If you’ve ever filled out a credit card application, you’ve probably noticed the long sheet included with the application that is set up as a table with two columns. This table is known as the “Schumer Box” and is required under the Truth in Lending Act (also called the Consumer Credit Protection Act), according to the FDIC.
The Schumer Box was developed to help credit card holders understand what they’re getting into. In presenting all of the information up front, issuers enable consumers to make educated, informed decisions about their finances.
The Schumer Box is named after the senator who created it, Charles Schumer. The box is required to be printed in at least 12-point type, with long-term rates in 18-point type or greater.
The information you will find in the Schumer Box includes:
APR Information
The Schumer Box must include the introductory annual percentage rate (APR), if any, as well as the long-term APR. If the interest rate is subject to change or is a variable rate, the credit card issuer must include how the rate is computed.
Finance charges
If the card issuer charges fees for any type of transaction, it must list it as a finance charge in the Schumer Box. This includes minimum charges, balance transfer fees, cash advance fees and charges for transactions.
Annual fee
Some credit cards come with annual fees, which are fixed fees paid to the credit card issuer every year. Clearly this is information that must also be contained in the Schumer Box.
Grace period
A grace period is the number of days between the issuance of a statement and the date on which interest rates commence. This is important information, which is why it must appear in the Schumer Box.
Credit limit
All credit cards come with a limit, which is the maximum balance the card can hold at a given time.
Minimum payment
Even if you do not intend to pay off a credit card in full each billing cycle, you will have to send in a minimum payment. The Schumer Box should also include how much that minimum payment is, which is usually a percentage of your balance.
Other fees
Some credit cards charge fees for issuance, credit card limit increase requests and other services. Naturally, these must also appear in the Schumer Box.
Before completing a credit card application, make sure to read the Schumer Box carefully. If you don’t understand some of the information, call the customer service number. It pays to get all the information up front rather than being surprised later.
