What is the Difference Between the Target Red® Credit Card and the Target Red Debit Card?

FT Contributor  | 

Private-label credit cards have become very popular over the years, and fans of the retail giant Target have more than one in-store payment option to choose from.

The Target RedCard credit card functions in much the same way as a typical credit card. You can use it in the store to make purchases upfront and then pay the card off at a future time.

The Target RedCard debit card is directly connected to your checking account and draws funds from it whenever you make a purchase.

Whether you go the debit or credit route, understand all of the benefits that are included to get the best value out of your Target RedCard.

How Do the Target RedCards Work?

Target RedCard offers a variety of different ways to save money, including:

  • No annual fees: While this is often expected, it’s still worth noting that there are no annual fees associated with a Target RedCard.
  • 5% off: Whether you’re shopping in a brick-and-mortar Target location or at Target.com, your Target RedCard gives you a 5% discount on all qualifying purchases.
  • Free 2-day shipping: Move aside, Amazon Prime. Target offers 2-day shipping to anyone who makes a purchase on Target.com using their Target RedCard.
  • Exclusive offers: All Target RedCard owners are given access to a revolving door of exclusive offers. These include extra discounts on select days, such as  your anniversary, as well as deals with associated companies like Hotels.com. It can also get you special early access to certain events, like Black Friday specials.
  • A longer return window: Target RedCard users get 30 extra days to return or exchange unwanted or incorrect items.

Managing a Target Red Card

As is always the case with credit cards, you’re going to need to manage your card properly if you don’t want all of your savings to be offset by accumulated interest or a handful of late payment fees.

As you set up your card, there are a few insider tips to make sure you get the most value out of your Target RedCard.

For Target RedCard credit cards:

  • Connect your bank account to your RedCard account in order to make quick and easy payments.
  • Set up a monthly reminder on your calendar to make sure you don’t miss any payments.
  • Sign up for email reminders to get alerts when your bill arrives and when it is due each month.
  • Don’t just make the minimum payment, as this can be very small and will leave the remaining balance to gather interest.

For Target RedCard debit cards:

  • Make sure you have easy access to mobile banking in order to check your checking account before using your card.

For both types of cards:

  • Take advantage of coupon shopping in order to stack savings on your 5% discount.
  • Purchase clearance items with your card and add your additional 5% discount.
  • Save larger purchases for the “cardmember anniversary” — make sure you’re signed up for emails in order to see what your anniversary deal is each year.
  • Regularly look for exclusive offers that increase the discounts provided by your Target RedCard.

Can the Target RedCard Be Used Anywhere?

As previously mentioned, the Target RedCard is a private-label credit and debit card. This means there are significant restrictions to where you can use your card.

You can use your card in a Target store, on Target.com, and at in-store partner merchants, such as Starbucks. However, you cannot use your card for general purchases outside of Target.

Target Red Credit Card Approval Score

You typically need a fair credit score in order to qualify for a Target RedCard credit card. On the FICO credit score scale, this would be between 580 and 669. However, if your credit score is higher, you’ll likely be approved for a larger credit limit.

When you apply, you will receive a hard credit check, which could affect your credit score, so only do so if you’re sure you want to open a Target RedCard account. You will also need to be 18 years old to apply for the credit card.

A Target RedCard debit card will not affect your credit score, nor will it require a credit check, as it will be directly linked to and draw funds from your bank account when you use it. You can apply for the debit card at age 16, two years before you’re eligible for the credit card.

Target Red Credit Card Fees

The chief danger of using the Target RedCard credit card is the threat of paying fees and interest charges. The APR associated with this card is very high, typically coming in around 25%, although it changes based on the prime rate.

The minimum payment is also very low, which can allow large charges to remain on the card where they will accrue hefty interest charges each month.

In addition, if you are late with a payment, you may be charged a late payment fee of up to $39. If a payment fails to go through, you can also be charged a returned payment fee that is around $30. One such fee can damage weeks and even months of scrupulous savings, all from a single mistake.

These are important considerations to keep in mind when signing up for your card, as mishandling a Target RedCard credit card can turn a beneficial tool into a financial fiasco.

Pros and Cons of the Target Red Credit Card

When you add them all up, there are several pros and cons to using either the Target RedCard credit card or debit card.

Pros:

  • 5% off of all qualifying purchases.
  • Free 2-day shipping.
  • Access to exclusive deals.
  • An extended return and exchange window.

Cons:

  • A very high APR.
  • Low minimum payments.
  • Late fees and return payment fees.
  • 5% off doesn’t apply to things like prescriptions, eye exams, and gift cards (look for a full list of exceptions under the RedCard benefits & program rules)

When you add it all up, as long as you’re competent with your personal finances, you should be able to use a Target RedCard to capitalize on numerous benefits while carefully avoiding the fees and high interest rates.


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