Consumer Credit Consultancy and Training

Schumer boxes / Honesty boxes

Senator Charles Schumer in the USA campaigned for a Truth in Lending law, which led to the introduction of clear tables on agreements and advertising material, giving the main details of agreements. These are known in the USA as "Schumer boxes" and in the UK as "honesty boxes".

Two American examples follow, demonstrating the range of solutions which are offered by lenders, the first very easy on the eye, the second almost as bad as the mischief which these boxes were supposed to redress!

Annual
Percentage
Rate for Purchases

Grace Period for purchases

Minimum Finance Charges

Balance Calculation for Purchases

Annual Fees

Transaction Fees for Cash Advances

Late Payment Fees

19%

Not less than 25 days

$5 when a finance charge at a period rate is charged

Average daily balance method (including new purchases)

Annual fee
$20 per year

2% with a minimum fee
of $3

$10

Annual Percentage Rate for purchases and balance transfers*	2.99% APR (.00819% daily periodic rate) on purchases and balance transfers until the first day of the billing cycle that includes the six (6) month anniversary date of the opening of your account. In the absence of the introductory rate, 12.99% APR(.03559% daily periodic rate) on purchases and balance transfers.**
Grace period for repayment of the balance for purchases	You will have a minimum of 25 days without a finance charge on new purchases if the total New Balance is paid in full each month by the statement closing date.
Method of computing the balance used in calculating finance charges for purchases	Average daily balance (including new purchases)
Annual fee	$25
Minimum finance charge	For each Billing Period that your Account is subject to a finance charge, a minimum total Finance Charge of $0.50 will be imposed.
Miscellaneous fees	Cash advance fee: 2.5% of amount of the cash advance, but not less than $2.50. Late payment fee: $25 Over-the-credit-limit fee: $25 Returned check fee: $25
** If you fail to make any payment when due, exceed your credit limit, make a payment which fails to clear and is returned unsatisfied, otherwise default on this or any other account with us, or upon any closure of your account, by you or by us, we may immediately increase all rates on your account to a variable rate of the higher of (a) 24.99% APR (.06847% daily periodic rate) or (b) up to the three months London Interbank Offered Rate published in The Wall Street Journal on the third Wednesday of March, June, September and December (¡°LIBOR¡±) plus 18.331% (24.99% APR, .06847% daily periodic rate, today).
Late payment fee: $35 and Overlimit fee: $29. Cash advance FINANCE CHARGE transaction fee: 4% of amount of advance, minimum $5. The variable rate for cash advances will be the higher of (a) 19.8% APR (0.05425% daily periodic rate) or (b) LIBOR plus 13.141% (19.8% APR today); see the CONSUMER INFORMATION above for other rate information applicable if you fail to make any payment when due, exceed your credit limit, make a payment on your account which fails to clear and is returned unsatisfied, otherwise default on this or any other account with us, or if your account is closed by you or by us.

Good examples in the UK are reported to be found in documents produced by the Nationwide Building Society and by Marks & Spencer Financial Services Ltd. although these have not proved scannable. Such boxes are compulsory on agreements in the UK with effect from 31 May 2005.