If you’re a Target shopper, you’ve likely been asked at checkout about applying for a Target credit card. The Target REDcard offers a few perks for “Tar-JAY” enthusiasts, but you might question whether this retail card is worth having in your wallet. To decide whether applying for the Target REDcard is the best move for you, you’ll want to learn more about its benefits and limitations.
Target REDcard Program Benefits
The Target REDcard program offers debit card and credit card options. With a Target REDcard, you’ll get a 5% discount on every Target purchase you make in-store and online. This discount also applies to brands inside Target locations, such as any in-store Starbucks.
Cardholders have an additional 30 days to make returns and receive free standard shipping for most Target.com orders. Certain online purchases may also qualify for free two-day shipping when you use your REDcard.
Target REDcard users also receive deals and discounts on top of the everyday 5% discount on purchases. For example, on your card anniversary date, you’ll receive 10% off Target purchases if you’ve signed up for Target marketing emails and your REDcard is in good standing.
The Target REDcard offers discounts for partner brands. For example, cardholders can save 10% when booking hotel stays through Hotels.com using a special website link.
The Target REDcard credit card has no annual fee but a 24.4% variable annual percentage rate. Its penalty fees include up to $39 for late payments and up to $28 for returned payments.
Target REDcard Disadvantages
Although there are a few immediate perks of shopping with a Target credit card, there are also a few disadvantages to keep in mind.
If your credit card balance rolls over to the next month, the high APR will erase the 5% savings you received at checkout. The Target REDcard also has benefit restrictions. For example, Target gift cards, prescriptions, eye exam services and Target Optical products are ineligible for the 5% discount.
The Target REDcard is a closed-loop retail credit card, which means it can only be used at Target.
What Credit Score Do You Need for a Target REDcard?
Credit score requirements vary by card issuer. But 72% of shoppers with a retail card and other credit cards have a FICO score of 670 or higher, according to a 2019 retail credit card study by the credit bureau Experian.
In general, retail credit cards are more accessible to those who have imperfect credit or a lean credit profile. The Experian study also says that 82% of consumers who only had a retail card had a FICO score of 669 or lower.
“Retail cards are generally easier to be approved for than some other premium cards, so often a consumer with fair credit can be approved,” says Lauren Anastasio, certified financial planner at online lender SoFi. “Those with lower credit scores may find that although they can be approved for an account, their credit line may be very low.”
Does Target REDcard Build Credit?
Retail cards are as effective as major credit cards in terms of building credit, says Shanté Nicole, financial educator and CEO of Financial Common Cents, a nonprofit financial educational resource.
“The top two components of a credit score are payment history and utilization, which can be shown by using any credit card, retail included,” she says.
Your ability to make on-time payments accounts for 35% of your FICO credit score. Your credit utilization ratio – the total amount of credit you’ve used compared with the total credit limit you have available – affects 30% of your FICO score calculation.
If you’re making regular, on-time payments toward your Target REDcard and keeping an eye on your overall credit utilization ratio, a Target credit card may help build your credit.
How Do I Pay Off My Target REDcard?
If you’re a Target credit card member and you’ve accrued a balance, pay off your debt aggressively to avoid going deeper into debt. Here are some steps you can take.
Take the Target credit card out of your wallet.
If you’re having a hard time coming out from under your Target credit card balance, stop using the card. Keeping your credit card out of reach and out of your wallet helps you focus on your existing balance, instead of adding to it.
Pay more than the minimum.
Stopping charges is helpful, but even if you’re not spending, interest will build on your account. You’ll need to pay more than the minimum payment each month to get out of credit card debt. Create a budget to determine how much you can afford to pay each month, then stick to it.
Ask about financial hardship programs.
If an injury or job loss leaves you unable to repay your credit card balance, you may qualify for a special payment arrangement. Hardship programs for retail credit cards, including the Target REDcard, are typically granted on a case-by-case basis, and the arrangements made under the program are based on your unique financial situation.
If you’re facing financial hardship, call the number on the back of your Target REDcard to discuss your options.