Target REDcard: Is It A Good Value?

Target REDcard: Is It A Good Value?

Editorial Note: The content of this article is based on the author’s opinions and recommendations alone. It may not have been reviewed, approved or otherwise endorsed by the credit card issuer. This site may be compensated through a credit card issuer partnership.

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Most store credit cards aren't worth applying for, as they typically offer high interest rates and low rewards.

However, the REDcard from Target isn't your typical store card. Instead of offering a rewards system, you'll enjoy an automatic 5% back on all purchases you make in Target stores or on Target.com. You'll also receive exclusive Target benefits, including free shipping and extended returns. If you frequently shop at Target, this $0-annual-fee card could be an easy way to save money on everyday purchases, such as groceries and household items.

On the flip side, the 5% discount is only good at Target and its partners, meaning the savings can be limiting. You may prefer to earn credit card rewards instead, such as cash back that can be applied as a statement credit or deposited into your bank account. Finally, this card also has a fairly steep purchase APR, which could negate any savings you earn with the discount if you carry a balance from month to month.

Good For

  • 5% back on all purchases you make in Target stores or on Target.com
  • Target in-store and online discounts
  • $0 annual fee

Bad For

  • No sign-up bonus
  • No rewards program
  • High APR

ValuePenguin's verdict

The REDcard could be an obvious credit card choice for people who routinely shop at Target and want a discount on all their purchases. $0 annual fee, free two-day shipping on eligible purchases and the extended return period are generous incentives that come with the card.

If you're not looking for another credit card or don't want to affect your credit score negatively, you can opt for the Target REDcard debit card instead. It offers the same discount and benefits as the REDcard credit card, but also links to your existing checking account. Regardless, when deciding if the REDcard is right for you, think about how often you shop at Target stores or Target online, and how much you could potentially save by getting 5% off each time.

How does the Target REDcard compare to other credit cards?

While the REDcard has plenty of features to like, there are a few reasons you might think twice about getting this card. This card doesn't come with a sign-up bonus, has a considerably high purchase APR and offers only Target benefits. With that in mind, we've highlighted a few other rewards cards you may want to consider instead.

Target REDcard vs. Amazon Prime Rewards Visa Signature Card

The Amazon Prime Rewards Visa Signature Card is a popular card for Amazon loyalists, but it comes with a rewards rate that encompasses a diverse range of purchases. You'll earn 5% back at Amazon and Whole Foods Market with an eligible Prime membership*. 2% back at restaurants, gas stations, and drugstores*. 1% back on utilities, rideshare, and all other purchases. You can use the points you earn toward future Amazon purchases or cash back, gift cards and travel.

Unlike the REDcard, you'll get a sign-up bonus with the Amazon Prime Rewards Visa Signature Card: get a Get a $100 Amazon Gift Card instantly upon approval.. This card also offers various travel protections, such as trip insurance and car rental insurance. You'll also enjoy complimentary purchase protection, with the potential of reimbursement up to $500 per claim for any damaged or stolen purchases within the first 120 days of the purchase. Another benefit is extended warranty protection, which will extend any U.S. manufacturer's warranty by an additional year on eligible warranties of three years or less.

Although this card also has $0 annual fee, it requires an Amazon Prime membership to qualify. Membership costs $12.99 per month or $119 per year. If you're not already an Amazon Prime shopper, this card probably won’t be worth the additional cost per year.

Target REDcard vs. Citi® Double Cash Card – 18 month BT offer

  • On Citibank's Secure Website

The Citi® Double Cash Card – 18 month BT offer takes a simplistic approach to cash back rewards: Earn 2% on every purchase with unlimited 1% cash back when you buy, plus an additional 1% as you pay for those purchases. There are no limits on the amount of cash back you can earn, and there aren't any confusing bonus categories or rewards tiers to keep track of. This card makes earning cash back rewards simple, with rewards redeemable for checks, statement credits or direct deposits.

This card also doesn't offer a sign-up bonus, but it does offer an intro APR of 0% for 18 months on Balance Transfers (then a 13.99% – 23.99% (Variable) APR applies). The Citi® Double Cash Card – 18 month BT offer might be more attractive than the REDcard for those planning to transfer a balance and need time to pay those amounts down without incurring interest charges for more than a year.

While the unlimited 2% cash back rewards rate is less than the 5% discount the REDcard offers, those cashback rewards can be earned on purchases anywhere — not just Target. As it also comes with $0 annual fee, the Citi® Double Cash Card – 18 month BT offer is a safer bet for long-term rewards gains.

