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Its no secret that credit card terms and conditions can be tricky and full of words we dont use in our every day life. When we receive offers in the mail, they are usually full of incentives that are often irresistible, whether it is a free airline ticket, hotel stays or cash back. Its very easy to see these great offers and not even try to figure out exactly how the card works. Credit card companies are required by law to provide detailed information about how the card functions. One way they do this is with the Schumer Box. This article will explain what the Schumer Box is and how you can use it to your advantage when consider a credit card.

What Is The Schumer Box?

Lets first start by talking about exactly what the Schumer box is. The Schumer Box is a table that has to be present in every credit card application form. The box discloses important information about the credit card such as the fees and interest rates of the credit card are disclosed. The Schumer Box was named after the New York Congressman Charles Schumer who was responsible for pushing through the legislation that required credit card companies to disclose fees and costs of credit cards in their promotional material. The Schumer Box legislation was enacted in 1988, and took effect in 1989. This made it easier for US consumers to know the main terms of a credit card, its fees and various interest rates so that they can make an informed decision when applying for a credit card.

The Information Contained In The Schumer Box

• Annual fee: The Schumer Box must mention if the card has any annual fee, and if so, how much the annual fee is.
• Annual Percentage Rate (APR) for purchases: It must be specified if there is an introductory APR, what the long-term APR is, how the rate is computed, and if it is fixed or variable.
• APR for balance transfers, cash advances, etc: Likewise, it must be specified if there is an introductory APR, what the long-term APR is, how the rate is computed, and if it is fixed or variable.
• Other transaction fees: This includes any type of fee that is associated with the credit card, such as balance transfer fees, over-the-limit fees, late payment fees, cash advance fees, penalty fees etc.
• Grace period: This is the period between the issue of your credit card statement each month and the date in which you will be charged an interest. The amount of days of your grace period is when you should pay your bills in order not to have to pay any interest fees.
• Method of calculating the interest rates: It must be mentioned how the interest rates are calculated and if it is according to the Prime Rate or calculated in a different way.

How To Use The Schumer Box

Consumers can and should use the Schumer Box as a tool to help them decide on which credit card they should apply for. The purpose of the box is to force card companies to disclose all relevant information about the card. This allows consumers to compare cards and know what all the fees and rates are upfront. If you use the box, you should never be surprised about how your credit card functions. The Schumer Box forces credit card companies to disclose important fees in an obvious way so that people can have a general idea of all the fees and interest rates they will have to pay as well as the more important things about the credit card that they are in the process of comparing or applying for.

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