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A Schumer box is the nickname given to the table where credit-card interest rates, charges and fees are legally required to be clearly disclosed and simply explained. The box is required both in the credit-card marketing materials and in account-opening disclosures.
The purpose of the Schumer box is to help consumers better understand what they’re paying for credit. Banks make a lot of money from fees and interest earned from credit cards. The Consumer Financial Protection Bureau (CFPB) estimates Americans pay more than $120 billion per year—$1,000 per household–on credit-card fees and interest alone.
With that much of your money at stake, understanding the costs involved with a credit card can help you make better decisions with credit. We’ll break down exactly what’s in a Schumer box, how to read it, and how that information can help you.
What does the Schumer box tell you?
The Schumer box is a legally-required table that tells you what annual percentage rates (APRs) and fees are associated with a credit card.
The required inclusions in the Schumer Box are:
- APR. The APR disclosures required include what the current rate is, whether or not the rate is fixed or variable, and how the rate is determined.
- Different APRs. The Schumer box must have information on when and how more than one rate applies. If a card has a different APR for balance transfers, cash advances, a penalty APR, or an introductory rate APR, there will usually be a separate row for each APR.
- Grace period. The grace period disclosure tells you how much time you have before you are charged interest on purchases.
- Balance calculation method. There are different ways that a credit card issuer can charge interest, some of which are more costly than others.
- Annual fees. This is a fee for maintaining the account each year.
- Minimum finance charges. If the card has a minimum interest charge requirement, you’ll see what it is. Usually it’s pretty small, like 50 cents.
- Transaction fees. This is a fee the card charges on regular purchases. Foreign transaction fees, for example, are reported in the Schumer box.
- Cash advance fee. If you withdraw cash out of an ATM using a credit card, you’ll likely be charged a fee.
- Over-limit fee. What the fee is if you exceed the amount of credit you’re approved for.
- Late fees. The date when late fees will be charged and how much they will be should be clear.
- Return payment fees. This is how much you are charged if your payment method is declined for insufficient funds.
- Balance transfer fee. This is the fee for transferring a balance from one credit card to another.
How to use the information in the Schumer box
The table is formatted so that it looks the same for every credit-card offer. The idea is that consumers are more easily able to compare credit-card fees and rates when seemingly minor things—like font size and table format—look the same.
You can use the Schumer box for the following:
Compare credit-card offers
You can compare credit-card offers more easily by analyzing the Schumer boxes. For example, if you’re looking for a card with a 0% introductory APR, you’ll be able to see what terms are offered in the Schumer box. This might include how long the 0% APR applies—and to which purchases—as well as what the APR is after the introductory offer expires.
You might also consider if you want to pay an annual fee in exchange for a rewards credit card. For example, a $99 annual fee for a hotel credit card that offers a free hotel night every year could make sense for you.
Being able to see fees and rates side by side in a standard format can help you choose a credit card that’s better for you.
Use the credit-card grace period
With a Schumer box, you’ll know the date by which to pay your credit card statement in full so you’re not paying interest. You can use the card for convenience until that date. After that date, you’ll be charged interest on your balance and your purchases.
Keep your daily balance lower
Many credit cards charge interest based on the average daily balance. If you have the ability to lower it, perhaps with a payment in the middle of the month, you’ll be able to pay less in interest charges overall.
Understand when credit will be costly
When you have the true costs in front of you from a Schumer box, it can help you make more optimal money choices.
Credit-card fees and interest can be incredibly high. The table in a Schumer box spells out those costs not just as a disclosure, but possibly as a warning. A cash advance fee on a Chase Freedom card for example, is either $10 or 5% of the amount withdrawn. Interest accrues immediately. If you take out a $100 cash advance on your credit card for a dinner out, you’ll immediately be charged $110 for the cash and the fee, then interest on the amount until you pay it off.
That is a typical fee you’ll see from any credit-card issuer. It takes a lot out of your wallet if you frequently use your card for a cash advance.
Where do you find the Schumer box?
You can find the Schumer box in the marketing materials for new credit-card offers. You’ll also see it when you apply for a credit card.
For direct mailers, you’ll see a Schumer table prominently displayed on one of the pages included with the marketing materials. It will also be mailed to you once you’re approved for the card. The APR is required to be in 18-point font with all other terms and conditions in 12-point font. They must be included in a table with a black border.
If you are looking for credit cards online, you’ll see the Schumer box when you click on text labeled, “rates and fees,” “terms and conditions,” or “pricing and information.” These are usually linked throughout the webpage.
Why is it called the Schumer box?
The Schumer box gets its name from Sen. Chuck Schumer (D-NY), who was a congressman in 1988 when he wrote an amendment to the Truth in Lending Act called the Fair Credit and Credit Card Disclosure Act. That amendment included a box that “clearly and conspicuously” outlined the rates and fees in an easy-to-read table.
Revisions were also made in the year 2000 to include more complex APR charges in the Schumer box and to specify font sizes.
TIME Stamp: Use the Schumer box to make informed decisions about credit
The Schumer box makes it easy to find the rates and fees of a credit card. Knowing the fees and interest charges can help you choose better credit cards and avoid fees where you can. In the end, minimizing the amount of interest and fees you pay on your credit card makes you a smarter consumer and helps keep money in your pocket.
Frequently asked questions (FAQs)
Is the Schumer box a law?
Yes. The Schumer box is required on all credit card disclosures by law.
How should you read the terms of a credit-card agreement sent by card issuers?
Look for the Schumer box, which should be prominently located in the materials sent out by credit card issuers. Information about rates and fees is disclosed in this table to help consumers make better credit decisions.
Are foreign transaction fees mentioned in the Schumer Box?
Yes. Foreign transaction fees must be disclosed in the Schumer box.
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