How To Calculate Total Credit Card Processing Fees

January 2, 2022

Finding your effective rate is the first step. First, get your credit card statement. Then divide the total processing fee by the percentage of monthly sales paid by credit cards. The outcome is your effective rate. 


Calculate Credit Processing: Mistakes Need To Avoid 

Many people don't think about the cost of credit card processing. It's one thing to know that you'll need a merchant account and an online payments solution. Still, it's another to understand what each service costs and how they can impact your decision. 

The cost of credit card processing can be high, and it is crucial to understand the different charges that apply. This mainly includes the cost of processing payments, which is often a misconception for business owners. It is essential to calculate the costs of these fees to make the right decision about what type of payment acceptance you want your business to offer. This article will discuss how you calculate credit card processing fees and share some common mistakes businesses make when calculating their expenses. 

How Are Credit Fees Calculated? 

Credit card companies calculate fees in a variety of ways. Still, typically they are based on either the total balance or the average daily balance. 

The total credit card balance is the sum of all transactions applied to a particular credit card account during a billing cycle. This figure includes revolvement balances or the total amount of money borrowed on a revolving basis, consisting of cash advances, balance transfers, convenience checks, and unpaid finance charges. 

The average daily balance is calculated by dividing the total credit card balance by the number of days in the billing cycle. This figure takes into account the fact that some days there may be more transactions than others. The calculation gives a more accurate representation of how much money is owed on a day-by-day basis. 

What Are the Common Factors That Affect Your Credit? 

Many factors can affect your credit score. Some of these factors are common, while others are specific to each individual. The knowledge of what can hurt or help your credit score will give you a good idea of what to do and what not to do to maintain healthy credit. 

Here are some of the most common factors that can impact your credit score: 

  • Types of Credit: Some types of credit contain negative factors that can lower your credit score. These include retail accounts, such as department store accounts or credit cards you obtained directly through a retailer. Be especially careful with opening too many new lines of retail accounts in a short time. 
  • Background of Payment: Your credit score can be affected by how you've previously paid your bills. If you have a history of paying your bills on time, your credit score will be higher. Conversely, your credit score will be lower if you have a history of missed or late payments. 
  • Amount of Debt: The more debt you have, the lower your credit score. This is because lenders see people with a lot of debt as risky borrowers. If you want to build your credit score, it's recommended that you keep the amount of debt you owe below 30% of your total available credit. 
  • Credit history duration: If you have had the same type of credit for years, this is seen as a positive sign that you are responsible for the money. The longer you've had credit accounts open, the better your credit score will be. This is because it shows that you're a responsible borrower who can handle borrowing money and repaying it over time. 
  • Inaccurate information: Incorrect information on your credit report can have a negative impact on your credit score. This is why it's important to ensure that all the information in your credit report is accurate and up-to-date. If you find incorrect information on your credit report, dispute the information with the credit bureau. 
  • Credit utilization percentage: Another factor that affects your credit score is how much of your available credit you're currently using. If you have a high credit utilization percentage, it means you're using a lot of your available credit, which is a sign of risk. Your credit score can be affected by how much of your available credit you are using. 

These are some of the most common factors affecting your credit score. Keep in mind that each individual's credit situation is different, so it's essential to review your credit report and credit score regularly to see where you can make improvements. 

What Are the Common Credit Processing Mistakes? 

Although having credit processing in place is vital to the stability of your business, you need to ensure that it's set up correctly. Find out some of the most common mistakes made when setting up credit processing systems. 

These are a few mistakes that are commonly made when it comes to credit processing: 

  • Choosing a credit card processing company: Credit card processing companies can be expensive, so you want to make sure they are legitimate. Ensure the company is well-established and has no complaints before contracting its services. Do your research and compare rates and read reviews before making a decision. 
  • Not getting set up for recurring payments: If you offer recurring services or subscriptions, you need to ensure that you've set up for recurring payments. Not only will the credit card be charged each month, but you also need to make sure that customer accounts are updated accordingly if a payment is declined. Failing to do this will result in lost money. 
  • Not negotiating rates: Many companies don't bother to haggle with credit card processors, but this is a mistake. Negotiating rates can help you to save considerable money on your merchant account, so it's crucial to establish whether or not they are willing to negotiate before signing a contract 
  • Not Understanding Contract Terms and Conditions: If you're using an offshore credit card processor, you need to ensure that the terms of your contract are clear. Getting all of the information in writing will help you understand precisely what they can offer and whether or not their services are appropriate. 
  • Protection of personal information: Ensure that the credit card processing company you contract with is committed to protecting your customers' data. You can review their website for details on how they store and protect personal information. This will help you feel safe about your customer's data confidentiality. 
  • Not asking for references: Getting the contact information of existing customers is essential. You will be able to get an idea about the quality of their services by talking to them directly. Find out more about the customer service they provide, how quickly issues are resolved, and whether or not they have had any problems with the company. 


An excellent way to avoid mistakes is by learning how to calculate credit processing. As you've seen, there are many different types of credit processing that all have their own rules for calculating rates and fees, making it challenging to stay on top of the details. By understanding the basics and taking the time to learn about your specific processor, you can make sure that you get the best deal possible. 

You may be wondering how much your credit card processing will cost you. This is difficult to answer without knowing too many factors, but we can help. If you need help with this credit processing calculation, let us know at BNG Payments. We offer benefits from an expert opinion and years of experience in the credit card processing industry. 

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