Schumer Box And Credit Card Offers

Ever hear of the Schumer Box? It’s actually an important piece of information that you will find in a credit card application and something you need to be aware of when considering a credit card.

The Schumer Box is a standardized disclosure box, a two-column table, that contains terms of credit cards that are being offered to new customers.  The phrase is named after Charles Schumer, the senator from New York (he was a representative when the legislature was originally passed).  The law requires that credit card companies place relevant data of card offering terms, such as rates and fees, in a box so that they are clearly outlined in company promotional materials.  Long-term rates must be printed in at least 18-point type and other disclosures in 12-point type.

What is in the Schumer Box

A list of important credit card information must be included in the Schumer Box.  Key data in the Schumer Box are annual fees if any, information on annual percentage rate (APR), finance charges, grace period, credit limit, minimum payment, and other transaction fees.  APR information must specify both introductory APR if any and long-term APR, as well as APR on balance transfer, cash advance, and default.  If any APR is variable, the company must also reveal how the rate is subject to change.  Information about finance charges should explicitly state the method for calculating interest such as daily compounding on daily average balance.  The section on transaction fees shall mention all potential fees that a credit card company intends to charge, such as fees on balance transfer, late payment, over credit limit, and cash advance.

Imagine you didn’t have all of the card offer’s information in one easy-to-read location?

The Schumer Box Format

The Schumer box uses a universal format so that all credit card companies can present the information in the same way, which makes the terms clearer for prospective customers to read and understand.  The Schumer box format is a two-column table.  On the left side, the table lists all the different credit card terms that are required to be included in the box.  On the right side, it contains information that explains how each of the terms works.  The table also formulates a number of rows and each term occupies a single row. The required font sizes must be used with the long-term APR printed in bold and in 18-point type.

Easy Card Offer Comparison

Also known as the clarity and transparency box, the Schumer Box is important for people who shop for credit cards, as it enables easy comparisons of different card offers in a straightforward chart setting in which key terms can be clearly outlined.  The Schumer Box makes credit card companies present important information up front by summarizing the key costs of getting a credit card.  The Schumer box allows consumers to make simple and intuitive side by side comparisons and in the process they not only educate themselves on credit card offers but also make informed decisions about their finances.

As you can see, understanding the Schumer Box is important when considering a credit card offer. It gives you all of the basic information you need to help you make a side-by-side comparison between two or more cards.

The Federal Reserve has a nice Flash demonstration that outlines the Schumer Box – http://www.federalreserve.gov/creditcard/ – Click on Learn more about your offer. (You’ll actually see this site in a Schumer Box).