Be sure you understand the rates and fees on a credit card before you apply. The Schumer Box helps you see and compare credit card rates and fees in a concise, easy-to-read format.
When you’re shopping for a new credit card and trying to compare rates and fees, the Schumer Box can make your life easier.
But, what is it exactly? It’s simply a standardized disclosure statement the federal government requires that lists a card’s interest rates, annual fees and other expenses in an easy-to-read format.
Knowing where to find the Schumer Box and about all its various working parts is an important part of the credit card comparison shopping experience, so read on to learn more.
What is a Schumer Box?
Prior to 2000, credit card companies presented their annual percentage rates (APRs), fees and other terms of their agreements in different ways. As a result, it was hard to compare cards or understand the true costs of using credit.
However, then-congressman Charles Schumer took steps to introduce legislation requiring clear, standardized disclosure for credit card offers. The law was enacted in 1988, and it took effect in 2000.
Ever since then, credit card companies are legally required to provide Schumer Boxes with any credit card offerings and monthly account statements.
What terms and conditions are required to be disclosed in the Schumer Box?
The Schumer Box provides a summary of a credit card’s rates and fees so that consumers can quickly understand the terms that credit card companies offer. All credit card agreements must include the Schumer Box in a visible place in the agreement. It must include information relating to:
- Grace period
- Annual fee
- Interest calculation method
- Other relevant fees
The purpose of the Schumer Box is to make it easy for consumers to compare the various rates and fees between credit cards and to protect consumers from hidden or unknown fees.
How to use the Schumer Box
Before you sign up for a credit card, use the Schumer Box to compare interest rates and fees for offers you’re considering. You can also check for fees specific to your credit card goals. If you plan to use a balance transfer card, for example, the most important terms will be the balance transfer rate, length of any introductory period and balance transfer fees.
After you have a credit card, the information in the Schumer Box helps you minimize interest costs and fees. And knowing your interest rate on purchases can help you decide which source of credit to use and how fast to pay it off. Bonus: Being educated about late fees might inspire you to set up automatic payments to make sure you’re never late.
Check the Schumer Box at least once per year to ensure you’re still getting the best deal on a credit card. Perhaps you now qualify for a lower interest rate due to market changes, or maybe your credit usage has gone down. If you no longer carry a balance from month to month, on the other hand, you may prefer a card that lets you earn cash back instead of one with the lowest purchase APR.
What the Schumer Box tells you about interest rates
The interest rate a credit card company charges tends to change with market forces. Many APRs are based on the prime rate, meaning they are equal to the published prime rate plus a certain number of points. Credit cards often charge different interest rates on different types of balances:
- Purchase interest rates: The interest rate on purchases is often lower than the rate on balance transfers or cash advances. One reason is that credit card companies charge merchants fees to process transactions.
- Balance transfer interest rates: The APR for balance transfers is often higher, unless you sign up for a special deal. It can still be worth it to transfer your balance from another credit card, however, if the APR is lower than the card you’re transferring from, or if you want fewer monthly payments.
- Cash advance interest rates: Unless you qualify for a special promotional deal, taking a cash advance on your credit card can be expensive. Cash advance interest rates are generally higher than purchase rates. And since there’s no grace period for cash advances, interest begins to accrue immediately.
- Penalty rates: If you miss even one credit card payment, the interest rate on your balance can go up significantly. Worse, it can stay there until you demonstrate a track record of paying on time again. The penalty rate in the Schumer Box tells you how much you may pay if you miss a payment.
- Minimum interest charge: The minimum interest charge is a fee that credit card companies charge if you didn’t pay your balance in full, but the outstanding balance falls below a certain threshold. That charge is typically 50 cents or $1.
In addition to information about interest rates, the Schumer Box informs you about your grace period (the amount of time you have to pay the balance on purchases without being charged interest) and other details about how your interest is calculated.
What the Schumer Box tells you about fees
It’s one thing to pay fees you understand and expect. For example, you might choose a card with an annual fee because it also has great cash back benefits.
That said, it’s a totally different thing to get slapped with high fees you didn’t see coming. The Schumer Box tells you exactly what fees you may be subject to:
- Annual fees: You can choose from plenty of credit cards that don’t have annual fees. However, some cards with fees make it hard to resist by offering great cash back perks, free companion airline passes and so on. It’s a good idea to reevaluate on a regular basis to ensure your benefits are still worth more to you than the annual fee.
- Balance transfer fees: Most balance transfer cards charge a balance transfer fee of 3 percent or 5 percent of your transferred balance, and most have a minimum fee amount of $5 or $10. Compare these fees so you can minimize the costs involved in a balance transfer.
- Cash advance fees: You’ll be charged a cash advance fee if you use your card to get cash out of an ATM or use the convenience checks you’re sent in the mail. You should know how much this fee will be before you take out a credit card cash advance.
- Penalty fees: Late fees can add up if you constantly pay your credit card bill after its due date. You could also be charged a fee if, say, you pay your bill with a check, and it’s returned for non-sufficient funds. If you do incur a penalty fee, call the credit card company and see if you can get it waived.
- Foreign transaction fees: If you travel or make purchases in foreign currencies using your credit card, you may pay foreign transaction fees. Not all credit cards charge the same fees, and many don’t charge any at all. It pays to know what your credit card charges before you go abroad.
Where to find the Schumer Box
If you’re already a cardholder, your card’s Schumer Box will be clearly displayed within the credit card agreement you’re sent in the mail. However, you can also search for it on credit card issuer websites.
If you’re currently researching credit cards, you may have to search each card company’s website to find out where it publishes the Schumer Box. It may be listed on the home page for various credit card offers, but you may also need to click off the page to find it.
The table below explains what to look for when searching for the Schumer Box on various card issuer websites:
|Credit card issuer||Where to find the Schumer Box|
|American Express||Click on “Rates and Fees”|
|Bank of America||Click on “Terms and Conditions”|
|Capital One||Click on “View important rates and disclosures”|
|Chase||Click on “Pricing & Terms”|
|Citi||Click on “Pricing & Information”|
|Discover||Click on “See rates, rewards and other info”|
|U.S. Bank||Click on APR offer or interest rate link at top of page|
|Wells Fargo||Click on “Important credit terms”|
Look for the Schumer Box whenever you’re considering a credit card offer and when you get your credit card statement. By understanding your total cost of credit and comparing it with other options, you can make better decisions that help you reach your financial goals.