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Ten Biggest Markups and How to Avoid Them

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Why pay a 1,000% premium when you don't have to?

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Markup can be a killer, especially with a discretionary purchase that makes your heart sing.

The Federal Reserve reports that consumer credit decreased at an annual rate of 10.5% in July and revolving credit decreased at an annual rate of 8%, suggesting that consumers continue to cut back in the economic downturn.

This is countered, at least in part, by reports that states such as Alabama, Georgia, Louisiana, and Tennessee reported small month-over-month gains in retail sales for July.

This may suggest a bottoming out of the economy. However, there won't be any immediate miracles because sales overall remain below year-ago levels.

Either way, it's time to be careful with your money and follow a budget. And a key component of that is to watch out for the markup, or the amount a store or manufacturer has raised an item's price over what it cost to make it. Think of it as money that goes directly out of your wallet and into some company's bottom line.

Of course, when browsing the aisles of Wal-Mart (WMT) or Safeway (SWY) for most routine purchases, most shoppers just want to get in and get out.

Special expenditures can punch a hole in your budget, but so can old shopping habits that few think about.

Next time you buy a small bag of popcorn at the movies, consider that the multiplex could be making a 1,275% profit margin on it. How much did it cost to fill that bottle of water? Most likely a tiny fraction of the $1.25 you paid.

View the slideshow for 10 items that typically come with large markups and are guaranteed to punch a hole in your budget.

No positions in stocks mentioned.
The information on this website solely reflects the analysis of or opinion about the performance of securities and financial markets by the writers whose articles appear on the site. The views expressed by the writers are not necessarily the views of Minyanville Media, Inc. or members of its management. Nothing contained on the website is intended to constitute a recommendation or advice addressed to an individual investor or category of investors to purchase, sell or hold any security, or to take any action with respect to the prospective movement of the securities markets or to solicit the purchase or sale of any security. Any investment decisions must be made by the reader either individually or in consultation with his or her investment professional. Minyanville writers and staff may trade or hold positions in securities that are discussed in articles appearing on the website. Writers of articles are required to disclose whether they have a position in any stock or fund discussed in an article, but are not permitted to disclose the size or direction of the position. Nothing on this website is intended to solicit business of any kind for a writer's business or fund. Minyanville management and staff as well as contributing writers will not respond to emails or other communications requesting investment advice.

Copyright 2011 Minyanville Media, Inc. All Rights Reserved.
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