Banking and Money in Japan
Take control of your banking and financial planning.
Bank Accounts
Japan’s banking system has changed greatly over the last few years, but with city banks, regional banks and foreign banking institutions what is going to be the best option for you, where you live and with your needs? In Japan it is common to have two or three different banks that you use. When choosing a bank it is advisable to first do enough research.
Bank links
One of the things you should consider is the number of branches that the bank has and their location. If it will be difficult for you to take out money or visit the bank if you don’t have any branch close to where you live or work then maybe you should consider another bank; language can also be an important factor when choosing a bank.
For those not proficient in Japanese dealing with Japanese banks can be difficult and frustrating as information will be in Japanese and the bank staff will, generally, have limited knowledge of English. Choosing a foreign bank could therefore be a wise choice; for those who wish to be able to conduct bank affairs online Shinsei Bank is commonly used by foreigners living in Japan.
You can learn more about setting up a bank account in Japan here.
Sending/Transferring Money
Sending money to your home country or transferring it within Japan doesn’t have to be difficult, this section is here to help make things as easy as possible. There are a number of options available for sending money overseas.
Companies that can help you transfer money
When transferring money the two things to keep in mind and to check is the fee that the institution takes to transfer the money and the exchange rate. It can sometimes be worthwhile to choose a bank with higher fees to get a better exchange rate, especially if you transfer large amounts of money. Saving up to transfer a larger amount to a better exchange rate but with a higher fee could be a good solution.
You also need to consider the time the transfer will take. The fastest way is by telegraphic transfer (”TT”), but you pay for the convenience – most banks charge either 2,500 or 4,500 yen per transfer (4,500 for urgent TTs) for most currencies. When you make your transfer also keep in mind that you will be required to pay the fee of intermediary banks which is normally deducted from the money deposited.
To read more about sending/ transferring money go here.
Getting a Loan
To qualify for a loan foreigners living in Japan previously needed to show that they had lived in Japan for a number of years. However today there has been a loosening of the previously strict regulations. Still many banks require Permanent Resident status for loan applicants.
Companies that offer loans
Some general requirements when applying is as below.
- Japanese national or Permanent Resident of Japan
- Applicant 20-60 years old
- Stable income
Savings
Foreign Currency Savings Accounts
Most major Japanese banks now offer foreign currency savings accounts, though interest rates are generally somewhat lower than you would expect to get in your home countries. If you keep yen savings, expect to get paid nothing. For the past few years, the Bank of Japan has maintained a near-zero interest rate policy.
Keeping Yen at 0%
HOWEVER, depending on your home currency, you might have actually been better off over the past 2 years keeping yen at 0%. For instance, from April 1, 1998 to March 31, 2000, the yen GAINED 26.4% against the US dollar- far more than you would have made in interest from keeping dollars! The point here is this: don’t expect to get any interest on yen deposits, but perhaps a greater concern is foreign exchange rate fluctuations- which brings us to our next point (see below).
Keep your money at home?
Many people suggest that you should “keep your money in your home currency”. But, it’s not quite that easy. Do you really know for sure what you will be doing/where you will be in a few years from now? Countless foreigners have come to Japan expecting to stay only a year or two and suddenly 10 years have gone by and they’re still here!
World of Global Banking
Also, in today’s world of global banking, the advantages of keeping your home currency simply for convenience are rapidly becoming obsolete. Case: If an Australian kept their savings in Aussie dollars for the past 5 years, they would have seen their savings plummet more than 30% against the US dollar and even more against the yen – ouch!
Keep a Multi-Currency Account?
Of course, the near-zero interest available on yen deposits might not seem very appealing either, but perhaps it would be best to keep a multi-currency account, accruing interest based on an average of the currency mix. For “global people” (like expats in Japan!) banking in only one currency represents a certain degree of risk – regardless of where you are now or plan on ending up in the world!
Investments
Foreigners in Japan (especially new arrivals to Japan) are understandably concerned about what to do with their hard-earned cash. Living abroad doesn’t mean you have to stop planning for the future, if anything it’s the perfect chance to add to start or even add your portfolio. So how can you best make your money work for you? Unfortunately, there’s no way to give you a clear set of guidelines on this one. It depends on your salary (dollars or yen), your level of savings and accommodation plans, etc.
Offshore Investing?
If you clicked on this page you are no doubt curious about the world of investments. If you are living in Japan and away from your home country then this would mean looking at “Offshore” investments. In a nutshell this invariably means investing and savings in a vehicle that is registered in a tax-free jurisdiction.
Getting the right advice
Before investing and embarking on your quest for “offshore” opportunities, you need to understand not only what is available but also who to trust with your money. The first thing is to ensure that your own personal financial objectives are realistic and achievable from your available resources. The next step is to find a financial planning company that is well known and respected in the community and is recommended by friends and colleagues who have used their services. Offshore investment providers use financial planners to distribute their products, you cannot buy directly from the company.
Why use a financial planner?
Financial planners are offshore investors themselves as well as having practical experience of providing client focused advice on their client’s financial affairs. The first stage is information gathering so that the financial planner can establish you appetite for investment risk, goals and timescales. The planner then prepares an in depth report on possible solutions to meet those goals.
A word of caution, there are many people passing themselves off as financial advisors or investment consultants who have little or no experience and are merely trying to sell a one size fits all type of investment for their benefit rather than yours. If you want a truly independent view, do some due diligence of your own to satisfy yourself that the person you deal with knows what they are doing and who places your interests first.
Six steps to choosing the right financial planner
1. Ask friends and colleagues who have been in Japan for a while. They can tell you about both good and bad “investment advice” they have received.
2. Do not succumb to fast sales talk from someone who has phoned you out of the blue, badgering you into meeting them.
3. If you have an offshore investment provider in mind then ask them whom they would recommend. This may not be totally impartial but it helps.
