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Assumptions: interest rate is 18%, minimum payment is 2% of balance or $50.00 made for one year**.

Beginning Balance
Finance Charge
Amt to Principle
Bal at End of Year 1

$2500.00
$436.98
$163.02
$2337.04

Your total annual payments would equal $600.00; your total finance charges would equal $436.98 and the amount to principle, $163.02. At the end of the year one you would still owe $2337.04. Now, lets take the original $2500 you charged and add the first year's finance charges of $436.98 which equals $2936.98. If you paid the entire balance off at the end of year one that $2500.00 in bargains you got actually cost $2936.98. Your actual realized savings would be as follows:

2500 initial balance. Average overall savings are 50%. Finance charge is $436.98.

436.98 / 2500 = 17.5%; 50% - 17.5% = 32.5% actual savings.

Even though the merchant charged $2500 for all those great deals, your out of pocket costs were far greater. ($2936.98) And if you continue to make minimum payments you would completely wipe out the savings you obtained when you first bought.

The point is, regardless of who you paid, the merchant or the credit card issuer, the money came out of your pocket...and these figures don't even include additional costs associated with credit: postage, when you make payments; annual fees; cash advance fees; checks; late fees & penalties and the many other costs that may apply.

Before embarking on your annual pilgrimage, keep in mind the following:

Ask yourself if this is something you really need or just want.

Pay with cash if possible

If you use your credit card, make sure you can pay off the balance when due.

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**These figures are just an approximation. They are intended only to convey the additional costs one should consider when using credit cards. Your actual costs could be more or less than the example above.