What Is a Schumer Box?
A Schumer box is a table that appears in credit card agreements showing basic information about the card’s rates and fees. The Schumer box shows information about the card’s cost to consumers, including its annual percentage rate (APR) for purchases, APR for balance transfers, APR for cash advances, penalty APR, grace period, annual fee, balance transfer fee, cash advance fee, late payment fee, over-limit fee and returned payment fee. Credit card issuers must provide the Schumer box with all credit card solicitations, whether the offer is online or through the mail.
- A Schumer Box is a required summary of a credit card's rates and fees that is visible in credit card agreements.
- It shows what the card will cost consumers, including the various annual percentage rates (APRs), an annual fee, a cash advance fee, a late payment fee, and a returned payment fee, among other expenses.
- The box is named after Senate Majority Leader Charles Schumer (D-NY), a NY Congressman at the time, who was involved in the legislation that required that credit card terms be clearly identified in any advertising material.
Understanding a Schumer Box
Schumer boxes of several different credit cards can help illustrate the similarities and differences among them. The box is named after New York Senator Charles Schumer—at the time Congressman Schumer—because he was involved in the legislation that created it. That legislation is known as the 1968 Truth in Lending Act, and its purpose was to protect consumers in transactions with lenders and creditors.
To adequately interpret the information presented in the Schumer box, it’s important to have an understanding of what a prime rate is and how it affects credit card rates. The prime rate is the interest rate that commercial banks charge their most creditworthy customers. Understanding this can help determine what APR the credit card issuer is likely to give based on an individual’s credit score.
The information presented in the Schumer box does not encompass all the criteria on which one should base a credit card decision. Other items for consideration include how a credit card company's rewards program works, how to earn a sign-up bonus or how to keep promotional zero percent APR on balance transfers. The Schumer box also won’t offer information about other cardholder benefits, like travel insurance and return protection. Information about those benefits can be found in a separate document.
How to Use the Information in the Schumer Box
Say the Schumer box for one credit card shows that the card’s APR is 8.99%, 10.99%, or 12.99% based on a potential borrower’s creditworthiness. If a potential borrower's credit score is 780, they can safely assume they’ll qualify for the 8.99% APR, based on their better-than-average credit score. On the other hand, if a potential borrower has a less desirable credit score of 660, they’ll likely be subject to one of the higher rates.
The Schumer box also tells consumers the type of method, such as the average daily balance method, that the credit card company will use to determine how much interest they owe.