You may not have heard of the Schumer Box, but you undoubtedly know what it is. It is what makes shopping for a credit card not just convenient, but for many of us, it makes it possible for us to compare credit cards side by side.
Have you ever tried to read the fine print on those deal of the century credit card offers? The words are barely large enough to read and once you do get out the magnifying glass and read through it, it's hard to comprehend, uses words that many of us don't understand, and is clearly written in a way that is not exactly designed to heighten our understanding.
This is where the Schumer Box comes in. We can thank the federal government for this box. The Schumer Box was born in March 2004 in response to The Federal Truth in Lending Act that requires credit card companies to include the costs of credit cards in anything that is designed to be an advertisement and to display them in an easy-to-read format. The Schumer Box format is named for Representative Charles Schumer who spearheaded the legislation in Congress.
To make it easy for us to compare credit cards, the Schumer Box contains the following items: annual fee if applicable, annual percentage rate for all purchases, APRs for balance transfers or other promotional offers, grace period for purchases, finance calculation method, and any other transaction fees.
With this information, a savvy consumer has all of the information needed to make an apples to apples comparison between all credit card offers.
Still, though, you will want to go through the fine print. There are some key parts of the fine print that you want to pay particular attention to. First, there is most likely a clause saying that if you are late in your payments, the card company has the right to raise your interest rate. This is called the universal default clause.
What does the fine print say about balance transfers? Most of the time, if there are any fees associated with transferring a balance, the agreement states that those fees will be added to your balance and you will pay interest just as you would on any other purchase.
In most instances, the fine print of most credit card offers is largely the same. Still, though, before signing the agreement, make sure you have at least skimmed the tiny little words on the back side of the card offer.
If you have any questions about the credit card terms, call the credit card company's customer service department and speak to a representative. Don't settle for the answer until you are confident that you understand it.
Although the Schumer Box will give you all of the important information, don't forget about everything that is on the back of the agreement. Claiming ignorance is not a way to get out of the agreement.
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