Credit Cards

Target Red Card Review: Pros and Cons

Target-Red-CardTarget’s privacy issues and customer confidentiality have come under fire lately, making them headline news. However, this retail giant does offer several perks to its customers through the Target Red Card program.

Unlike a typical department store credit card, Target offers their card in two forms: as a debit card and as a store credit card. Consider both the good and bad points of these cards to make an informed decision when you’re offered one on the next shopping day.

Debit Versus Credit

In its debit card form, the Red Card mimics the bank debit card you use every day to pay for purchases via your checking account. The main benefit to this card type is debt control. Red Cards are linked to your personal checking account, pulling funds as you charge items at Target. You can’t create a balance on the card the way you do with a credit card. As a result, you aren’t creating a debt with the card. There’s no credit check to pass when you apply, either. That means your credit score isn’t taken into account to approve the debit card application. And because there’s no credit check, your credit score won’t be affected (which occurs whenever a credit check is processed).

Of course, with the Target Red Card credit card, you will have to pass a credit check, which will cause a temporary dip in your credit score. And a fair to excellent credit score is required. Plus, the Target Red Card credit card carries a pretty hefty APR of 13-23%, depending on your credit history. But there is no annual fee, and the 5 percent discount you’ll receive when shopping at your favorite Target is higher than the one or two percent you commonly get with cash-back credit cards.

Discount Perks

If you shop at Target a lot, the credit or debit Red Card’s discount quickly adds up to savings. At every checkout, you receive a 5 percent discount off your merchandise. That percentage is taken off the items immediately rather than being a rebate or cash-back situation. For busy families, 5 percent off $200 is $10. Although this amount may not sound like much of a discount, weekly or monthly expenditures add up to huge savings. The discount even applies toward sales items.

Data Collection And Sharing

A major drawback to the Red Card is Target’s data collection and sharing standards. Although most businesses share consumer information to a certain degree, Target spells out their sharing processes with some alarming truths. They share purchasing information with their affiliates and even non-affiliates, making you a target for pinpoint-accuracy marketing. Financial companies can contact you because of certain purchases or shopping frequency. However, most of the data collection is mainly for Target’s internal needs, including inventory restocking and marketing future sales to the right people.

No Credit Benefits from the Debit Red Card

Although debit and credit cards look exactly the same, your debit Red Card doesn’t provide any boost to your credit score. You cannot build credit with the debit form of the Red Card because it only runs through Target’s financial institution, or specialized bank. It doesn’t work its way through the major credit card channels for Mastercard or Visa. That’s why a credit check isn’t necessary when you apply for the debit card. If you need to boost your credit history, the credit form of the Red Card, or another real secured or unsecured credit card from a major credit company, is required.

Benefiting Your School

When you apply for a Red Card, you’ll be asked for a local school’s name. Each purchase you make creates a 1 percent donation to that school from Target’s funds. If you shop with them a lot, this 1 percent adds up quickly. There are schools that receive thousands of dollars from Red Card families choosing one particular school. This benefit, in particular, makes Target’s Red Card programs stand out.

Checking Account Access

When you lose a credit card (including the Target Red Card credit card), any fraudulent charges are often reversed with no affect on your account. However, losing a debit Red Card opens up your checking account to thieves. Target stipulates that you won’t be charged more than $50 if you notify them within four days of the stolen or lost card. If you don’t use the card too often, however, you may not notice the charges until after the notification period. You must diligently inspect your checking account to avoid any Red Card withdrawals you didn’t approve.

Although you can use your own bank debit card or regular credit card at Target, their Red Cards do give you some motivation to use their system. From discounts adding up to helping local schools, Target has a smart recipe for customer loyalty, but read the fine print before committing your checking account to their card or taking on a high APR credit card. Because of the APR, the Target Red Card credit card is a better fit for those who pay off their credit balance each month. If you do that, you can get the most out of the Red Card’s 5 percent discount each time you shop at Target!


  1. Aaliyah Johnson says:

    I’m trying to cancel my target debit card because apparently I have some fees and I thought with a debit card it’s just like a bank card and it’s your money your spending so why do I have fees I want to cancel my card but I don’t know how

  2. Thank you for this post. I shop T occasionally bi monthly. I read the terms and conditions word for word before seeing this post. I’ve been eying the debit card for months after learning it’s not just a credit card. I’ve decided to hold off especially since O would not benefit from it $ wise. Also I don’t like that you have no option to opt out off marketing collection info.

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