diff --git a/man/systemd-creds.xml b/man/systemd-creds.xml
index b16ee09cee..fbe62262af 100644
--- a/man/systemd-creds.xml
+++ b/man/systemd-creds.xml
@@ -228,7 +228,8 @@
 
         <listitem><para>When specified with <command>encrypt</command> controls whether to show the encrypted
         credential as <varname>SetCredentialEncrypted=</varname> setting that may be pasted directly into a
-        unit file.</para></listitem>
+        unit file. Has effect only when used together with <option>--name=</option> and <literal>-</literal>
+        as the output file.</para></listitem>
       </varlistentry>
 
       <varlistentry>
diff --git a/src/creds/creds.c b/src/creds/creds.c
index ef32efe1e2..670e719d21 100644
--- a/src/creds/creds.c
+++ b/src/creds/creds.c
@@ -506,20 +506,21 @@ static int verb_encrypt(int argc, char **argv, void *userdata) {
         if (base64_size < 0)
                 return base64_size;
 
-        if (arg_pretty) {
+        /* Pretty print makes sense only if we're printing stuff to stdout
+         * and if a cred name is provided via --name= (since we can't use
+         * the output file name as the cred name here) */
+        if (arg_pretty && !output_path && name) {
                 _cleanup_free_ char *escaped = NULL, *indented = NULL, *j = NULL;
 
-                if (name) {
-                        escaped = cescape(name);
-                        if (!escaped)
-                                return log_oom();
-                }
+                escaped = cescape(name);
+                if (!escaped)
+                        return log_oom();
 
                 indented = strreplace(base64_buf, "\n", " \\\n        ");
                 if (!indented)
                         return log_oom();
 
-                j = strjoin("SetCredentialEncrypted=", name, ": \\\n        ", indented, "\n");
+                j = strjoin("SetCredentialEncrypted=", escaped, ": \\\n        ", indented, "\n");
                 if (!j)
                         return log_oom();