Is the Target REDcard Worth It?

A big one-time discount and high earnings for in-house purchases make this enhanced store card compelling for a certain type of consumer. 

Think of the Target REDcard™ credit card as a store card with muscle. Although it can only be used at Target stores and on the big retailer’s website, its credit limit can be quite high, giving a user quite a bit of buying power.

I’ve been a Target REDcard™ holder since a City Target opened very close to me in 2013, and I’m well familiar with its pluses, minuses, and quirks. I’d like to share them with you, as well as my opinion as to who should own it and why. Without further ado, let’s dive into it.

Note: I’m specifically discussing the credit card, which is not to be confused with the similar Target REDcard™ debit card.

Should you get a store credit card?

So you like shopping habitually at a favorite retailer. Most likely, if that retailer is big and prominent you’ve probably been hit up to get their proprietary credit card. Almost always, they promise some kind of one-time and/or regular savings unique to the card.

As always in the financial world, though, you don’t get something for nothing. Those deals might be sweet, but store cards tend to have much higher APRs than general credit cards.

Why? Because store cards are a tool for retailers to keep customers coming back. As such, retailers aren’t as picky as general credit card issuers regarding the credit quality of those customers.

Thus, store card holders as a group are a much riskier pool of borrowers than general rewards credit card holders. And the higher the risk of default, the higher APRs tend to be.

Great care must be taken not to carry over a balance on a store card. If you feel you can do so effectively, and you’re enough of a frequent shopper at the retailer to gain from the card’s benefits, then you should go ahead and apply for one.

What I like about Target REDcard™

5% discount on qualifying purchases -- The card generates a 5% discount, both online and in-person, on most Target merchandise. In my experience this is quite extensive; I’ve never not received the 5% discount on any of my purchases, and I’ve been a cardholder for over half a decade.

Savvy cardholders can also leverage that 5% discount in other ways. These include:

• Starbucks -- For some reason Target doesn’t highlight this in the list of REDcard™ features, but the 5% discount also applies to Starbucks outlets located inside Target stores.
• Target subscriptions -- Jumping on a trend popularized by retailers such as Amazon.com, Target offers subscription services in which it’ll deliver “everyday essentials” directly to your home. The 5% Target REDcard™ credit card discount can be applied to this service too.
• Free shipping on online orders -- The one big complaint many e-shoppers have is that shipping costs are too high. That problem is non-existent when you’re a Target REDcard™ credit card holder ordering from the retailer’s web portal.
• No annual fee -- No one likes to pay an annual fee to own a credit card. You won’t have to do so with this product.
• Extra time for returns -- Target REDcard™ credit card holders receive an additional 30 days in which they can return unwanted merchandise.

• High APR -- Yes, store cards typically have lofty APRs (see above), but given Target’s army of frequent and loyal shoppers the company could give its cardholders a break on this.
• No use outside of Target -- This card is limited only to purchases in-store and on the retailer’s website. Other big-chain stores, such as clothing retailer Gap, co-brand their credit cards with big networks such as Visa. This allows a cardholder to use them like an ordinary credit card wherever that network is accepted.

As with many other store cards, it doesn’t take a lofty credit score to obtain a Target REDcard™ credit card. The needed score is characterized as “fair,” and presumptive users report that even with scores in the low to mid-600 range they have had their applications approved. Personally, I had a credit score in the mid-700s when I applied.

Credit limits can be generous. Mine started out fairly high and although I don’t remember the exact figure, these days my limit is $2,500.

How best to use Target REDcard™

Target REDcard™’s biggest draw and its most attractive feature is the 5% discount. Since this is a virtually across-the-board savings both online and off, it also makes the card straightforward to use -- swipe and save!

This is very beneficial, particularly considering that Target’s featured prices are already modest. So considering that this is a general retailer, if you’re considering the card I would recommend making Target your default shopping option for a wide variety of product categories (groceries, home goods, electronics, etc.) if it isn’t already.

It’s also a good idea to leverage the 5% discount for the subscription service. No one particularly wants to trudge to the local store every few weeks to pick up laundry detergent; you can take out subscriptions to this and plenty of other essentials through Target’s service. It’s a happy combination of right-to-your-door convenience and savings.

The card is right for you if…

Frequent Target shoppers are the obvious target market (pun intended!) for this card; why would anyone turn down a permanent 5% discount? Going for the Target REDcard™ credit card should be a no-brainer for them.

For those who don’t visit Target quite as often, the card still offers plenty of benefit. Saving 5% is better than saving 0%, after all. And Target is a fine go-to for a great many goods, as it has always been sharp about having at least a few items in nearly every imaginable product category. If you can’t find it elsewhere, have a look at Target.

I should emphasize that this is not a card for those who freely spend and plan to take care of their obligations later. The APR on this plastic is extremely high; carrying even a small balance could accrue quite a bit of interest. In doing so, you run the risk of erasing the savings derived from the 5% discount. If you carry a balance regularly, check out our top 0% APR credit card picks instead.