4. When selecting a financial planning company, how long has the company been established, do they have their own office and infrastructure or do they only meet in coffee shops.
5. Always ask for a written report including literature for products recommended including charges.
6. Before implementing any recommendations ask for the rationale for making the proposal.
A final note: Everyone’s circumstances and their priorities are unique to them. Make sure your goals are being met and you are not being squeezed into something you do not feel comfortable with, if in doubt get a second opinion.
Information provided by Magellan Japan.
Credit cards
Credit cards are more and more accepted as a method of payment in Japan. However it is still not as common as in many other countries and especially when leaving metropolitan areas and when shopping in smaller stores you can’t always depend on being able to use your credit card to make payment.
The major credit cards used in Japan are VISA, Master card, Diners Club, American Express, JACCS, Saison and JCB. You will need the same information when you apply for a credit card as you need when opening a bank account. You can apply for a credit card through your bank but you it is also possible to apply for a credit card at other companies. For instance Softbank offer its customers to apply for a Sasion card when purchasing a phone with a payment plan.
Currency exchange
There is no limit on the amount you can bring with you to Japan or take out if Japan but you are required to fill out a customs declaration form if what you transport (currencies, checks or securities) exceeds 1 000 000 yen worth in Japanese currency. You can exchange currencies at most banks and also at the post office. There are also a number of Currency exchange offices that can be of assistance. Make sure to carefully check exchange rates and exchange fees.
Exchange counters at airports don’t usually have very favorable rates and Japan’s airports are no exception to that rule. Whether exchanging your money before arriving in Japan or, when flying from Japan, exchanging it before getting to the airport is recommended. If you need to exchange money at the airport look for a post office (both terminal 1 and 2 at Narita airport have post offices) as the exchange rate at the airport post offices will be the same as other post offices in Japan.
Bank Accounts (continued)
Setting up an account
Setting up an account is relatively easy although if you do not have a decent level of Japanese and choose to use a Japanese bank make sure you have lots of time and try to be patient. The foreign banks and foreign-friendly banks however are usually the fastest and most conveniently way to use when setting up an account.
When setting up a bank account you will always need to bring your Gaijin Card, which is officially called, “Certificate of Alien Registration” (外国人登録証 – gaikokujin-tōrokushō); as a tourist you are not allowed to open up a bank account.
Banks commonly require that you bring a recent utility bill stating your current address. However some, for example Shinsei bank will not require a utility bill if you apply for a bank account at one of their branch offices. You can open an account in most banks by phone or by submitting anapplication by post however it is usually easier to just go down to nearest branch office.
Most Japanese use a Hanko (official seal) to open an account, but foreigners can usually get by with just a signature. Even if a signature usually is accepted it’s wise to get a hanko as even slight differences in how you write your signature could be cause for refusal as the bank will claim that it is a different signature.
Hanko
Hanko is a personal seal that bears your name (or your company name, INKAN) and serves the same purpose as a signature on official documents. It is common to have more than one seal: an everyday seal and a bank seal.
Everyday seals are normally machine-made and sold at a number of locations (you will find them in most stores that sell stationary). The bank seals are sold at special stores and are carved out by hand which makes them individually identifiable. When “signing” documents with your Hanko make sure that the seal is not smudged or only partially visible.
Paying bills
Probably the most convenient way to pay your normal bills (such as utility bills) is to go down to the nearest convenience store (conbini). There is no extra charge for paying your bills at the conbini. You can also pay bills at the post office and at your bank. Most of your everyday banking, including paying bills, can be taken care of at ATM machines. Bills or invoices that require you to transfer money to a bank account can be paid at an ATM or at your bank by an account-to-account transfer (furikomi) and depending on what bank you use a fee could be charged for the transfer.
Checks
Warning: If you can avoid it, don’t bring checks to Japan. Checks are not commonly used, and banks will charge heavy fees to cash them. The most common method to make large payments is by an account-to-account transfer (furikomi).
Post Office Account
It is also possible to set up a Postal Savings Account at most post offices in Japan. You need to bring your Alien Registration Card, Passport or other picture ID when setting up the account. After a few weeks you will receive your cash card and then you will be able to withdraw money from any post office in Japan and many ATM’s; post office accounts can also be used when transferring money (see below).
Sending/Transferring Money (continued)
Bank transfer
Bank transfer is probably the most common way to transfer money abroad. Most banks offer the service of transferring money but the exchange rate as well as the exchange fee can be very different between banks so it can really pay off to investigate the different options the banks have.
Shinsei bank is commonly used among foreigners in Japan to transfer money as well as Lloyds TSB Bank which has a set fee of 2000 yen for overseas transfers regardless of the amount sent. Perhaps the most common way to make transfers is to go down to the bank office or to use online banking but most banks also offer you to make transfers via ATM machines. If you do want to use the ATM to make a overseas transfer make sure you bring someone along that can read Japanese as the ATM’s will not have English translation for transfers.
For those working long hours and with little interest of spending their lunch hour queuing at the bank some larger companies offer their employees the benefit of conducting their bank matters at the office through a bank representative that will visit the company at regular intervals. Not the fastest alternative but a convenient way of transferring money overseas.
Transferring through the Post Office
To transfer money you can also visit your local Post Office to transfer your money either by TT or by mail. At the Post Office you can send money overseas via telegraphic transfer with fees ranging from 1,000 to 2,500 yen, depending on the amount (up to 1,000,000 yen- 500 yen for every additional 500,000 yen).
It is also possible to send money by using Registered Mail which currently costs from 420 yen for letters and 360 yen for parcels. The registered mail can be insured. You should keep in mind that sending money through Registered Mail could take up to two weeks so if you need to transfer the money fast it’s better to use TT.
