Merchant Account Teaser Rates Exposed

The Lower Your Base Rate is the Higher Your Effective Rate Tends to be

If you have ever received a home loan, auto loan or credit card you have seen the term APR. This term stands for annual percentage rate. The definition for this term is:

The annual rate that is charged for borrowing money, expressed as a single percentage number that represents the actual yearly cost of funds over the term of a loan. This includes any fees or additional costs associated with the transaction.

You may have heard radio ads for a home loans with a 1% interest rate that at the end have the announcer saying fast, and in a hushed tone, "with an APR of 4.35%." This means when you take into account the additional fees associated with the loan you are not paying 1% but 4.35%! So when you shop for any type of credit what you want to focus on is the APR, not the incredible "teaser rates" because the APR tells you what you are actually paying.

APR = Effective Rate for Merchant Accounts

With merchant accounts you will see similar offers with teaser rates like 1.39% for a swiped card. That rate is actually .16% below cost from Visa. How can this be? Do merchant account providers actually lose money just to get you in the door? No way, this is what I call a "Hollywood rate." Yes this rate is a facade; you are drawn in with a super low rate but when you add the additional miscellaneous fees and surcharges your effective rate (APR) is much, much higher.

Effective Rate

You can figure out your effective rate by taking the total fees you are paying for your merchant account and divide it by your total bank card volume. This will give you the real rate you are paying. If the number is much higher than your base rate, you need to start looking for a new merchant account provider.

The only problem with you figuring this number out is merchant account statements tend to be very difficult to decipher. That is where I come in; I analyze merchant account statements for a living. Go to the link below, fill out the form and I’ll walk you through the process step by step.

Go here to take the first step

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