All credit cards charge interest; they make their money by charging you a fee for loaning you money. That fee is charged per transaction (purchase) is determined by your interest rate, which is expressed as a percentage of your transactions. Some of the most valuable information the Schumer box contains involves your annual percentage rate or APR, which is usually a sliding scale of rates sometimes called a range.

All credit cards have various rates for different kinds of credit card charges. For example, purchases you make at retailers and service providers will probably have a different interest rate than the one you will be charged for using your card at an ATM. If you ever pay off a credit card using another credit card, that’s called a balance transfer and that transaction also has its own interest rate. If you have a variable interest rate, it can change without notification because it is based on the prime rate (the amount of interest banks can charge one another for loans); the Schumer box will alert you to that, too. If you have a variable rate card, be sure to keep your eye on the prime rate and borrow money from your creditor only when your terms are favorable.

Amount Charged ÷ Interest Rate = Finance Charge

The Schumer box also shows how the credit card company is calculating your finance charges (basically, amount charged divided by interest rate equals finance charge) and details the fees and penalties that may accrue if you default on your contract. It will show a minimum finance charge of a token amount (usually a dollar), but it is only charged when you have no activity of any kind during a billing period.

Fees are not necessarily negative, but penalties always are. For example, if you pay an annual fee for being a cardholder, that’s not a negative or positive mark on your credit. It’s just a payment requirement you have to meet to be a cardholder. But if you are late on a payment, miss a payment or go over your credit limit, you will be charged the appropriate penalty charge: late or missed payment fees and over-limit fees are listed in the Schumer box. If you are late a lot or miss too many payments, they will raise your current interest rates to your penalty interest rate, which is also listed in the Schumer box. It will be scary high, because it is intended to act as a deterrent against knowingly and willfully violating your contract.

You should compare the finance charges to the ones detailed in the Schumer box to make sure they are using the correct interest rate for each type of charge on your statement.