Avoid These 6 Target RedCard Mistakes for Strong Savings (2024)

Plain and simple, the RedCard is Target’s store card. Stores tout the primary benefit being 5% off on purchases at Target in store or online purchases at Target.com. There are no limits on your total earnings and no annual fee. If you spend $500 per month at Target, that adds up to $25 in savings (or $300 per year). That’s easy to do for households that regularly buy groceries, clothing or household items from the store.

Target RedCard Benefits

Beyond a large discount on Target purchases, the Target RedCard offers other benefits to shoppers. Those benefits cardholders receive include:

• Free two-day shipping on select items at Target.com
• Exclusive RedCard items and offers
• An additional 30 days for returns and exchanges

Where the RedCard gets complicated is the fact that Target offers it in three different forms. When applying, you can choose either a debit or credit card. The third version, a Target Mastercard that you can use outside Target, isn’t open to new applicants, but some credit card holders may be targeted for it as an upgrade. All versions offer similar benefits at Target.

Unlike most store cards, Target allows you to apply for two separate versions of the RedCard. Customers can choose between a debit card or a credit card. Both offer similar discounts and benefits with no annual fee.

Pros and Cons of the Target RedCard Credit Card

The main advantage of choosing the credit card option is the ability to pay over time. You’ll have 25 days to pay your bill after your statement closes before interest starts to accrue. Watch that date carefully, though: the APR on the Target RedCard is sky-high and will quickly chew through the 5% discount you get for using the card.

This option can also be good for someone looking to build credit. The Target credit card is easier to qualify for than most rewards credit cards, so it could be a solid option if you have fair or limited credit history. Your payment history will be reported to the main credit bureaus, giving you the opportunity to improve your credit score if you responsibly pay your bill.

This card, like many store cards, is known for offering low credit lines at first but raising the credit limit based on your payment history and use of the card. Some cardholders are eventually offered an upgrade to a Target Mastercard, which can be used at stores other than Target.

Pros and Cons of the Target RedCard Debit Card

Like all debit cards, you’ll need to have funds in your checking account to cover the full cost of your purchase. Money is withdrawn immediately. For someone with a habit of spending more than you planned, this can be a good way to ensure you’re not accidentally racking up debt.

Additionally, choosing the debit card is a good option for anyone who wants to avoid opening a new credit card. Since purchases are paid for instantly, that’s one less monthly bill to keep track of. It also means you won’t have another credit inquiry or new account listed on your credit report, which can be helpful if you intend to apply for a car loan or mortgage in the near future.

Keep in mind that debit cards don’t offer the same consumer protections that credit cards do. Debit cards are governed under the Electronic Fund Transfer Act, which protects you against fraudulent charges—but only after you report your debit card lost or stolen. You’re still on the hook for up to $500 in fraudulent transactions if you report the issue more than two business days after your card loss. Wait 60 days, and you’re responsible for all charges with no cap. Learn more in our guide to credit versus debit cards.

All credit cards come with fees, but the credit version of the RedCard has sky-high fees. The APR varies with the market but is currently 29.95% variable APR on purchases. Late fees are up to $41 each, and returned payments can add up to $30 to your next bill. In other words, if you don’t pay your bill, it could snowball out of control before you know it.

You can avoid all these fees by sticking to your budget while you’re in-store and setting up automatic monthly payments.

The RedCard is only designed for use in Target stores or at Target.com. If you hold the debit card or entry-level credit card, your card will be denied if you attempt to use it elsewhere. Save yourself the embarrassment by saving it for Target purchases only.

Some credit cardholders are offered an upgrade to the Target Mastercard after several months of responsible use. The Mastercard version offers the same in-store benefits but can also be used outside of Target. However, just because you can doesn’t mean you should. The Target Mastercard doesn’t offer great rewards or discounts at other stores. You’re better off getting a separate card for other purchases, like the Citi Double Cash® Card, which offers 2% cash back on all purchases—1% when purchases are made and another 1% when they’re paid off or the Blue Cash Preferred® Card from American Express, one of the best credit cards for groceries if you do your grocery shopping at a traditional U.S. supermarket (Terms apply. See rates & fees).

Although the Target 5% discount applies to nearly all purchases, there are a few exceptions. Prescription co-payments and clinic services (like vaccines) are excluded, as are eye exams at Target Optical. Since you won’t get a discount, you’re better off paying for these purchases with a credit card that earns rewards. An HSA or FSA can also provide benefits for these health-related purchases.

Another noteworthy exclusion is the purchase of Target gift cards. If you need to buy a gift card for someone else, you may as well purchase it with a different credit card in order to earn a few rewards.

For the most part, you can expect the discount any time you’re buying merchandise from Target shelves. However, you’ll want to read the full list of exclusions before you whip out your RedCard for every purchase.

In 2019, Target launched its Target Circle loyalty program. Shoppers can join for free, and RedCard holders are automatically enrolled. The program allows members to browse and save even more offers to their account to apply at checkout. Members can also cast votes on where to direct Target’s community-giving initiatives.

One of the more popular benefits of Target Circle is the ability to earn 1% rewards to redeem in the future. However, this benefit doesn’t combine with the RedCard discount. If you pay with RedCard, you’ll receive the standard 5% discount but not any additional rewards. Of course, since the RedCard discount is higher (and applies instantly), it’s a better option for loyal shoppers.

Regardless, Target Circle is still worth using to access sale prices and other offers, even without the extra rewards. These discounts come with an extra step, though. You’ll need to save offers to your account online or through the app before shopping. At checkout, the cashier will scan a barcode in your app or ask for your mobile phone number in order to apply the Target Circle discounts on top of the 5% RedCard discount.

Both the debit and credit card versions of the RedCard come with no annual fee, meaning you can hold them forever. Even if you only use the card occasionally, it’s worth holding onto since the RedCard provides access to exclusive, limited-time-only discounts in addition to its everyday savings.

Anyone who chooses the credit card version can also keep their credit card open to improve their credit score. Keeping the card open can increase the average age of your accounts and the total credit limit you have available, both factors known for a slight increase in credit score.

If you find yourself at Target often, applying for a RedCard is a no-brainer. Instead of collecting rewards points on a traditional credit card, you’ll get an instant discount on every purchase. At 5% off, that’s higher than you’d find through any other credit or debit card, not even factoring in the other store perks. As long as you use your card responsibly and don’t make any RedCard mistakes, it’s a smart way to save on every Target purchase.

To view rates and fees for Blue Cash Preferred® Card from American Express please visit this page.