Schumer box

The Schumer box is a summary of the costs of a credit card in the United States. It is named after Charles Schumer, the New York congressman (now United States senator) who was responsible for the legislation^[1] requiring that terms of credit cards be clearly outlined in any promotional material. The law was enacted in 1988 and took effect in 1989 in the United States.^[2] Similar legislation was enacted in the United Kingdom and took effect in March 2004. Credit card companies are required to list long-term rates in at least 18-point type and other key disclosures in 12-point type.

The Schumer box includes:

• Annual fee if applicable
• Annual percentage rate for purchases (APR)
• Other APRs (balance transfer, cash advances, default APRs)
• Grace period
• Finance calculation method
• Other transaction fees (balance transfers, late payments, exceeding credit limit fee, cash advances)

All credit card companies use the same format, making comparison shopping for credit cards easy. Although the Schumer box contains the basic terms of the credit card, there are other terms that one should look for in the fine print. For example,

1. Universal default clause – If the cardholder is reported late by another creditor, their APR can be increased even if they are paying their bills on time with that creditor.
2. Dispute resolutions, binding arbitrations – Disputes are settled by an independent third party body instead of a judge or court. The arbitrator’s decision is final and cannot be disputed or appealed. There are two types of arbitrations – voluntary and mandatory. In mandatory, a consumer waives their constitutional right to sue and must use an arbitrator instead to resolve disputes. In voluntary, the consumer and company may mutually agree to allow a third party to intervene.
3. Double Billing Cycles - The cardholder is charged interest on their current billing cycle and the previous one. As such, even though they may have paid their previous balance in full, they are still charged interest on it.
4. Fees – Read the contract for other fees you may incur. For example, some credit card companies charge a fee for not updating the account every year.

The Schumer box is also known as the summary box, transparency box, clarity box, consumer box and honesty box.

References