Target Credit Card

Target uses the name “REDcard” to refer to three different products:

• 1. Target credit card: This is a store card, accepted at Target and Target.com. There is no annual fee, but as with most store cards, the interest rate is on the high side: 23.15%, as of November 2016.

• 2. Target debit card: This card is linked to your checking account, and your purchases are deducted each time you use the card. It’s accepted at Target and Target.com. There’s no annual fee.

• 3. Target MasterCard. This is accepted anywhere that takes MasterCard. However, new cardholders cannot apply for the Target MasterCard. It’s an upgrade that Target may offer you later. It has no annual fee or foreign transaction fee, and the annual percentage rate is the same as on the Target credit card.

All three cards give you the same benefits outlined above: 5% off, free shipping, extra time for returns. The MasterCard doesn’t give you any rewards outside of what you spend at Target. All are chip-and-PIN cards, meaning you need to enter your PIN each time you use it. This isn’t a bad thing, because such cards are more secure than chip-and-signature cards.                

• 1. Discount on shopping. You get a 5% discount on all purchases you make with the card, whether in store or online. This is an automatic discount that occurs at checkout, which doesn't require accumulating a certain amount or redeeming anything in order to take advantage of the discount. You also receive the discount on all purchases and not just certain merchandise in specific categories, providing a savings on a wide variety of products. This is comparable to a cash back card that gives 5% back on purchases.

• 2. Extra days for returns. If you need to return a purchase, you receive 30 extra days to do so when you purchase with this card. Target's return policy is 90 days for unopened items in new condition, but as a cardholder, you receive a little extra time if the product you have purchased doesn't meet your needs.

• 3. Free shipping. You can not only save money shopping Target's many sales and discounts, but you can also skip the drive to the store and standing in line, by shopping online at Target.com. If you use your Target credit card, shipping is free with no minimum purchase, or you can get free 2-day shipping on eligible items when your spend more than $35 on your order. Although other retailers offer free shipping, this benefit sometimes comes with a price. 

• 1. Only Target purchases. Because this card is a store card and not a Visa or MasterCard, it isn't a credit card that you can use anywhere except Target stores.

• 2. High APR. The APR, as with most store cards, is exceptionally high. If you carry your balance from month to month, the 5% discount you receive for your purchases isn't going to be worth the money you pay in interest. In order to get the most from the card, it is important that you are diligent in paying your balance in full each month and avoid paying interest on your purchases.                

The Target REDcard offers loyal customers an opportunity to save 5% on purchases, or even more if they look for chances to stack discounts with Cartwheel and Target subscription services.

However, be careful! If you get behind on payments, this card’s high interest rate & fees can negate the 5% savings. It’s best to pay off the balance every month or choose the Target REDcard debit card version instead.

Alternatively, if you don’t spend at Target very often, there’s likely a better cash back card out there for you.                

The only difference between store credit cards and regular credit cards is that store credit cards are branded and associated with a specific retailer and its rewards program. Store credit cards offer in-store discounts, allow cardholders to earn and redeem points when making purchases.

There are two basic types of retail store credit card:

• Open-loop cards: These cards with a Visa, MasterCard or American Express logo in the bottom-right, can be used anywhere.

• Closed-loop cards: These cards without a Visa, MasterCard or American Express logo only can be used at their co-branded stores, online stores or affiliates.

For example, there are three types of Best buy credit cards, My Best Buy Credit Card, My Best Buy Visa Platinum Credit Card and My Best Buy Visa Card. My Best Buy Credit Card is a closed-loop card, so you can only use it at Best Buy. My Best Buy Visa Platinum Credit Card and My Best Buy Visa Card are open-loop cards, you can use them anywhere that Visa is accepted.

Easy to get and can help you to build credit

Because of store credit cards’ high interest rates and low credit limits, they are easy to get with fair or poor credit. If you can use it responsibly, this is an opportunity to build up your score.

A reasonable annual fee

Many great store rewards cards don’t have an annual fee.

Save money at your favorite stores

Store rewards cards have different rewards programs which are great ways to save money, especially you are a frequent customer of that shop. For example, My Best Buy Credit Card offers as much as 5% cash back.

Additional sign-up bonuses and benefits

Many store reward cards attract new customers with a sign-up bonus. What’s more, some store reward cards offer extra benefits, such as discounts, free shipping, a birthday gift and extended return policies.

Open-loop cards can be used anywhere as normal credit cards.

Low credit limits

This means that you have the risk of going over your credit limits.

High interest rates

Most store credit cards’ interest rates are higher than the industry average (17%).

Closed-loop cards are limited to single store

Many store credit cards can only be used at their store or online shop. But some store credit cards can be used anywhere like normal credit cards, such as Amazon Prime Rewards Visa Signature Credit Card.

Customer service problems

Some store credit cards are not issued by major cards issuers, so the quality of customer service is difficult to guarantee.

Some store credit cards can’t be used for balance transfers

Credit score

Banks approve much lower credit scores for store cards. Therefore, applying a store card is an ideal way for someone with a fair or poor credit score to rebuild his or her credit.

Credit card application

You can apply for a store credit card online, in-store or by email depending on the card. And you just need to fill in your personal information and submit your application. The credit card issuer will consider your credit reports and several different factors when reviewing your application to get an idea of your creditworthiness.