Friday, December 23, 2011

Banking in Japan #3: Savings and Fixed Deposits

Today we will cover savings and deposit options from your local bank.

Types of Accounts 
In addition to the standard non-checking savings account (chochiku koza 貯蓄口座), most local and national banks offer a wide variety of savings options. Since Japanese banks offer interest in range of a fraction of a percent, don't bank on much growth.

  • The most popular type of savings account is known as a teiki yokin (定期預金) which is basically the same as a Certificate of Deposit or fixed deposit in the West. These accounts offer a fixed interest for a certain period of time (ranging from a month to 10-20 years) after which the money can be withdrawn or reinvested in another account. Many banks also offer variable interest rate deposits (henko rikin teiki yokin 変更利金定期預金) which fluctuate with the market. It may be possible to have part of your pay check directed into a fixed deposit account, depending on the bank.
    • Many local banks have special tailored products for families looking to save for higher education or building a new house. Consult your local bank to see what is available and about restrictions, interest rates, tax obligations and fees.
  • Another popular type of account is a Japanese Government Bond account (国庫債券) which can be purchased through JP bank or directly through treasury auctions. The dynamics and rules of bond buying, hedging and holding are extremely complex so unless you have a good understanding of how bonds work it is best to focus on more traditional accounts.
  • If you don't want to save in yen, you can always look for a foriegn currency fixed deposit account (gaishi teiki yokin 外資定期預金) or regular foreign currency account (外資普通預金 gaishi futsu yokin). Keep in mind that betting on foreign currency versus the yen is highly speculative so these forms of saving accounts carry additional risk.
  • In addition to the above mentioned accounts, many banks offer trust/investment accounts (toshi shintaku 投資信託) to manage assets, although these usually have a substantial account management fee attached and, because they are invested in other financial products, carry risk.
  • Banks also offer things such as large asset accounts and tax payment accounts geared toward businesses and individuals. If you are serious about saving the best thing you can do is consult with your local bank and see what services they offer.

Come back soon as we cover how bank online and the growing net bank market.

Other Posts in This Series
# 1 The Basics
# 2 Opening an Account
# 3 Savings and Fixed Deposits
# 4 Internet Banking and Net Banks 
# 5 J-Debit and Pay Easy
# 6 ATMs
# 7 Domestic Money Transfers
# 8 International Money Transfers

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