'Tis the season for credit offers

T HE PRESSURE is on this holiday season.

Cashiers will be pushing store-issued credit. And for many of you, the pushiness isn't pleasant. Yet you cave.

Credit.com found that 31 percent of shoppers felt store clerks "bullied" them into opening store-branded credit accounts. During the holiday shopping season, 28 percent of consumers said they succumbed and signed up.

But it turns out the discounts dangled to get people to give in aren't enough to overcome the regrets they have later. Almost half of consumers said they were sorry they took on the credit because, among other reasons, they already had too many credit cards or too much debt, they spent more than they had intended, or the new account had a negative impact on their credit scores.

I've been on the end of many of these solicitations. And while I never felt bullied or harassed, I've been annoyed by the more persistent sales associates. But when I just say "no," most quickly drop the matter.

I understand why many people are tempted to take the offers. You have a pile of goods on the counter and you're watching the total rise as each item rings up. When the cashier announces the total, you might gasp or shake your head because the bill is much more than you had expected. The cashier notices your consternation. That's the opening.

"But," the sales associate says as you dig for your cash or general-purpose credit card, "if you fill out a credit application today, you can get a 15 percent discount off your total purchase."

The person ringing up your items may eagerly point out the dollar-figure savings as you contemplate the offer. After all, who doesn't like a discount?

The pitch continues. With credit cards tied to that particular retailer, you may be told you'll get advance notices about special sales. You might be offered future discounts or cash rebates based on how much you buy.

However, it's unlikely you'll ever be told that if you don't pay off the balance in full every month you'll be hit with a high interest rate on the card, far above the average rate charged on a regular credit card. I doubt the cashier will mention that applying for the card will trigger an "inquiry" to a credit bureau, and this in turn can lower your credit score.

I've never heard a sales associate point out that store cards often have lower limits on the credit you are allotted. Let's say you're buying a big-screen television, and with the discount it comes to $1,000. Lo and behold you're approved for $1,000. Immediately you are maxed out on that card. A high credit-utilization rate can bring down your credit score, too. The credit-scoring algorithms look at your credit utilization rate for each active credit-card account and, separately, your usage for all your credit cards together. Experts recommend that you don't use more than 30 percent of your available credit.

Even if you don't feel bullied to get more plastic, you've got to have a game plan to avoid the temptation. So here's a script you can follow for the more persistent clerks:

The cashier says: "Sign up and save. If you apply today, you can get an additional fill in the blank with the percentage savings off your purchase."

You say: "Are there any other discounts you are offering for the holiday that can save me money that don't involve me getting more credit I don't need?"

The cashier says: "It only takes a few minutes to fill out the application."

You say: "But applying for new credit can result in an inquiry on my credit report, and that can lower my credit score. Do you think that's a good deal?"

The cashier, undaunted, says: "You really could save a lot of money. Are you sure you don't want to sign up?"

You say: "Correct me if I'm wrong, but getting new credit can lower my credit score, and that means I have to pay more for other things I may get on credit in the future, such as a home or car."

Earlier this year, CreditKarma.com wanted to know how many people open a store credit account on a whim. It's a pretty high percentage. The online survey of 2,051 adults found that 21 percent were enticed by a discount and opened a store credit card at least once during the previous two years. Forty-five percent of those shoppers hadn't given any thought about how the added credit account might affect their credit history or finances over the long term.

Just keep in mind that a discount today could mean money problems later.