Every credit card offer contains a virtually identical table, listing all the applicable terms and conditions. These banks are not just doing this to copy each other, they are required by law to disclose these terms in a standard format. Within the industry, this disclosure has come to be known as the Schumer Box, after Charles Schumer, a legislator from New York state.
Schumer, now a United States Senator, has been a tireless advocate for consumer financial protection legislation. In 1988, Charles Schumer was a congressman who felt that banks were unfairly hiding the terms and conditions of their offers in the fine print, or failing to disclose them at all. In response, he championed the inclusion of a provision in the Truth in Lending Act mandating a uniform standard of disclosure.
The legislation mandates that the box is a two-column table. On the left side, there is a list of the different terms that are required to be disclosed, while the right side offers the rates and fees as well as a description of how these terms works. Long term rates must be in at least 18-point type, while other disclosures must be in 12-point size. The box must include the following, when applicable; annual fees, annual percentage rate of interest for purchases, balance transfers, cash advances, and default rates. It must also specify the grace period, the method of calculating interest, and any other transaction fees.
Choosing the right credit card is an important, but confusing task. With many other types of purchases, consumers are left to sift through the various terms and conditions without any uniform structure. However, with a credit application, consumers can easily compare and contrast different terms on various cards by going directly to the Schumer boxes. When visiting the web sites of any card, applicants can search for a link to “terms and conditions,” or “rates and disclosures” that will bring them directly to a new page with a Schumer box.
While Schumer’s table is a great tool for cardholders, it doesn’t cover everything. A Schumer box does not have to disclose the terms of reward credit cards or any included benefits. To ensure that applicants will receive everything they are promised, they should closely study the remaining fine print, and make copies of the offer for their records. The Schumer box is a very consumer friendly requirement, but it is still no substitute for applicant’s due diligence when applying for a credit card. This is particularly applicable when comparing credit cards that have 0% APR balance transfer offers, as there are often many subtle differences in terms and fees that are only clearly disclosed in the Schumer box.
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