The cheapest yen for your euro

Comparing different ways to pay in Japan

October 11, 2017

When it comes to traveling and getting the local currency I am usually too lazy to research my options and just end up using ATMs. With many banks especially in Europe that is not a problem since there is usually no fees involved. However outside of Europe you will find that most(if not all) banks will charge a nontrivial amount for cash withdrawals on top of a exchange rate for the currency. Now that my stay is a lot longer than usual I wanted to dig into the details of just how to maximize the value of my euros.

Disclaimer: I am not an expert in currencies or finance and might make some mistakes in my assumptions, research, math and observations so consider this as some guidelines rather than the absolute truth. Most things I will talk about are subject to change over time or situation so don't take them at face value but as possible options to research yourself.

How to pay in Japan

Japan's currency is the Japanese yen and you generally cannot pay for anything outside of airports with any other currency. Cash is king but some places will accept credit/debit cards. Cash will be necessary no matter what, which means you will either need to exchange cash or use an ATM to get yen.

The value of the euro compared to yen

The value of currencies and in this case the exchange rate between the yen and the euro is the main factor to how much money you get when you exchange your currency. The rate is speculative and everything from national to international events/regulation/situations/trade and more will affect the value of a currency. One way to take advantage of this volatility is to make purchases, withdrawals or exchanges on days with a favorable exchange rate but realistically that is not always possible.

As you can see from the chart below I am quite lucky that the euro has risen ~15% in value compared to the yen in just five months before the start of my exchange. The last time I visited in 2015 the exchange rate was also favorable hovering around 130JPY per 1EUR.

Up to date graph on xe.com

Comparing our options

All examples will use a market exchange rate of 135JPY for 1EUR and all fees will be calculated towards the market rate, not the given exchange rate by the bank/card.

Exchange money in a bank

This is the old school way of doing things. You bring a big pile of cash to the bank and buy the target currency at a hopefully good exchange rate. The exchange rate will differ from bank to bank. In Finland I observed rates up to 6% different from the market while in Japan most banks hovered around 3%. If you do not find a good deal in Finland I suggest exchanging your cash at a Japanese bank in the airport(check the rate before you do!).

Price of 10.000¥ in Japan = 76,36€

Price of 10.000¥ in Finland with Forex = 78,80€

pros

You can return any left over cash with a receipt free of charge with some banks
You can exchange at speculative peak exchange rates

cons

Risk of carrying a lot of cash

Withdrawing yen from an ATM with euros

Using an ATM outside of Europe with most European banks will end up with rather big charges depending on the bank. Some banks will also have extra charges after certain amount of ATM withdrawals. My bank charges 2€ + 3% + the additional visa international exchange fee of ~2.15%. So you end up with a whopping 2€ + 5.15% fee. So if your only option left for cash is an ATM you should withdraw as large sums as possible without having leftover yen when you leave. Keep in mind that with ATM you can time your withdrawal on a day the exchange rate happens to be good, which could save you around 1.5% on some volatile days.

Price of 10.000¥ with Visa electron and Nordea on a 7/11 ATM = 78,09€

pros

Convienient
No need to carry a lot of cash

cons

Quite expensive
Possible limits with cards/withdrawals
Possible extra fee for some ATMs
Your debit/credit card could break/dissapear rendering you with no way to get cash or pay

Paying with a credit/debit card

Paying with a credit/debit card will use a very good exchange rate that in my experience only differs about 0.2% from the market rate. However my visa electron card takes a 1.95% exchange fee ending up with an around 2.15% total fee.

Price of 10.000¥ card purchase = 75,70€

pros

Cheap
More secure than cash

cons

Availability is bad in Japan

Conclusion

You can draw your own conclusions from my observations above but I will give you my opinion.

Short term stays

In my opinion the best method to pay in Japan for short stays is to exchange 80% of your budget into cash at a Japanese bank upon arrival. Then use your credit/debit card whenever possible especially for large purchases such as accommodation, shopping and fine dining. Finally if you need some extra cash use an ATM.

For exchange students

As you might know exchange students can get scholarships and in Japans case it is the Jasso scholarship issued by the Japanese government which is around 600€/month worth of yen. I think you will not know beforehand if you can get it or not which is unfortunate. It is good to stay positive and hope for the best so you should keep the scholarship in mind when you consider ways to get yen. I would recommend you to take around 1000€ with you and exchange them at the airport in Japan. If you get the scholarship you will need to open a bank account and then you can live pretty much with the scholarship. If you do not get the scholarship you will regret only bringing 1000€ and panic about how to get more money. Your options at this point are opening a Japanese bank account, wire euros and exchange them or just use an ATM. You will only save 2% with the former method so I would suggest just deal with it and use ATMs with large withdrawals. If you get the information that you will not get the scholarship before you leave for your exchange then I would recommend bringing more euros and exchange them either at the airport or periodically at favorable exchange rates.

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