Ordinary deposit interest rates at megabanks reach 0.5% for the first time in 34 years—interest on 1 million yen increases from 10 yen to approximately 4,000 yen. I thought …

The three megabanks—Mitsubishi UFJ, Sumitomo Mitsui, and Mizuho—will raise their ordinary deposit interest rates to 0.5% per annum starting November 2nd. 0.5% is a level not seen in about 34 years.

If you deposit 1 million yen for one year, the interest you receive (after tax) will be approximately 3,984 yen. A few years ago, the same 1 million yen would have earned about 8 yen.

Internet banks are even further ahead. Aozora Bank’s ‘BANK’ offers 1.2% per annum on balances up to 1 million yen, with after-tax interest of approximately 9,562 yen. Even with the same 1 million yen, the place you keep it makes a difference of nearly 6,000 yen per year.

The trigger was the Bank of Japan raising its policy interest rate to 0.25% in September. Banks are raising their deposit interest rates one after another.

Actually, starting this month, I began setting aside 20,000 yen every month as ‘special expenses’ to prepare for repairs to my exterior walls and water heater.

Looking at interest rates alone, 1.2% is attractive. But at 20,000 yen a month, that’s 240,000 yen in a year. The difference in interest will only be about 1,000 yen in the first year.

Therefore, I decided to prioritize ‘being able to keep it separate from both living expenses and investment funds’ over the height of the interest rate.

Also, 0.5% interest still cannot cover price increases of 2-3%. I believe the strategy of keeping money for immediate use in savings and money for the long term in NISA remains unchanged.

On my blog, I have summarized the following: • A list of interest rate hikes by bank for October-November (for 10 banks) • A quick reference table for interest on 1 million yen by rate • 4 points to note when choosing a high-interest bank

I wrote about the details on my blog👇
https://ktn-blog.com/普通預金の金利、メガバンクは34年ぶりの0-5へ/