How Schumer Box Helps Decode Credit Card Offers

The Schumer Box is named after Charles E. Schumer, the politician who helped pass legislation in 1987 to protect consumers from unfair credit practices The Schumer box is comprised of standardized disclosures that are relevant and clear for prospective customers to read and understand. They must be on all credit card statements and include terms and conditions, interest rates, annual fees and how rates are calculated.

With this information in hand, consumers have the details necessary to compare and contrast terms and rates from a variety of credit card offers before deciding which one best meets their needs. Gone are the days when you had to scour through all the fine print to discover the hidden fees of an offer.

Sometimes called a consumer, transparency or summary box, the Schumer box makes it easy to see account details at a glance. Whether you’re looking for your first card, a better rate, a business card or a new card for any number of reasons, comparing offers is much easier with the major details laid out clearly in a universal format.

By law, the rates disclosed must be large (18-point type), while other required information must be 12-point. The box must be a two-column table with the left side describing the different terms and the right providing a description of how that term works along with the rates and fees attached.

Choosing the right credit card will no longer be the confusing task it once was when you use the details from Schumer boxes to compare offers. Search for a link for ‘terms and conditions’ or ‘rates and disclosures’ on the website of a card you’re reviewing.

Terms and fees to compare include:

• Annual Percentage Rate (APR) for purchases.
• Interest Rates charged for balance transfers and cash advances
• Grace Period is the number of interest-free days after a purchase has been made.
• Annual Fees for the privilege of using the card
• Penalty Fees charged for late payments or exceeding the credit limit.
• Calculating Method used to determine interest charge, i.e., daily compounding, variable rates
• Transaction Fees applied for balance transfers, cash advances, etc.

While the Schumer box includes some vital information for cardholders, it doesn’t cover every important detail you may need or want to know.

Disputes: If you ever need to file a dispute against the credit card company, you need to know the terms for binding arbitration. If arbitration is mandatory, you will be waiving your right to dispute the issue in a court of law and an arbitrator will make the final decision that cannot be challenged or appealed by either party. If arbitration is voluntary, both parties must agree to have their dispute settled in this manner.

Rewards: Credit card issuers are not required to disclose the terms and benefits of reward programs in the Schumer box. However, you will find details in the promotional material and elsewhere in the credit card agreement; this is one area that you need to examine in the remaining fine print.

The Schumer box is a terrific tool for consumers that summarizes the key costs of a particular credit card but is no substitute for due diligence when choosing a credit card. This is particularly important when comparing credit cards offering 0% APR, as there may be subtle differences in terms and fees that will be clearly disclosed in the Schumer box.

The Schumer box helps to educate consumers on the cost of using credit and also helps them make informed decisions about their finances. Learn more about your offer with this demonstration outlining the Schumer box provided by the Federal Reserve.

Noreen Ruth is a regular contributor to www.asapcreditcard.com and numerous financial-related blogs and websites. She specializes in credit and debt-related issues and enjoys educating consumers about the latest rules, regulations and credit protection laws as well as ways to build, improve and maintain good credit.

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