If there is one country in the modern world where you can get away without using a credit card it’s probably Japan. It’s still largely a cash-based society and as such a large number of people don’t use credit cards at all.
But the times they are a changin’. Especially with the advent of online shopping and services, it’s becoming more difficult for old curmudgeons like me to justify my continued resistance to joining the plastic leagues.
There are quite a few instances where a credit card in Japan can come in handy. Anything that requires a contract (like a cell phone), buying something online or paying for big purchases like flights home are just a few examples.
Can foreign residents apply for a credit card?
Yes. Though unfortunately, as is the case with many financial services here in Japan, foreigners are at something of a disadvantage when they try to get a credit card. Tightening credit regulations coupled with the fact that few foreign workers in Japan have permanent employment status mean we aren’t exactly seen as good credit prospects.
There is a distinct lack of transparency with regards to credit scores in Japan.
I think I can say that I am a man who always pays his debts. And yet for some inexplicable reason I, and many of my friends, are consistently rejected when we apply for loans, credit cards and even cell phone contracts. Our only common trait is that none of us were born in Japan.
What about my credit score?
I tried to upgrade my cell phone last year and I was told I would have to pay for the entire phone upfront, instead of the regular monthly installment plan. Ironically, the staff in the AU shop told me that if I made a credit card payment I could still pay in monthly installments. But how can I do that when I can’t get approved for a credit card in the first place?
Regardless of how good your credit rating in your home country may have been, if you try to apply for a credit card here — especially if your visa is only for one year — be prepared to get declined continuously.
Try, try again
There are ways around this problem. To some extent, the process of acceptance and rejection for credit cards here in Japan does appear to be somewhat random. Also, the number of times you apply doesn’t really seem to affect your chances. So, if you are rejected for one company’s card, wait a few weeks and try again. Apply for as many cards with as many companies as you can. Eventually, you may get lucky.
Options to look into
Visa debit cards are a relatively recent addition to Japan, only really becoming popular in the last two or three years. UFJ Bank offers a debit card when you open a new account, as does Suruga Bank.
An alternative is a prepaid visa card. These are available from most convenience stores, and for the limited amount of online shopping I do, these are more than adequate.
However, my current bank Shinsei (in my opinion, the most foreigner-friendly financial institution in Japan), does not. Nor do they plan to start offering debit cards anytime soon. Instead, I’ve been encouraged to apply for the Shinsei credit card. But while they have the benefit of English-language online banking, their rates aren’t the most competitive.
More trouble than it’s worth?
This is another area where you may meet with some frustration if you’re the type who is used to having easy access to financial services back home. Banks in Japan are still very heavily regulated, and as a result, competition isn’t exactly encouraged. In much the same way as the big three telecom companies operate a trio-poly on the smartphone market here, Japanese banks are similarly collaborative when it comes to protecting their own interests.
To me, getting a credit card in Japan as a foreigner is probably more trouble than it is worth while living in this cash-based culture. What do you think?