How to read a Schumer box to learn about your credit card terms

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How to read a Schumer box to learn about your credit card terms

Chances are you’ve never heard of a Schumer Box, but if you’ve applied for a credit card, you’ve probably seen one. The Schumer Box is table you’ll find on every credit card offer you receive, laying out the basic terms in a clear, easy-to-read format — which really helps bring crucial information about your card out of the fine print and into legibility. No matter what the financial institution, the Truth in Lending Act requires the Schumer Box be included with the card’s terms, making it easy to compare terms and figure out which cards are a good deal.

What does a Schumer Box look like?

The Schumer Box is a simple two-column table that you’ll find on credit card offers, typically with the heading “Interest Rates and Interest Charges.” The layout won’t win any design awards, but it does present information in a clear way, with a description in the left-hand column and information in the right-hand column. The entire box is printed in a very legible 12-point font, with interest rates listed in at least an 18-point font for easy reading.

What’s in a Schumer Box?

The box itself contains information about interest rates and fees, including:

  • Annual percentage rate (APR) for purchases, which indicates how much interest you’ll pay on purchases. A credit card offer may list several different rates here, with the one you get dependent on your credit rating. If the card offers a low introductory APR, both the introductory APR and the regular APR will be listed.
  • APR for balance transfers, which indicates the interest you’ll pay for balances transferred to this card. This may be higher than your APR for purchases.
  • APR for casHow to read a Schumer box to learn about your credit card termsh advances, which indicates the interest you’ll pay for any cash advances you get using your card. This is almost always higher — sometimes significantly so — than your APR for purchases.
  • Penalty APR information. If you pay your bill late — or make another kind of financial misstep, most cards will apply a higher penalty APR to your transactions. This section will also tell you how long you’ll be stuck paying the penalty APR if you wind up triggering it.
  • How to avoid paying interest, which indicates when you need to pay to avoid paying interest — typically paying the balance in full by the due date will do it.
  • Minimum interest charge. All cards will have a minimum charge if you’re charged interest, which will be listed here.
  • Set-up and maintenance fees, which lists any fees associated with the account, like annual fees or set-up fees.
  • Transaction fees, which lists fees specific to certain transactions, like balance transfers, cash advances, or foreign transactions.
  • Penalty fees. In addition to the penalty APR which can kick in if you miss a payment, you’ll also usually get a fee for late payments, returned payments, or going over your credit limit. These fees will be listed here.
  • How we calculate your balance details how your card balance is calculated for the purpose of charging interest fees.
  • Loss of introductory APR explains how you can lose a low introductory APR — typically by getting a couple of months behind on your bill payments.

What’s not on a Schumer Box

Though the Schumer Box was designed to make it easy to read and understand credit card information at a glance, there’s still a lot you won’t find listed on it. The biggest thing you’ll want to know that probably isn’t in the Schumer Box is details of the card’s reward programs and other advantages — you may get points you can redeem for rewards, extended warranties for purchases, and more, all of which are of importance if you’re getting a card for specific benefits.

The most important thing to remember is to read the document thoroughly to ensure that you know exactly what you’re signing up for when you get a new credit card.

Posted in: Credit Cards
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