My Blog 
del.icio.us
Digg It 
Furl 
reddit
Home
Articles
Contact Us
Schumer's Box
Schumer’s box is named after Charles Schumer – the New York Congressman responsible for the legislation that requires that terms of credit cards be clearly outlined. It is in summary a list of the costs of a credit card. This law was enacted in 1988 but took effect in 2000 in the United States and March 2004 in the United Kingdom. Credit card companies are required to list long-term rates in at least 18-point type. Other key disclosures are to be listed in 12-point type.
The Schumer Box includes:
- Annual fee if applicable
- Annual percentage rate for purchases (APR)
- Other APRs (balance transfer, cash advances, default APRs)
- Grace period
- Finance calculation method
- Other transaction fees (balance transfers, late payments, exceeding credit limit fee, cash advances)
All credit card companies use the same format, making comparison shopping for credit cards easy. Although the schumer’s box contains the basic terms of the credit card, there are other terms that you should look for in the fine print. For example:
-
Universal default clause – If you are reported late by another creditor, your APR can be increased even if you are paying your bills on time with that creditor.
-
Dispute resolutions, binding arbitrations – Disputes are settled by an independent third party body instead of a judge or court. The arbitrator’s decision is final and cannot be disputed or appealed. There are two types of arbitrations – voluntary and mandatory. In mandatory, a consumer waives their constitutional right to sue and must use an arbitrator instead to resolve disputes. In voluntary, the consumer and company may mutually agree to allow a third party to intervene.
-
Double Billing Cycles - You are charged interest on your current billing cycle and the pervious one. As such, even though you may have paid your pervious balance in full, you are still charged interest on it.
-
Fees – Read your contract for other fees you may incur. For example, some credit card companies charge a fee for not updating your account every year.