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Making the Most of the Target REDcard

December 14, 2016
Credit Cards, Rewards Credit Cards
Making the Most of Target REDcard
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The REDcard from Target is three things at once: It’s a store credit card. It’s a store debit card. And if you’re invited, it’s a MasterCard that you can use wherever MasterCard is accepted. Whichever version you have, you get the same money-saving benefits.

The big benefit is 5% off everything you buy at Target or Target.com and free shipping at Target.com. Beyond using it for the everyday items commonly associated with Target — clothing, housewares, health and beauty products, etc. — here’s how you can get the most value from your Target REDcard.

Buy your groceries at Target

When you do your regular grocery shopping at a Target supercenter, that 5% off can add up to big savings. In 2015, according to the U.S. Department of Agriculture, the average weekly cost of groceries for a family of four with two children ages 6 to 11 on a moderate budget was $248.20. With the REDcard’s 5% discount, that family would save $12.41 a week. Not much, you say? Over a year — $12,906.40 spent on groceries — that works out to a savings of $645.32. Now we’re talking.

The only credit card that comes close to that discount is the Blue Cash Preferred® Card from American Express, which earns 6% cash back on the first $6,000 in U.S. supermarket spending each year and then 1% cash back. At the spending level mentioned above, your total cash back for a year’s worth of supermarket spending would amount to $429. The annual fee is: $95. The Target REDcard has no annual fee.

Shop online at Target.com

The upside of shopping online is the convenience; the downside is the cost of shipping added to the price. If you subscribe to Amazon Prime for $99 a year, your Amazon purchases ship for free. But if you have the Target REDcard, you get free shipping on everything you buy at Target.com — with no annual fee.

Use Cartwheel, coupons and more

You can find additional discounts on specific items by using the Target shopping app Cartwheel. When you’re ready to go shopping at Target, check your list against the app to see whether discounts are available and select those you want. When you get to the checkout, the app produces a bar code on your phone that the cashier scans to give you your discount. You can also find savings on the fly as you shop by scanning items’ bar codes to see whether a discount is available.

At Target.com, you can also check out the “Deals” on the home page to see clearance items, the weekly ad and printable coupons.

When you use Cartwheel or coupons, your 5% REDcard discount is taken off the total after all other discounts are applied.

Pay your REDcard balance in full

Like many store credit cards, the REDcard credit card has a higher interest rate than most bank cards. As of November 2016, for example, the APR was 23.15%, whereas the third-quarter 2016 average credit card rate, according to the Federal Reserve, was 12.51%. Even a 5% discount on purchases doesn’t make up for paying a high interest rate. So to make the most of the REDcard, pay your balance in full each month.

If you don’t think you can trust yourself to pay it off, consider getting the REDcard debit card. You get all the same benefits as the REDcard credit card, but the purchases come directly out of your checking account with each shopping trip.

The Target REDcard is one of NerdWallet’s best store credit cards, so if you’re a frequent Target shopper, this is a must have.

Ellen Cannon is a staff writer at NerdWallet, a personal finance website. Email: ecannon@nerdwallet.com. Twitter: @ellencannon.