Going on a vacation the first thing that we usually need is the local cash.
But what’s the best way to do this?
Exchange money at your home country’s bank beforehand?
Exchange at the airport?
Or just swipe the credit card through your stay, the options are many.
And depending on the option you choose it is possible so save or waste a good chunk
of the amount of money that you will spend.
This is true especially if you live in the country for long term.
So today I will talk about my research of the best method to exchanging your money to
yen.
The results I have should be useful to both those who are visiting Japan for a vacation
as well as those that live here long-term.
So lets get into it
Starting with the most conventional option, taking your dollars, euros or whatevers and
exchanging them for yen at a bank.
Let’s see if this is a good option whether you use your home country’s bank or a bank
in Japan.
Because I’m from Finland I first looked at some Finnish banks and exchange services
which ranged from Nordea bank offering a 1.7% fee to OP-bank with 7.3% and Forex.fi with
a hefty 7.5% fee.
First I want to show you I calculated these percentage discrepancies
From now on, I'm just gonna call them "fees"
So first I took a look of the so called middle exchange rate was at the time from
the xe.com website, this is the so called “real exchange rate” which of course we
can’t have because banks always take their cut by adding a margin.
Then I subtracted the bank rate from this and divided by the original middle rate and
multiplied by 100 to make this into percentage.
If you want to see the logic behind this calculation the link is in description.
Next looking at banks in Japan the fee was about 3% but what surprised me was that the
exchange rate at the Narita airport exchange counter was only 2.6% making it cheaper than
the banks.
With the dawn of credit cards, many travelers have noticed that carrying a plastic thingy
with you can sometimes get you all the things you need to buy.
Unfortunately, Japan is still somewhat of an exception as it is still a country where
cash is the king.
If you plan to hang around big cities it is very possible that you can make do with just
your credit card but take a step outside the city or just go to some kind of “granny
cooks” type of restaurant and your card will be no good.
But the question is if you can pay with your card, should you?
When I moved to Japan I was naïve to think that “hey, if I can pay with my mastercard,
that means I don’t have to send money from Finland so no exchange fees!”.
Boy was I wrong.
Basically this is how it goes:
When I first make a payment in Japan with the mastercard the invoice to the mastercard
comes in yen which they then transfer to euros using their own daily currency exchange rate
for that time and then they add a margin of up to 1.95%.
So when I calculated the exchange rate fee from purchase to purchase, I couldn’t get
a consistent percentage.
Sometimes it would be 2% another times 4%, which means that using a mastercard or any other credit card
can be more expensive than just exchanging at the bank or exchange counter.
But what if you live in Japan?
We now know that credit cards are not a cheap option and when you first came to Japan you
probably didn’t bring a suitcase full of your countrys currency.
This is where bank wires come in.
Bank wires have generally been the go-to-method when sending money from your country to Japan
or any other country for that matter.
Saying that, I still have never been satisfied with the way the whole thing happens.
I will give you an example of how the transaction has been happening with my Finnish bank and
my Japanese bank.
So first I make a remittance order from my Finnish bank, for which they take a processing
fee of about 7 euros.
Then after waiting usually 3-7 business days, the money that I sent in euros have been deposited
to my Japanese bank account with first a 4,000 yen processing fee subtracted, and added to that
a 0,05% lifting fee, and further subtracting the conversion fee of about 0,5% the total
so called transaction fee adds up to about 1.8% which doesn’t sound like much but if
you send money regularly or large sums, its going to add up.
Those who have heard of transferwise know what Im talking about but for those who haven’t,
It's basically a service that does the remittance for you.
You make the order for transferring online, send the required amount to them and they
do the rest.
I should probably also add that transferwise or no-one else has sponsored this episode
but it is purely my own opinions and experiences.
So I did use transferwise to send money from my Finnish bank to Japan and it actually took
only 2 days to get the funds.
The overall transaction fee was only 0.5% making it a really attractive option to send
money instead of the banks.
Anyone who has looked into the cryptocurrencies probably have heard the usual pitches about
the benefits of crypto.
Its borderless, anonymous, and instant, and while I cant argue with the concepts.
When it comes to sending money from fiat to fiat, through crypto
it wasn’t as convenient as I thought it would be.
So basically this is how the process happened.
Send money from my Finnish bank to my crypto exchange that operates in Finland.
Buy bitcoin on the crypto exchange
Send the bitcoin to my crypto exchange that operates in Japan
After receiving the bitcoin, sell it for Japanese yen on the crypto exchange
And lastly I received the money to my Japanese Bank account
Overall the process took about 4 days and the transaction fee totaled to a painful 7.7%
Which is almost all the fault of the crypto exchange that took a service fee of 7% to exchange
from euros to bitcoin.
So overall this could be a viable option if you can find a crypto exchange that doesn’t
rob you.
So these were the methods I researched and tried myself, and if I had to recommend the
best method I would recommend transferwise (or a similar service) for those that have
a Japanese bank account and for those visiting for a vacation or such – find the cheapest
exchange rate, whether its your local bank or an exchange counter at the airport.
You can use the internet to research and calculate the exchange fee in advance to be able to
choose the cheapest option.
That is all for this episode, always do your own research with anything regarding money
and I will see you on the next video.