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By highlighting fees and rates that matter, the Schumer box can save you time when sorting through endless credit card terms and conditions.
Shopping for a credit card can mean sifting through a lot of fine print. If you’ve been reading terms and conditions ’til your eyes cross, you might want to try using the Schumer box. It’s a tool that can help you review rates and fees, and more easily compare one credit card to another. Let’s take a look the Schumer box, and more importantly, how you can use it.
What is a Schumer box?
A Schumer box is a standardized table that summarizes many of the costs involved with a credit card, including interest rates, fees and other terms. You can find the Schumer box alongside credit card terms and conditions online or in your printed credit card agreement.
Using the Schumer box: APRs and fees
Annual percentage rates
Listed prominently in a card’s Schumer box, the APR, or interest rate, is basically how much it costs to borrow money from the credit card issuer. Knowing how much you’re being charged is key to being able to manage your finances, so take note of your card’s APRs. A credit card with high APRs can quickly become a very expensive, growing source of debt.
Keep in mind that there will likely be more than one type of APR listed in the Schumer box. For example, you may be offered a lower introductory APR that only lasts a few months before jumping up to the regular rate. Or you might see a different APR for purchases versus balance transfers. There could also be a penalty APR listed, which typically applies if you don’t make payments on time or break other rules in the card agreement.
What’s a variable interest rate?
An interest rate that can change with an index interest rate is called a variable interest rate. Variable APRs can go up or down based on changes in an index interest rate, like the prime rate published in the Wall Street Journal. A fixed APR, on the other hand, can also change, though it won’t change based on an index — and it may never change at all. A fixed APR also means the lender typically must notify you before your interest rate changes.
One more important note about APRs: Many cards won’t charge you any interest on purchases if you pay your balance on time and in full each month. The gap between the end of your credit card’s billing cycle and when your payment is due is called a grace period, which credit card issuers should note in the Schumer box if it’s available.
Even if you’re not charged interest on a transaction, you may still be charged a fee. The Schumer box will show you fees that you’ll be charged no matter how you use the credit card. An example of this is the annual fee, if the card has one. The Schumer box also includes fees assessed for special transactions, like balance transfers, cash advances and foreign transactions.Credit card fees: How much they’ll cost you and how to avoid them
Check the Schumer box for details about penalty fees, too. Penalty fees can apply for a number of reasons, like when you make a late payment, miss a credit card payment, or pay less than the minimum amount due.
Why do creditors use the Schumer box?
As amended, the Truth in Lending Act requires credit card companies to provide a standardized table of information, and the Schumer box became the industry standard.
But while a primary purpose of the Schumer box is to help potential cardholders identify key terms, creditors aren’t required to include all the card’s information in it. Details about rewards programs, for example, are not required to be in the Schumer box. Instead, you’ll generally find this info in the body of a card agreement. That’s why it’s important to also review the terms and conditions before choosing a card.
Whether you’re looking for the lowest APR, or the best balance transfer card, the Schumer box can help you compare terms and find a card that works for you.
Typically, in order to qualify for cards with the most favorable terms, your credit generally needs to be in good to excellent condition. Checking your credit scores can help you be better prepared to apply for your next credit card once you’ve shopped around.