Schumer box

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The Schumer box is a summary of the costs of a credit card. It is named after Charles Schumer, the New York congressman who was responsible for the legislation[1] that requires that terms of credit cards be clearly outlined in any promotional material. The law was enacted in 1988 and took effect in 1989 in the United States.[2] Similar legislation was enacted in the United Kingdom and took effect in March 2004. Credit card companies are required to list long-term rates in at least 18-point type and other key disclosures in 12-point type.

The Schumer box includes:

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 one should look for in the fine print. For example,

  1. 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.
  2. 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.
  3. Double Billing Cycles - You are charged interest on your current billing cycle and the previous one. As such, even though you may have paid your previous balance in full, you are still charged interest on it.
  4. 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.

Other names that the Schumer box is known as include the summary box, transparency box, clarity box, consumer box and honesty box.

[edit] References

  1. ^ Senator Schumer Website: Press Room
  2. ^ "Final Rule: Truth in Lending; Credit and Charge Card Disclosures (12 CFR Part 226)". Docket No. R-0654, Board of Governors of the Federal Reserve System, April 6, 1989, p. 1.
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