Uniquely unique?
I’ve written about my European trip in the past, which was 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, so I’ll try to cover what makes them unique, tips on how to get your first credit card in Japan, and the benefits of using them over cash.
How are Japanese credit cards different?
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 by only repaying 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. You’re charged a percentage fee for this, however, so paying in full every month is still the recommended way to go.
Tips for getting your first credit card in Japan
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’re struggling to get your first card, try some of the following strategies:
- Get a card from an institution that you already have a relationship with.
- Try smaller regional banks (they are usually more flexible than the megabanks).
- Make sure you pay all your bills on time (utilities, cellphone, etc.).
- Get a small loan and pay it on time.
- Have a Japanese person guarantee your card.
- Get permanent residency.
- Look out for credit card promotions at supermarkets or airports. The staff there will help you fill in the application correctly.
Another good tip from reader comments (thank you!) is to apply with a store or service you use that has its own credit card, such as Autobacs or a gym chain. They may be more lenient because they want you to keep you as a customer, and that can help you build up your credit score to apply for other cards later.
Personally 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.
Benefits of using credit cards
Some credit card 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.
- Get air miles or points: 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 points and miles a couple of years ago.
- Easy expense tracking: 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.
- Purchase protection or insurance: Some cards offer purchase protection or insurance, so if you buy something and there is a problem the credit card company will cover you. Travel insurance is often a benefit too.
- Easy bill tracking: 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.
For advice on which card is most suitable for you, or for any other questions about Japan’s credit card system, feel free to visit the friendly RetireJapan forum.
I remember the days when I struggled to get my first credit card. I remember feeling so envious (having grown up in a society where credit cards are practically passed around like a bottle of wine) of my other foreign friends who had successfully overcome the credit card hurdle. How frustrating that time was!
I think Rakuten was the first card I got (and interestingly the only card I really still use). I remember reading various online sites that would tell you which banks and cards are easier or harder to apply for and receive – Rakuten was up there as being relatively easy.
Once you’re in the credit system, it’s much easier to apply for and be approved for cards. I also signed up for a private gym which requires you pay for the monthly fee with their credit card, and only their credit card, so that may be a good way in if you’re struggling to get approved through other routes.
Personally, I think that credit cards in Japan come with a lot less strings attached to their overseas counterparts.
Say for example a card issuing company launched a new card that claims to earn 10% points for every dollar spent. This usually would mean several convoluted rules such as a mandated minimum amount of expenditure on the card within a certain time frame, and applicable only on certain categories of spending.
In comparison, the simplicity of cards in Japan is refreshing =)
I’ve lived here 2 years and applied 21 times including Rakuten twice and never been accepted, including when my employer’s employees were specifically targeted. There’s obviously a sticking point or twenty but I’ve no idea what they are so I’ve given up for now. I just want an ETC card for the expressway and to be able to use Times carshare.
2nd hand information but I heard that if you go to an Autobacs store and apply for an ETC credit card you are pretty much guaranteed to get approved. As stated in the article, once you have a credit card it is way easier to get other cards.
For me I was lucky in that my company provided me a corporate card which was paid out of my account and thus made me appear credit-worthy to the gods of Japan finance. Now I use a JAL card for almost all of my purchases which gives a nice airmiles bonus.
Maybe you can make a case to your company that you need a card for business expenses?
Hello Unworthy.
To break it down into numbers, 21 applications over a period of 24 months would mean almost one application a month.
Every time you are rejected it is reported to the credit bureau, which then keeps that record for 6 months.
My best recommendation is to lay off for at least 6 months (preferably 7) from the date of the latest rejection, and try again after the records are wiped clean.
I did wonder about how credit was tracked in Japan. Thanks for the 6 month advice. It wasn’t one application a month, it was more in batches in periods of desperation. Maybe I’ll give Rakuten one more go later – although their application is one of the most frustrating as it requires you to enter so much data that only gets used if you are accepted.
Hi Unworthy,
That really seems a bit off. I second Ben with the shopping mall sales folk – I got my first card there at the first attempt. I was married but didn’t yet have PR, but perhaps having a Japanese spouse helped. I really don’t know. It just seems to be the luck of the dark. I doubt I had any credit rating in Japan at the time, either good or bad, and from what friends tell me it just seems like a lottery at times. Try the shopping mall folk, if you haven’t already. They are quite often in AEON malls.
I think your nationality also has a lot to do with it. If you’re from an English-speaking country it’s much easier than if you come from Latin America for example.
I could easily get a Japanese student credit card when I was studying at a Japanese university but none of my Latin American and Asian friends could, even though we were all on the same scholarship so had exactly the same status and income. Sigh.
10 years here and I still have never been approved–I gave up after a while though. This is one of the few areas where self-employment definitely works against you, regardless of nationality or how long you’ve been working at the same job.
Factors working against me that I know of:
-As mentioned above, I’m self-employed (they don’t care about income level or employment period if it isn’t from a “stable” source)
-I move around a lot (have only once renewed a 2-year lease)
-A foreigner without PR
The first two kill it even without the last one. Japanese banks are conservative.
I have a Rakuten card in my name on the wife’s account and we’ll leave in a few years anyway, so I’m not even interested in trying anymore. The last time I had a credit check locally was when we moved into our current apartment 3 years ago and they made me sign up for their card to pay rent. They “approved” me with the wife’s dad as a guarantor (also self-employed), but didn’t give me a card… just a monthly processing fee of 888 yen.
I got rejected by quite a few until Rakuten finally said yes. Now I barely use it except for my phone bills, which require a Japanese credit card (and are why I applied in the first place).
I’m a much bigger fan of using a debit card – commonplace in the UK, less so here. With Rakuten Bank, you can get a debit card and get points on it, all without the risks that credit cards can involve. And as Ben says, coupled with Moneytree it makes tracking your spending pretty easy :o)
(Speaking of Moneytree – did you notice you can now link it to Rakuten Securities to display your investments?)
I saw Moneytree started supporting Rakuten Securities, but haven’t linked my account.
Not sure I need to, to be honest, as I keep track of it monthly on a spreadsheet.
(also not entirely comfortable giving people the password to my investment accounts…)
You can also get a prepaid card with Line Pay. It’s prepaid, not debit, but for most purposes it’s the same. I have Line Pay and Rakuten Debit, but Line gives 2% cashback on all spending, so that’s the one I tend to use, it also has some other nice features if your friends also use it like instant transfers and restaurant bill splitting. Don’t use it for international transactions though because they take a 4% fee for those.
Is there any disadvantage to having multiple credit cards? I mean, how does the Japanese credit bureau feel about it?
Well, I have a stupid number of credit cards (left over from when I was obsessed with air miles and hotel points) and it doesn’t seem to have hurt my credit much.
I have been accepted for any card I applied for and managed to get a 100% mortgage at 0.5% 🙂
I think having more cards that you pay on time is a plus, as it shows that you are a good potential customer.
Generally, for credit scores, having more cards is good, especially long-term.
I still have the first card I opened (a Saison card with no annual fee) which gives me a 14-year record of paying in full.
Anyone have a more technical answer?