury of waiting for years to save up enough to buy those things outright. I just wanted a rough idea of how much extra I’d have to pay on top of regular price. And an extra few thousand yen is a decent price to pay for a low cost monthly instalment at this current point in time.
It’s definitely not something I want to do. But I need another aircon ASAP, and there’s only so much I can save in the event that my fridge probably breaks within the next couple of months.
It’s not something I plan to do for every purchase going forward.

On your statement, it should tell you the interest rate they have assigned to you for revolving credit, and maybe a separate interest rate for cash advances.

From their Website Q&A

https://support.rakuten-card.jp/faq/sho ... order=desc

The Annual Interest Rates are shown to be
12.25% for 3 months or Y2.04 Interest per Y100
13.5% for 4 months or Y3.4 Interest per Y100
and so on.
15% P.A. for anything over 12 months...


If you split something over 3 months:

Interest = Amount x 2.04 / 100
Interest = Amount x 0.0204

Total Paid = Amount x (1 + 2.04/100)
Total Paid = Amount x (1 + 0.0204)
Total Paid = Amount x 1.0204

If you split something over 4 months:

Interest = Amount x 3.4 / 100
Interest = Amount x 0.034

Total Paid = Amount x (1 + 3.4/100)
Total Paid = Amount x 1.034

and so on to

If you split something over 36 months:

Interest = Amount x 24.48 / 100
Interest = Amount x 0.2448

Total Paid = Amount x (1 + 3.4/100)
Total Paid = Amount x 1.2448



Therefore, paying off you credit card completely every month will deliver a better return than leaving the money on the card and investing it elsewhere, or leaving the cash in the bank.

It is important to note that splitting one time is often FREE with most card. Subsequent splits levy interest.

Many of us may be in a position were we have the money, but want to avoid maxing out a card, etc. The Free split can solves this headache.

Look at your cards policy.

TokyoBoglehead wrote: ↑Sun Jul 31, 2022 5:53 am It is important to note that splitting one time is often FREE with most card. Subsequent splits levy interest.

Many of us may be in a position were we have the money, but want to avoid maxing out a card, etc. The Free split can solves this headache.

Look at your cards policy.

Yeah 2 instalments is free on Rakuten credit card HOWEVER many online shops/services don’t give you the option of 2 instalments, only from 3. Including Rakuten ichiba which is annoying.

KCLenny wrote: ↑Sun Jul 31, 2022 7:26 am

TokyoBoglehead wrote: ↑Sun Jul 31, 2022 5:53 am It is important to note that splitting one time is often FREE with most card. Subsequent splits levy interest.

Many of us may be in a position were we have the money, but want to avoid maxing out a card, etc. The Free split can solves this headache.

Look at your cards policy.

Yeah 2 instalments is free on Rakuten credit card HOWEVER many online shops/services don’t give you the option of 2 instalments, only from 3. Including Rakuten ichiba which is annoying.

They do make it difficult. Maybe it's best to try another credit card if you plan to split?

adamu wrote: ↑Sun Jul 31, 2022 1:05 am Better way to do it is to plan for big purchases in advance, and save up the payments in monthly installments *before* you purchase.

Sometimes people have unexpected purchases, and burn through their emergency funds. They then need to access credit, and it is logical to approach this in the most cost-effective way possible.

Lower-income persons get caught in these cycles. Often characterized by phrases like "It is expensive to be poor" or Sam Vines "Boot theory" https://en.wikipedia.org/wiki/Boots_theory

As low-income people cannot really lower their expenses in most cases, the only way out of this cycle is to focus on increasing their households income. Which is of course more easily said then done.

KCLenny wrote: ↑Sun Jul 31, 2022 7:26 am Yeah 2 instalments is free on Rakuten credit card HOWEVER many online shops/services don’t give you the option of 2 instalments, only from 3. Including Rakuten ichiba which is annoying.

Can't you always change to 2 installments later in the card website? I never did it before, but I always see the advertisement about it.