Friday, September 02, 2011

Credit Card Guide #4: Do you really need a card?

Welcome to AccessJ's final installment of our Japanese credit card super series. Now that we have covered the in's and out's of getting a credit card and the application process, lets consider if this whole rigmarole is really worth it.

Read on...

Before getting involved with any sort of financial product, it is always a good idea to step back and think about potential pitfalls and benefits. Like in any other country, Japanese credit card applications are full of fine print and financial minutia. Plus, no one likes going into debt. Let's take a look at some potential pros and cons of getting your own line of credit.

Online Shopping- While Japanese consumers have been a bit slower to catch on to the Internet shopping wave as compared to other countries, it is still a big deal and only getting bigger. There are many ways to pay for your online goods in Japan (many companies, such as Amazon, offer pay-on-delivery or via a convenience store), but having a credit card will certainly reduce the hassle of paying, give more flexibility in what you can buy, and generally make life easier for the frequent online shopper.

Not Needing Wads of Cash- When I am back home in the USA, I rarely find more than $20 in my wallet at any given time. However, in Japan carrying around 20 times that is a pretty common occurrence. Nevertheless, since credit card terminals are becoming more and more wide spread, having your own card will reduce the potential impact of theft, losing bills, and the dreaded Alcohol-Induced Wallet Displacement Syndrome (AIWDS). Unlike large wads of bills, credit cards can at least be canceled and replaced.

Not Worrying About Currency Rates- As we have discussed previously, you can use your home country credit card just about anywhere domestic cards are accepted. While this will save you the hassle of applying for a Japanese card, it creates all sorts of headaches when trying to figure out currency conversions as well as the potential for incurring large transaction fees.

Travel Abroad- Somewhere down the line, some Japanese bank big-wig thought it would be a great idea to put the bank (ATM) card magnetic stripe on the front of the card, rather than the back. While this may be all quirky and cool, people say it pretty much renders your Japanese bank card useless when overseas. However, Japanese credit cards do have magnetic strips on the back, making them usable at overseas ATMs and shops. If you are a frequent overseas traveler then a Japanese credit card may be a good investment.

Payment Flexibility and Points- When moving into a new place or buying something expensive, it is good to have the option to divide up your payments so you don't totally destroy your bank balance all at once. Plus, like most cards, Japanese companies offer points and rewards in exchange for maintaining your custom at specific stores.

ETC- As we discussed in the previous sections, Japanese credit cards almost always come with a matching Electronic Toll Collection (ETC) card that can be used in any compatible automobile. Not only does this save the hassle of paying at toll gates, but you also get fairly substantial discounts (see our previous article about highway travel) when driving plus the ability to earn points toward free travel. While you can get your own card separate from your credit account if you so desire, the process is a bit complicated and involves putting down a rather hefty deposit.

Fees- Card issuers aren't in the business of making your life easier for free. Many cards have annual fees ranging from anywhere from 1000 yen to over 10,000 yen. Others might have certain conditions such as signing up for a bank account or charging a certain amount per year. Other card issuers will waive fees only if you utilize revolving credit or divide your total credit line into interest bearing payments. While there are plenty of no-annual-fee cards out there, make sure you do your research or find a Japanese speaker to do it for you.

Money Management- One of the biggest problems with credit cards is the simple fact that when you buy something it doesn't feel like you are spending anything. In absence of forking over cold, hard cash, it is easy to ring up a huge bill. This is by no means unique to Japanese credit cards, but when you just starting to get established in a new country or you are not sure of the cost of living then it is easy to rack up debt fast. Moreover, Japanese credit cards are often payed off in full at the end of the month so you may find your bank account suddenly drained.

Linguistic Barriers- Understanding the terms and conditions of a financial contract is no easy feat, even for native speakers. When getting a credit card, you are agreeing to a whole set of potentially onerous terms as well as putting your credit on the line. Missing payments and the like will ding you credit record, which is especially important for those who one day wish to buy fancy cars and real estate. Moreover, any problems that pop up (fraud, ID theft, etc) will have have to be dealt with in Japanese (with rare exceptions for international banks).

While most of the above info is basic financial common sense, it is worthwhile considering, especially when living in a foreign land. That being said, it is much easier to get by in Japan without a credit card compared to most other countries, and not having to deal with the potential pitfalls of credit finance can be liberating for many. 

Well that concludes our AccessJ super feature on Japanese credit cards! Check back soon for more J-living info and please do post any comments, questions, and/or suggestions.

Other Posts in this Series
Part 1: The Basics
Part 2: Application Pointers
Part 3: Filling Out the Application
Part 4: Do You Really Need a Card?


  1. Does Japan have an equivalent to the Credit/Debit card? As in, it's not real credit, but it works anywhere a credit card does, and withdraws straight from your bank account?


    Looks like Rakuten Bank does. Dunno about anyone else.

  3. Some banks have gotten with the debit card program but sometimes the have terms and conditions attached such as maintaining a certain balance or putting down a deposit. Either way, you usually have to go through an application process.

    Also, most banks offer a service called "J-Debit" that is inculded with your regular cash card. If you see a J-Debit sign at a retailer that means you can pay with your cash card and pin. However, the service does close at certain time and its not widely accepted outside for large retailers. Banks hate this service because they loose the ability to charge you for accessing your money so its not heavily promoted.
    See for details

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