I wrote about my European trip earlier in the month, paid for mainly with air miles I got from using credit cards.
Credit cards in Japan are slightly different to their UK or US equivalents. The default option is to pay the balance in full every month, which I think is far more consumer-friendly than allowing people to build up substantial debts and only pay a fraction of the balance.
You also have the option of paying in installments (called リボ払い for 'revolving payments') which can be decided at the point of sale or later online.
It can be difficult to get approved for your first credit card in Japan. New foreign residents don't have a credit history and can be seen as excessively risky by banks.
If you are having trouble getting your first card, try some of the following:
- Get a card from an institution that you already have a relationship with
- Try a smaller regional banks (they are usually more flexible than the megabanks)
- Make sure you pay all your bills on time (utilities, cellphone)
- Get a small loan and pay it on time
- Have a Japanese person guarantee your card
- Get permanent residency
I got my first Japanese credit card (Saison) by talking to an agent trying to sign people up at the supermarket. I didn't have permanent residency at the time, and my then girlfriend (now wife) had to guarantee me.
Now I have successfully applied for over a dozen cards including the more rigorous gold ones.
Some studies have shown that using a credit card can make people spend more. If this is the case for you, the advantages of credit cards will be outweighed by the extra spending. However, if you can control yourself, credit cards offer several advantages over cash in Japan.
- You can get air miles or points. If you are disciplined this is basically free money or flights. There are all sorts of cards. For more of a primer I wrote an ebook about this a couple of years ago.
- It makes it really easy to see what you are spending money on. You can use your credit card statement or an app like Money Tree to easily record your monthly spending.
- Some cards offer purchase protection or insurance, so if you buy something and there is a problem the credit card company will cover you.
- Paying bills with a credit card makes it really easy to keep track of them. Instead of notifying each company of a new bank account, for example, you just have to change the credit card settings.
Any thoughts on credit cards in Japan?