This article was updated on June 25, 2018.

Believe it or not, the Target REDcard may not be the best bet for cash back and discounts at Target this holiday season. Those who plan to shop for gifts at the retailer may find that the 5% discounts and extended returns timeline offered by the REDcard can be beat with other general purpose credit cards.

Here's how to get the most from your Target shopping this holiday season.

1. The Discover it® Cash Back pays bonuses on Target spending

This card is especially rewarding for Target purchases during the 2017 holiday season because its 5% bonus category rewards cardholders for spending at Target and Amazon on up to $1,500 during the fourth quarter.

Best of all, qualifying cardholders who sign up for the card now can qualify for a huge perk: All cash back earned in the first year is matched dollar for dollar. Thus, this card effectively pays out 10% cash back on Target and Amazon.com purchases on up to $1,500 of spending, generating $150 of savings for those who qualify for the match in the first year.

Importantly, the card also has use beyond the Target checkout lines or Target.com. Cardholders earn 1% on all other spending, which, when doubled thanks to the first year bonus, amounts to 2% cash back on all purchases, making Discover it® Cash Back one of the best all-around cards this holiday season, particularly for heavy Target shoppers.

Picture of five people with shopping bags sitting at their feet.

Image source: Getty Images.

Other perks include a 0% intro APR on purchases and balance transfers for 14 billing cycles, no annual fees, and access to your FICO score for free. In addition, with one of the best price protection policies of any card issuer, Discover cardholders can shop with the confidence of knowing that if an item they buy is later advertised at a lower price, they can make a claim for the difference, up to $500 per purchase, and $2,500 per account.

Finally, note that the 5% bonus cash back category rotates quarterly, thus cardholders will be able to accumulate more rewards well after the holiday season on the Discover it® Cash Back card. If you max out the categories each quarter, and receive the match, it amounts to $300 of bonus rewards with another $300 cash back bonus in the first year.

Bonus categories change frequently, but as you can see in the table below, the bonus categories in 2017 were particularly valuable for the average shopper.

Time Period

Bonus Category

January through March 2017

Gas stations, ground transportation, and wholesale clubs

April through June 2017

Home improvement stores and wholesale clubs

July through September 2017

Restaurants

October through December 2017

Amazon.com and Target

Source: Discover.com.

2. Snag a sign-up bonus

Sign-up bonus cards are retailer agnostic, making them an all-around good pick for any of your holiday spending. This year, some issuers are offering $150 in new cardholder bonuses for qualifying cardholders who spend as little as $500 in the first three months after account opening. All of these cards can be found on Fool.com's rankings of the best credit card sign-up bonuses

Credit card New Cardholder Bonus Minimum Spending Requirement
Bank of America® Cash Rewards Credit Card $150 cash bonus $500 in the first 90 days from account opening
Capital One® Quicksilver® Cash Rewards Credit Card $150 cash bonus $500 in the first three months from account opening
Chase Freedom Unlimited® $150 cash bonus $500 in the first three months from account opening

Source: Card issuers.

These cards are all excellent choices for people who will spend $500 this holiday season, whether on gifts, Target purchases, or simple everyday swipes like filling up your gas tank. Given each offers $150 in bonuses on $500 of spending, there's up to $450 in value between these three cards just from their new cardholder bonus potential.

3. Use a Target REDcard for the rest of the year

The Target REDcard is a popular choice among the retailer's most loyal customers, but it isn't the most rewarding choice this holiday season. The REDcard offers a 5% discount on purchases in store or online at Target.com, half the value of the Discover it® Cash Back on the first $1,500 of spending when the new cardholder bonus is taken into consideration, and a fraction of the value provided by sign-up bonus cards.

The upside of the Target REDcard is that it offers a 5% discount on Target purchases throughout the year, not just the holiday season. In addition, it offers an Extended Returns program whereby cardholders get an extra 30 days to return items purchased with the card. That said, many credit cards also offer extended return programs, and the truth is that most Target purchases can be returned without hassle up to 90 days after purchase, plenty of time to return an item before the end of the holiday season.

Because the Target REDcard is a true store card (it can only be used at Target stores or Target.com), it isn't necessarily a good pick for an everyday rewards card. Since it has no sign-up bonus, introductory 0% APR, or other perks of general purpose credit cards, creative shoppers would be better off shopping at Target with other credit cards during the 2017 holiday season. 

 

John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool's board of directors. Jordan Wathen has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends Amazon. The Motley Fool has a disclosure policy. The Motley Fool receives compensation from some advertisers who provide products and services that may be covered by our editorial team. It’s one way we make money. But know that our editorial integrity and transparency matters most and our ratings aren’t influenced by compensation. The statements above are The Motley Fool's alone and have not been provided or endorsed by bank advertisers. Review The Motley Fool’s ratings methodology to uncover how we pick the best credit cards.