Target REDcard Review: 5% Discount and No Annual Fee

For those who shop for everything at Target — food, clothes, household essentials — the perks on the Target REDcard™ Credit Card may hit the bull's-eye.

The $0-annual-fee card gets you a 5% discount on all purchases, which means you don’t have to wait to redeem rewards; you’ll get savings right at checkout.

Because the Target REDcard™ Credit Card carries high ongoing interest rates, it’s not a good fit for folks who are planning to spend time, well, in the red. But for those who pay their bills in full every month and are looking for some extra savings, it’s worth getting.

Nerd tip: Target has three REDcard products, all of which offer the same 5% discount on eligible Target purchases: the Target REDcard debit card, Target REDcard Mastercard and Target REDcard™ Credit Card. This review focuses on the Target REDcard™ Credit Card, a closed-loop credit card that can be used only at Target.

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Key benefits of the Target REDcard™ Credit Card

Card type: Store.

Ongoing rewards: 5% discount on all eligible Target purchases.

Annual fee: $0.

Other benefits: 

• 10% discount awarded every cardholder anniversary.

• Exclusive offers, gifts and early access to promotions.

• Free standard shipping (and free two-day shipping on qualifying items).

• 30 days of extra time to return purchases.

Because the card's 5% discount is applied at checkout, you don't need to worry about accruing and redeeming rewards on this card; you'll get your savings upfront. The 5% discount doesn't apply to certain purchases, though. For example, you won't get a 5% discount on prescriptions, Target Optical eye exams, or Target gift cards and prepaid cards. For a full list of exclusions, see the card's terms and conditions.

Why you should get the Target REDcard™ Credit Card

You could benefit from the discounts

For prolific Target shoppers, the Target REDcard™ Credit Card could be one of the most rewarding credit cards available. It offers an outstanding 5% discount on eligible Target purchases, plus a 10% discount coupon every year on your card anniversary when you sign up for Target marketing emails. You can also stack the card's 5% discounts with savings through Target's app.

Provided that you stick to your usual spending habits and don’t overspend, those perks could potentially help you save hundreds every year across a broad range of purchases. And for an annual fee of $0, the price is right.

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You’re looking for extra perks at Target

The Target REDcard™ Credit Card also features a handful of other loyalty benefits, including exclusive offers, gifts and early access to certain promotions for cardholders. For shoppers who can take advantage of these offers, these deals could make the Target REDcard™ Credit Card more valuable.

Not all of the benefits that the Target REDcard™ Credit Card markets are big game-changers. Take the card’s free shipping benefit, for example. Target already offers free standard shipping (and free two-day shipping, on select items) on orders over $35 for all shoppers. The free shipping benefit on the Target REDcard™ Credit Card is fairly similar; it offers free standard shipping (and free two-day shipping on select items) on all orders placed through the Target website — only it doesn't come with a $35 minimum order requirement. One caveat: Certain add-on items — generally, food items that cost less than $10 — will qualify for free shipping only when your order is at least $25. Unless placing orders of $35 or more on Target.com is an honest-to-goodness challenge for you, the free shipping perk shouldn’t factor into your decision on whether or not to get the card.

Why you should go with another card

You don’t shop at Target very often

The Target REDcard™ Credit Card is an excellent choice for frequent Target shoppers. But for those who do the bulk of their shopping elsewhere, it won't make much sense.

Say you have an Amazon Prime membership already and buy virtually all of your household supplies through Amazon. Unless you’re planning to radically change your shopping habits, the Amazon Prime Rewards Visa Signature Card could be a better fit. It offers 5% cash back at Amazon and Whole Foods with an eligible Prime membership, 2% at restaurants, gas stations and drugstores, and has an annual fee of $0. At the time of this writing, a standard Amazon Prime membership — which features free two-day shipping on eligible items, along with other benefits — costs $119 a year.

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You carry a balance

Like most store cards, the Target REDcard™ Credit Card carries a high interest rate: The ongoing APR is 25.15% Variable. If you carry a balance — even just some of the time — think twice before getting this card. Any interest charges you might incur can quickly snowball, quickly wiping out the value of the discounts the card offers.

You may want to consider the Chase Freedom Unlimited® instead. It offers 1.5% cash back on all purchases, along with a cushy 0% APR period: 0% on Purchases and Balance Transfers for 15 months, and then the ongoing APR of 16.74% - 25.49% Variable APR. Its annual fee is also $0, and you can use it virtually anywhere credit cards are accepted. It also starts off with a generous sign-up bonus: Earn a $150 Bonus after you spend $500 on purchases in your first 3 months from account opening.

Should you get it?

The Target REDcard™ Credit Card isn’t a good choice for those who carry balances or don’t shop at Target often enough to take advantage of the card’s benefits. But for frequent Target shoppers who pay their bills in full, it offers top-notch value.