Store credit card signups spike during the holiday season - here's why you should avoid them

For a frequent shopper, nothing is better than a good discount - especially during a holiday spending spree.

In fact, according to new research from TransUnion, more shoppers sign up for store credit cards - which often entice customers with a percentage off their purchase at sign up - during the holidays. Discount retailers, online stores, and jewelry stores nearly double their signups in the month of December.

Since December 2014, the overall number of consumers with store credit cards has steadily risen from 123.7 million to 125.3 million in the third quarter of 2016, TransUnion reports. That number is expected to grow substantially this holiday season.

In addition to scoring a discount up front, signing up for a store credit card will typically get you on a mailing list that will offer more discounts and reminders for upcoming sales. And though it may seem like a sweet deal on the surface, it's generally not a smart financial move.

"When you sign up for a store credit card, you're also signing up for frequent nudges to buy, buy, buy, which means you're often spending more than you would normally," wrote certified financial planner Sophia Bera in an article on Business Insider.

Even if you save $100 in a year using your store credit card, there's a strong chance you spent more just to save that. "There are better ways to save or make $100 than using a store credit card," she wrote.

Store cards also have much higher interest rates, sometimes around 25%. "If you tend to carry a balance on your credit card, an interest rate this high will come back to bite you. The highest interest rates I've ever seen are with store credit cards," Bera wrote.

TransUnion projects the average balance on a retail card to increase to $1,768 this year from $1,725 in 2015, along with a slight rise in delinquency to 1.4% from 1.3% in 2015. A high interest rate coupled with a habit of not paying your bill could could be damaging.

Ultimately, Bera suggests not limiting yourself to one retailer - unless you're particularly loyal to that store and disciplined about paying your bill - because many traditional credit cards offer cash back and points that you can spend at several different retailers and on travel.