Target REDcard vs. Chase Freedom Unlimited®

  • On Chase's Secure Website

The Chase Freedom Unlimited® card is another $0-annual-fee cashback card — but with a sign-up bonus. Eligible cardmembers can Earn a $200 Bonus after you spend $500 on purchases in your first 3 months from account opening. And earn 5% cash back on grocery store purchases (not including Target® or Walmart® purchases) on up to $12,000 spent in the first year. The rewards rate caters to everyday spenders, too: Earn 5% cash back on travel purchased through Chase, 3% on dining and drugstores, and 1.5% on all other purchases. Cashback rewards don't expire, and they can be redeemed for cash, gift cards, purchases at Amazon.com or travel bookings through Chase Ultimate Rewards.

Another benefit of the Chase Freedom Unlimited® is that it offers a 0% Intro APR for 15 months on purchases, then a 14.99% - 23.74% Variable APR. In a nutshell, the Chase Freedom Unlimited® may be more appealing for those who want to earn cash back everywhere they shop and spend, with a $0 annual fee. And with several ways to redeem rewards, this card can offer flexibility by saving on both shopping and travel.

Target REDcard benefits and features

Although the Target REDcard does not offer a sign-up bonus, it's still a fantastic offering for loyal Target shoppers. From its automatic discount to its online shopping benefits, the REDcard has the potential to offer lots of savings.

But with any store card, it's essential to be wary of all the rates and fees. The REDcard comes with a 22.99% variable purchase APR, so be sure to pay off your balance in full every month, or you'll incur some hefty interest charges on any balance rolled over.

Get a 5% discount at Target and its partners

The biggest draw of the Target REDcard is an automatic 5% back on all purchases you make in Target stores or on Target.com, though there are RedCard, including prescriptions, over-the-counter pharmacy items, Target Optical services and Target gift cards. This discount can be a game-changer for expensive purchases like electronics or furniture, or for someone who spends heavily at Target. For example, a shopper who spends $10,000 at Target per year will save $500 through the discount alone.

The ease of the discount is also a big plus. Since your savings are applied automatically at the time of purchase, you don't have to deal with redeeming your rewards later, nor do you have to wait for the rewards to deposit to your account. (Some cashback cards take a couple of billing cycles to deposit rewards.)

The 5% discount applies to much more than just Target purchases. When paying with your REDcard, you'll also enjoy the discount on specialty gift card purchases, subscriptions for everyday items, Shipt purchases (membership fees excluded) and Starbucks inside Target stores.

Enjoy free shipping on all Target orders

The REDcard is a great choice for shoppers who want free shipping on all Target.com purchases. Depending on where you live, some items are even eligible for free two-day shipping. This free shipping benefit can be useful when trying to save money and time around the holidays.

Take advantage of extended returns

If you buy an item at a Target store or online using your REDcard, you'll receive an extra 30 days to return items beyond the standard return policy window allowed for that item. There are only three types of purchases that don't qualify for extended returns: Target Optical purchases, non-returnable items and contract phones.

Receive additional savings on select purchases

REDcard holders have access to an "exclusive extras" benefit, which offers additional savings on select purchases. While these offers will change throughout the year, they can include perks such as discounts at partner merchants or exclusive access to limited edition merchandise.

You can also link your REDcard to your Target App to unlock special offers. Here's how it works:

  • Download and install the Target app.
  • Link your REDcard to the app.
  • Browse offers in your Wallet in the "Offers" tab.
  • Choose the offer you want and give the barcode to the cashier at checkout.
  • These offers are only available for in-store shopping, but Target offers other savings opportunities for shopping online.

One of the more recent offers included a $10 off $100 purchase coupon for in-store or online purchases. Again, you can easily access offers like these on your Target mobile app.

The information related to REDcard and Amazon Prime Rewards Visa Signature Card has been independently collected by ValuePenguin and has not been reviewed or provided by the issuer of this card prior to publication.

These responses are not provided or commissioned by the bank advertiser. Responses have not been reviewed, approved or otherwise endorsed by the bank advertiser. It is not the bank advertiser's responsibility to ensure all posts and/or questions are answered.

Advertiser Disclosure: The products that appear on this site may be from companies from which ValuePenguin receives compensation. This compensation may impact how and where products appear on this site (including, for example, the order in which they appear). ValuePenguin does not include all financial institutions or all products offered available in the marketplace.

How We Calculate Rewards: ValuePenguin calculates the value of rewards by estimating the dollar value of any points, miles or bonuses earned using the card less any associated annual fees. These estimates here are ValuePenguin's alone, not those of the card issuer, and have not been reviewed, approved or otherwise endorsed by the credit card issuer.

Example of how we calculate the rewards rates: When redeemed for travel through Ultimate Rewards, Chase Sapphire Preferred points are worth $0.0125 each. The card awards 2 points on travel and dining and 1 point on everything else. Therefore, we say the card has a 2.5% rewards rate on dining and travel (2 x $0.0125) and a 1.25% rewards rate on everything else (1 x $0.0125).