DECIDING WHICH BANK TO TRANSFER YOUR MONEY WITH (JAPAN SIDE)
There are two things you need to consider when you choose the Japanese bank you will use to send money home via wire transfer:
1) Remittance Fee
2) Exchange Rate
Everyone I have talked to knows when it comes to sending money home from overseas, banks are gonna take a piece of your hard earned cash. Although these small pieces add up, interestingly, no one seems to know the best way (cheapest) to get the better part of their money home. I will break down the process of what happens to your money when it leaves your bank, why it decreases once it gets to the other side, and finally, give you the tools necessary to decide for yourself what the best way is to transfer your money from Japan (or any country for that matter) to the US via wire transfer.
TAKE A LOOK AT THIS DIAGRAM
Money goes to the Japanese bank goes to the US bank.
Simple enough. Remittance fees (cost of the wire transfer) are standard and can't be avoided. But depending on which bank you choose, you can save.
Here are the going Remittance fee rates for a few of the popular banks, three of which I personally have accounts with (first 3 on the list).
- Shinsei Bank = 4,000 yen
- Citibank = 4,000 yen (3,500 online)
- Mitsubishi UFJ Bank = 4,000 yen
- GoLloyds = 2,000 yen
Anything less than around 100,000 yen and you will probably want to check out the American Express Travelers Check service found at the Japan Post Office (Japanese only) which charges 2% of the amount you choose to send. Then just mail it to your bank in the states, tell them to deposit it into your US account, and you can avoid handling charges associated with overseas remittances. You could also check out Western Union but I haven't looked into it at all but its connection to Seven Bank (Seven Eleven) may mean greater availability.
After the Japanese bank takes a piece, either the money goes directly to your US bank if it accepts overseas wire transfers (it may or may not take a fee for this) (I use USAA which fortunately has free incoming international transfers). If your bank doesn't handle international wire transfers itself, then it uses an intermediary bank to handle the transaction and this intermediary bank will charge a handling fee. (Something to the tune of $20±10)
This is all pretty standard and basically you work with what you have up to this point.
But the most important thing you can do to help yourself is research the various banks and services in your area for the "HIDDEN COST: EXCHANGE RATE" (yellow box in the diagram above). Even though I say Hidden Cost, I really mean
a bank can hide its cheap remittance rate behind a bad exchange rate. Banks have the standard exchange rate and offer their customers something lower. Essentially the bank could make a profit on your transfer. For example the marketing is selling a dollar for 93 yen, the bank offers you 91 yen per dollar. They can essentially make 2 yen on every dollar deposited into your US bank account. But at first glance, the offered exchange rate is hard to understand.
a bank can hide its cheap remittance rate behind a bad exchange rate. Banks have the standard exchange rate and offer their customers something lower. Essentially the bank could make a profit on your transfer. For example the marketing is selling a dollar for 93 yen, the bank offers you 91 yen per dollar. They can essentially make 2 yen on every dollar deposited into your US bank account. But at first glance, the offered exchange rate is hard to understand.
So let me break it down for you. Look at the various banks' websites and find their posted exchange rates. Should like something like these:
* I focus on sending money from JAPAN to the US, this means work with the posted TTS Exchange Rate.
You can very easily calculate with the TTS rate how much you should receive in the target currency (US$). I will include the calculation here: I want to send 250,000 yen using the TTS rate of 90.00 using Citibank.
- First subtract the remittance fee. This is always taken out before it is sent by your Japanese bank. 250,000-4,000=246,000 yen
- Divide the remainder by the TTS rate. 246,000/ 90.00 TTS= $2,733.33. This is the final amount I receive in my US bank account (if it is sent directly without any additional fees).
For comparison, let's look GoLloyd's
- 250,000-2,000=248,000
- 248,000/90.14 TTS= 2,751.28
Looks like with GoLloyd's I can get an extra $17.95 (2,751.28-2,733.33=17.95) and in these topsy-turvy economic days every little bit helps especially if you have to do this every month to pay student loans, as I do.
Finally, what you need to know:
The banks update their posted rates every few hours on their websites, and somedays depending on the hour, you may be able to get a better exchange rate from one bank than another. Thus, in an ideal world you would want to take a sample of data points to compare and see which bank routinely provides the best exchange rate over an extended period of time. But really, who was time for all that noise? especially when you need to get that money home fast.
Well it just so happens that I have been collecting the exchange rate data on these same four banks over the past 6 months and I am presenting the results here so you can see which bank routinely offers the highest exchange rate. My apologies for the information that is missing:
I performed the calculation from above and put it into an excel sheet. Dollars to Yen is a website I use to check the latest TTS rate of the market. I presented it here as a sort of control...It is not an actual financial institution. Also, in the very bottom right corner you see "Citibank without remittance fee" because this is what I use to send my 250,000 yen home every month, its a benefits program my company has with Citibank. This special case aside
The bank that routinely comes out on top, month after month, is GoLloyds.
So from a purely exchange rate standpoint, Golloyds would be your best bet to save as much as possible. That being said, everyone is going to have a different set of circumstances that dictate how this transfer gets done. Other points to consider:
- ease of setting up an account
- proximity to the bank
- frequency of wire transfers
- possibility of upgrading your bank account to access the bank's premier exchange rate.
- availability of services: i.e. online access, English customer support
- plethora of other banks out there, that could vary well offer a better exchange rate
It is only my goal to shed some light on a topic I personally found to be a bit murky when I first settled down in Japan. And I realize that in some cases we are taking about the difference of saving a few bucks. I know it isn't much. But it does add up. And I for one just like knowing whats happening with my money.
If you have some info or a personal experience to share about banking in Japan or transferring money home COMMENTS WELCOME. Thanks for reading.
J.
