A Schumer Box is an easy-to-read table or “box” that discloses the rates, fees, terms and conditions of a credit card agreement as required under the federal Truth in Lending Act (TILA). It requires that all credit card companies use the same standardized format to disclose certain aspects of a credit card agreement so consumers can easily understand and compare rates and fees associated with a credit card. The Schumer Box requires credit card companies to print long-term rate information in 18-point type or greater and remaining terms in at least 12-point type.
Brief History of the Schumer Box
The Schumer Box is named after Charles Schumer, the New York congressman (now senator) responsible for the legislation requiring credit card terms to be presented in a standardized, easy-to-read format for consumers. Although the Schumer Box legislation was enacted in 1988, it did not take effect until 2000. The main reason the Schumer Box was created was to simplify credit card terms and help consumers easily understand and compare rates and fees associated with credit card offers.
Tips On What To Look For
Before applying for a credit card, make sure you read the Schumer Box carefully — as well as what’s outside the box, in the fine print. Pay close attention to promotional and regular APRs, finance charges, minimum payments, annual fees and how your outstanding balance will be calculated. When shopping for a credit card, it pays to know all of the facts up front — before you apply. It’s also a good idea to check your credit before comparing credit cards, so you know what cards you’re most likely to qualify for and if there are any errors on your credit report you want to fix before applying for new credit. You can see a free snapshot of your credit report and two credit scores on Credit.com.
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Key Information in a Schumer Box
- Annual percentage rate (APR) for purchases: the interest rate you pay on financed purchases, which may include introductory and long-term rates
- Other APRs: interest rates for balance transfers, cash advances, default, etc.
- Variable rate information (if applicable): how your interest rate can (and will) change.
- Grace period: the period of time after your billing period ends when interest charges are not yet applied to your debts
- Finance calculation method: how interest is calculated, if the credit card balance is not paid in full each month
- Finance charges: the minimum amount charged if a balance is carried over month to month.
- Annual fee — the once-a-year charge for using the card
- Other fees — foreign transaction fees, balance transfers, cash advances, late payments, etc.
This article has been updated. It was originally published August 1, 2012.