This is another in our series of short guides, aiming to give some very basic info on the savings situation in Japan. Keep in mind we are not experts and this is designed to simply cover the essentials. If you have extra tips, please free to add them in the comments below.
Foreign Currency Savings Accounts
Most major Japanese banks now offer foreign currency savings accounts, though interest rates are generally somewhat lower than you would expect to get in your home countries. If you keep yen savings, expect to get paid nothing. For the past few years, the Bank of Japan has maintained a near-zero interest rate policy.
Keeping Yen at 0%
HOWEVER, depending on your home currency, you might have actually been better off over the past 2 years keeping yen at 0%. For instance, from April 1, 1998 to March 31, 2000, the yen GAINED 26.4% against the US dollar- far more than you would have made in interest from keeping dollars! The point here is this: don’t expect to get any interest on yen deposits, but perhaps a greater concern is foreign exchange rate fluctuations- which brings us to our next point (see below).
Keep your money at home?
Many people suggest that you should “keep your money in your home currency”. But, it’s not quite that easy. Do you really know for sure what you will be doing/where you will be in a few years from now? Countless foreigners have also found that transferring money into Japan if suddenly needed can be difficult and time-consuming. Also, in today’s world of global banking, the advantages of keeping your home currency simply for convenience are rapidly becoming obsolete. Case: If an Australian kept their savings in Aussie dollars for the past 5 years, they would have seen their savings plummet more than 30% against the US dollar and even more against the yen – ouch!
Keep a Multi-Currency Account?
Of course, the near-zero interest available on yen deposits might not seem very appealing either, but perhaps it would be best to keep a multi-currency account, accruing interest based on an average of the currency mix. For “global people” (like expats in Japan!) banking in only one currency represents a certain degree of risk – regardless of where you are now or plan on ending up in the world!