Learning the ins and outs of APRs and interest rates is crucial in lowering the debt on your credit cards.
What is a Schumer Box?
The Schumer Box is an easy-to-read table disclosing the terms, rates and fees charged by credit card issuers under the Truth in Lending Act. The table contains boxes that disclose critical aspects of credit card agreements, including the annual percentage rate, variable-rate information, annual fees, foreign transaction fees and minimum finance charges.
In the Schumer Box, all credit card issuers must clearly disclose long-term interest rate information in 18-point type with the rest of the information in 12-point type.
In 1988, then-Rep. Charles Schumer of New York sponsored a bill known as the Fair Credit and Charge Card Disclosure Act requiring credit card issuers to disclose all information, regarding the interest rates and fees on lines of credit they offer to consumers.
In 2009, the Credit Card Accountability, Responsibility and Disclosure Act took effect. Also known as the CARD Act, the law helps consumers fully understand their credit card costs, including balance obligations, over-limit fees and how long it will take consumers to pay off their balances by only making the minimum monthly payment.
For consumers, the Schumer Box provides enough information to compare credit card offers. Most importantly, the Schumer Box outlines the difference between promotional and regular annual percentage rates, or APRs, and if the credit card issuer waives the annual fee for only the first year. Consumers also receive information on deferred interest and penalty rates.
Schumer Box example
The Schumer Box discloses any penalty APRs and when those penalties apply. The disclosures also include the interest rates on purchases, cash advances and balance transfers. Consumers see information on how to avoid paying interest on their credit cards and minimum interest charges. Updated information includes tips from the Consumer Financial Protection Bureau, or CFPB, and the factors to consider when applying for a credit card.