FW-48 -- Credit Cards in Japan

J@pan Inc Magazine Presents:

* * * * * * * * F R U G A L W A T C H * * * * * * * *
A weekly roundup of how to be frugal in the world's most
expensive country to live (unless you read this!), written
and compiled by Wendy J. Imura.

Regular edition, March 14, 2005 Issue No. 48
+++ INDEX

- What's new (Credit Cards in Japan)
- Bargain Roundup: I-Auction Net: English Auction Site in Japan
- Frugal tips (Credit Card Tips)
- Credits

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+++ WHAT'S NEW

Dear Frugal Readers,

To celebrate the March update to the FrugalJapan.com website,
I thought I would delve into a rather complex topic: that of
credit cards in Japan. To most short-term (in my book, one
year or less) residents here, the opportunity or necessity to
procure a domestic credit card seldom arises. However, the
longer one stays here, holding at least one domestic card does
make life a lot easier.

For domestic cards, there is no need to maintain tricky online
banking accounts in your home country or incur international
transfer fees -- the payments are deducted from your domestic
bank account monthly. Most domestic cards in Japan
automatically deduct the full amount of your purchases made
every month -- "revolving" credit (the kind most Americans
might be familiar with, that can be split into as many months
as desired as long as a minimum payment is made) is not an
automatic feature of most cards. Your card must have the
'ribo barai' (revolving payment) option if you want to split
purchases over several months. Even with this option, there
is still no 'minimum payment' -- just your total purchases
divided by the total number of installments, plus interest
(usually around 1.5% monthly).

When using a card, most merchants will ask you at the time
of purchase how many installments you want to break it into.
This is that funny question you get every time you try to
use a credit card in Japan: "Nankatsu barai desu ka?"
(How many installments?) If you are using an overseas card,
you will automatically need to specify one installment
(ikkatsu-barai). If you are using a domestic card, and want
to avoid interest payments, answer "ikkatsu barai." If you
want to spread it out over two months, "nikatsu barai";
three months, "sankatsubarai." You get the picture. Another
option is "bonus ikkatsu barai," where the card company saves
your purchases until payment in January and August,
traditionally when Japanese employees are paid their bonuses.
Installment payments, of course, require payment of interest
charges.

Once they understand the system, the biggest bottleneck for
foreign residents in using credit cards is simply obtaining
one. Traditionally, it was very difficult for foreigners
without permanent residency (or without a Japanese spouse) to
secure a credit card. However, one Frugal Japan reader's
experience tells differently.

"I decided to get a Japanese credit card, because sending
money overseas to pay the bill costs money itself, not to
mention the exchange rate. I heard that a non-Japanese
friend of a friend was turned down by a bank so I wasn't
very optimistic. But during a department store credit
card promotion, I was offered an application form. I was
surprised, but the staff member assured me that it wasn't
impossible. After I'd sent it in, they phoned and told me
they needed an 'emergency contact person.' This person
must be (a) over 30 years old; (b) married; and (c) have
a permanent home telephone number. Guess this represents
'stability'? They didn't say the person had to be Japanese
(but I'm sure it makes it easier if they can at least speak
the language), and this is actually a requirement for
everyone, Japanese or otherwise. Luckily I have a Japanese
friend who fits this description and she was happy to help
me. The moral of the story is that department stores
don't care where you come from as long as you want to shop!"

Thus, it seems that with an increasing number of retailers
offering their own branded cards, the likelihood of getting
approved for one is higher. Having a Japanese friend willing
to serve as a "guarantor" or "contact person" also improves
your chances tremendously.

While in general I remain opposed to the excessive use of
credit cards, they can be an effective shopping tool as
long as the entire debt balance is paid off monthly.
Another careful point to note is the annual fees for your
credit card, which tend to be high in Japan. Cards with
special bonus point packages or airline mile functions
attached to them can sometimes have annual fees in the
2,000-3,000 yen range, making the card significantly
less attractive.

Finally, with the variety of cards out there, a number
of credit-card comparison sites flourish on the Internet.
Although all written in Japanese, they might provide a
good resource for comparison shopping. Here are a few:
http://www.all-navi.jp/credit-card/
http://www.creditcard-hikaku.com/(looks to be corporate
sponsored)
http://www.hikaku.com/card/ (general price comparison
website)

Frugally yours,
Wendy J. Imura

PS: "Being a Broad" offers a special credit card deal
for women in Japan through CitiBank's Elite card. Click
here for more details:
http://www.being-a-broad.com/special/citibank_application_form.html
(All in English!)

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remit funds to pre-registered beneficiaries overseas from
any of Japan's 28,000 ATMs. GoLloyds offers most major
currencies at very competitive exchange rates. The service
fee is a highly competitive 2,000 yen. Please visit
for further details.

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========================================

+++ BARGAIN ROUNDUP: I-Auction Net -- English-Language
Auctions in Japan
Several weeks ago, I wrote an article focusing on how to use
Japanese auction sites, in which I lamented the lack of an
existing English-language auction site in Japan. Well, it
appears there is one indeed! I received an email from Sho
Hara, who works for a bilingual auction site called
"I-Auction Net." Sho was originally with eBay Japan, which
closed its doors in Japan in 2002.

Now, he writes, "we operate the only bilingual auction site
in Japan called 'iAuctioNet' (www.iauctionet.co.jp). Also as
auctions on iAuctioNet are totally free and we do not charge
any fees for users buying or selling items on the site, it is
a very good option for your 'frugal' community.

"Our coin, vintage toy and book categories are quite popular
among collectors in Japan and overseas. We encourage people
in the English-speaking community in Japan and overseas to
use our bilingual auction site. Besides the bilingual
auctions, we offer many other services to make buying and
selling via auctions in Japan and overseas easier to do.

"We also offer fee-based service to those who have many
things to sell, especially someone moving back to their home
country and companies who are moving in Japan who would
like someone to manage the entire auction process."

A visit to their website shows, indeed, a small but active
online auction site in English. While the interface could use
some improvement, it definitely surpasses the other Japanese
auctioneers online in terms of English accessibility (as in,
they have none, this has some). The free auctions, and the
other services, might indeed be worth a try. Please email Mr.
Hara at for further information.
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-------------------------------------------------

+++ FRUGAL TIPS (Credit Card Tips)
Interested in learning more about credit cards and loans in
Japan? Check out FrugalJapan.com's latest Tiptionary update
for March at www.frugaljapan.com/tips/creditcards.html.

Here are some samples:
"I'm not sure if my credit card is free, but it's from ANA
and every yen I pay with it earns me miles. I don't know if
any of you use credit cards that are linked to mileage, but
many people are so surprised when the four of us take exotic
vacations at least once a year."

"Our Bali holiday last year and the year before was paid for
by ANA. We traveled Singapore Airlines, even got upgraded
into business class, and were able to stay at great hotels,
as this was the only thing we had to pay ourselves."

"I pay for EVERYTHING by credit card, even a bottle of milk
at Lawson....it adds up in the end."

"The credit card I use now is a Gold Card from Citibank that
collect miles for Northwest. I decided to splurge for the
more expensive card because travel insurance is covered in
the card and the amount given if sick/injured is a lot. I
figured in the long run it is cheaper than buying travel
insurance when going abroad. Now I am applying for my
daughter to have one because she is going to the US for
school. It will cost an extra 9,000 yen per year for her to
be added onto the card. But again, it is for the travel
insurance."
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+++ ABOUT US
STAFF
Written by: Wendy J. Imura (frugalwatch@japaninc.com)
Edited by: JI

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