Schumer Box

The Schumer box is the informal name for the tabular disclosure of rates and fees that federal law requires on credit and charge card applications and solicitations. Regulation Z, at 12 CFR 1026.60(a)(2), generally requires those disclosures "in the form of a table with headings, content, and format substantially similar to any of the applicable tables found in G-10 in appendix G," the model forms the Consumer Financial Protection Bureau publishes with the regulation.

The regulation itself never uses the nickname. The Federal Reserve Board, which wrote the rule before the CFPB inherited it, explained the name in a 2000 rulemaking: the Fair Credit and Charge Card Disclosure Act of 1988 "generally requires that card application and solicitation disclosures be provided in the form of a table (commonly referred to as the 'Schumer box' after the law's chief sponsor)." That Act added the requirement to the Truth in Lending Act, at 15 U.S.C. 1637(c).

The rows, and where each is explained.

• Annual percentage rate for purchases, with separate rows for balance transfers and cash advances. A variable rate must say so and name the type of index; the index value and margin stay out of the table.
• Introductory rate, if any, labeled "introductory" or "intro," with how long it lasts and the rate that follows.
• Penalty APR and when it applies, described briefly, along with how long the higher rate lasts.
• How to avoid paying interest on purchases, which is the grace period row, including any condition on it.
• Minimum interest charge, if one above a small threshold can be charged in a billing cycle.
• Fees: the annual or other periodic fee, transaction fees such as balance transfer and cash advance fees, and penalty fees for a late payment, going over the limit or a returned payment.
• How the balance is calculated, by naming the balance computation method.
• Available credit, but only where required fees or a security deposit charged at opening equal 15% or more of the card's minimum credit limit.
• A reference to the CFPB's website for credit card information.

Format rules. The purchase APR "shall be in at least 16-point type," except in oral disclosures and for a penalty rate. Rates and the main fee amounts must be in bold. The table "shall contain only the information required or permitted" by the section; anything else, such as a rewards program, must appear outside it. Disclosures in a direct-mail offer must be accurate when mailed, and a variable APR counts as accurate if it was in effect within 60 days before mailing. An application made available to the general public, such as a take-one form or one printed in a magazine, may carry the table or may instead say that costs apply and give a toll-free number and address for asking about them (1026.60(e)).

What the table will not tell you. The purchase APR on a card is the periodic interest rate stated yearly; it does not fold in the annual fee, which is listed separately. And the penalty row is written to be brief: the CFPB's official interpretation tells issuers to describe a trigger as "make a late payment" even where the rate on existing balances can rise only after a payment is more than 60 days late, and to say the penalty rate "may apply indefinitely" if the agreement reserves that right, without listing the legal limits on how long it can last. Those limits are on the penalty APR page.

A second table at account opening. Once you open the account, Regulation Z requires the account-opening disclosures to use a similar table, set out in its own model forms (1026.6(b)(1)), so the terms you saw before applying reappear when the account starts.

Read the box row by row against how you expect to use the card. Someone who pays in full each month cares most about the annual fee, the grace period and any transaction fees; someone who carries a balance cares most about the purchase APR and the penalty APR.

Consider an example. Malik is choosing between two cards and expects to carry an average balance of about $3,000. Card A's box shows no annual fee and a purchase APR of 27%. Card B's shows a $95 annual fee and a purchase APR of 21%.

• On Card A, a year of carrying $3,000 costs roughly $810 in interest ($3,000 × 27%), with no fee.
• On Card B, the same balance costs roughly $630 in interest ($3,000 × 21%), plus the $95 fee, about $725 in all.

For Malik, Card B is about $85 a year cheaper. For someone who pays in full every month and never pays interest, the comparison flips: Card A costs nothing and Card B costs $95. The box gives both facts, but only the reader can combine them, because the APR row never includes the fee.

Pros

• Puts the same core terms in the same place on every card offer, so cards can be compared directly.
• Requires the purchase APR to be large and bold, and keeps marketing claims out of the table.
• Discloses the penalty APR and what triggers it before you apply.

Cons

• The APR does not include the annual fee, so the cheapest card depends on how you use it.
• The penalty row is deliberately brief and does not describe the legal limits on a penalty rate.
• It does not show the credit limit you will receive, and rewards terms appear elsewhere.
• Rates in the table can change after you open the account, within the rules on advance notice.