David Bach The Automatic Millionaire

If you're like most Americans, you've already started buying gifts for the holidays.

According to the National Retail Federation, more than 145 million Americans shopped during the Thanksgiving weekend. Between in-store and online purchases, shoppers dropped an average of $302.81. These numbers will just keep rising as the December shopping marathon continues with the average American expected to drop almost $740. That's a lot of ties and fruit cakes. 

I'm not going to tell you to watch your spending in this column. What I want to talk to you about is how to avoid being royally ripped off by department store credit cards.

Want to Save 10 Percent on Your Purchase Today?

If the department stores did their job, you've already been offered "a special deal" on purchases this season. I have. I recently went into one of my favorite stores (a large national clothing chain) looking for a grey sweater. As I looked for my size, I was approached by a perky clerk.

"Hi, have you signed up for our store credit card?" she asked

"Well, no. I'm looking for a small grey sweater."

"Let me look," she said.

She never returned.

I finally found some things and headed to the dressing room where another salesperson approached me.

"Can I help you with anything?" quickly followed by, "Have you signed up for our store credit card?"

I said no and explained that I was looking for a small grey sweater.

"Well you really should get a card today, because we have a special $15 gift certificate if you do, and you get 10 percent off your purchase today. It's really a great deal," the clerk responded.

On and on this went with nary a grey sweater in sight. When I went to pay for some socks and pants, I was asked twice again if I would like to sign up for the store's credit card. One clerk even showed me the math.

"You'd be really foolish not to get a card today," he said, "because you will save $32 on this purchase, plus you'll get the $15 gift certificate. That's $47 for free -- for doing nothing! Just sign here."

I didn't take the card, but I had to say no four times before I left the store. Even if approached by persistent sales clerks, avoiding retail credit cards is the right thing to do. Here's why.

1. The Interest Rates Often Exceed 20 Percent

According to Bankrate.com, the average credit card in America has an interest rate of about 13 percent. Interest rates on store credit cards can be higher than 20 percent annually. Just this week, a friend told me that her department store credit cards from two years ago (the ones that were originally zero percent interest) are now charging her 28 percent!

Senator Charles Schumer of New York is also concerned about department store credit cards. In a recently released report, he explains why these cards are a lousy deal for consumers. Almost all the stores included in the report were charging over 20 percent interest.

2. Chances Are You Won't Pay Off Your Balance Quickly

I know the rationalization you'll make when you take one of these cards: You'll pay off your balance as soon as the bill arrives. And saving on your current purchases naturally seems like a good deal.

The truth is you probably won't pay off the balance when you get the bill. The stores know this. That's why they want you to get a card. They're not doing this to give you a good deal. They want to get rich off of you. They can make more on your debt than what you buy.

Assuming you make minimum payments, a $1,000 purchase at 20 percent interest would cost you $1,464.64 in interest. Suddenly, saving $150 on that initial purchase doesn't look like such a bargain.

3. You Could Hurt Your Credit Score

Most department store credit cards have low credit lines. You may be offered a few thousand dollars or less, but it will be instant credit. Credit is reported to the credit bureaus, and if you use the cards and most of the line allowed, it can quickly lower your credit score. This can cost you a lot of money later if you have to borrow to buy a car or home.

Also, if you apply for multiple credit cards during a shopping spree, those requests can show on your credit report and also lower your credit score. Trust me: Just saying "yes" to a store credit card is a much bigger commitment than you think.

4. You May Pay Your Bills Late

According to R.K. Hammer Investment Bankers, more than 35 percent of credit card companies' income now comes from late fees. Last year alone, the industry took in $43 billion in fee income.

The credit card companies know that the moment you take on a new card, you've got another chance to be late on your bills. They love this, because they often charge $30 or more for late fees. Also, the moment you're late on your card, chances are your interest rate will rise.

So even if you applied for a special deal "with no interest for 12 months," if you're late -- just once -- the rate can be bumped to 17 percent. Do it again, and it's probably going over 20 percent. Don't believe me? Read the fine print on the application.

Just Say 'No'

I feel bad for those nice clerks. They're just doing their job.

They have to ask you if you want a credit card. They have to ask people thousands of times a week. They must hate asking it as much as we hate hearing it. But, you don't have to say yes.

Just say "no" -- nicely of course.