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It feels like every time you checkout at Target, the cashier asks, "Would you like to apply for a REDcard™ and earn 5% off on all purchases?" The 5% discount sounds good – at first. It’s the fine print that gets you. Here’s why you should look before you leap.
Before you sign up for a store-branded credit card, make sure to compare key benefits from major bank cards. With the Target REDcard there are many areas where major bank cards beat it hands down. Let's dive a little deeper.
Interest Rate. The Target REDcard APR at 23.65% is exceptionally high, almost double the rate of regular credit cards. The REDcard is not a card you should use if you ever carry a balance over to the next month. The 5% discount you receive on purchases, won't be worth the money you pay in interest.
0% Intro APR Period. The Target REDcard does not offer a 0% intro APR period. Several bank cards offer 0% introductory interest rates for a year or more. Discover it® Cashback Match™ gives you 14 months of zero introductory interest on purchases. That means you can carry a balance on the credit card and pay no interest for 14 months.
Sign-Up Bonus. There is no sign-up bonus with the Target REDcard. Many bank cash-back cards offer generous sign-up bonuses. Discover it® Cashback Match™ gives you a dollar-for-dollar match of all the cash back you've earned at the end of your first year, automatically. You could turn a $200 reward into $400 with Cashback Match™.
Everyday Rewards. You can't use the Target REDcard anywhere except at a Target store. That leaves you locked inside their narrow rewards system. You can get better cash-back rates on all your spending with the cards we've listed below.
If you are looking for a new credit card, there are cash back offers with better interest rates, big sign-up bonuses and rewards on all spending wherever you shop. We’ve done the research and found the best cash-back credit card offers available.
Citi revolutionized the approach to cash back rewards with this card. You collect unlimited cash back twice on all your purchases everywhere. Score 1% on every purchase and another 1% when you make a payment, which makes it one of the highest all around rewards rates among cash back cards. It gets even better. There's no limit to the amount of cash you can earn and no rotating bonus categories. If you are looking for a way out of high-interest credit card debt, but still want a cash back card, this card offers a long introductory APR of 0%* for 18 months on Balance Transfers*, then 14.49% - 24.49%* (Variable). This card comes with no annual fee.
You hit the jackpot with this card's cash rewards sign-up bonus. At the end of your first year, Discover will match the cash back you've earned. Direct all your spending to this card for purchases that don't require a convenience fee and you could collect a hefty cash-back bonus after 12 months. Discover delivers with this 5% cash-back card on popular spending categories up to the quarterly maximum each time you activate, and unlimited 1% rewards on all other purchases. Get 0% for 14 months introductory APR on purchases. After that, the APR is 11.99% - 23.99% Variable. This card comes with no annual fee.
With this card, the cash rewards keep piling up in categories like groceries, gas and clothes. Earn a 3% cash back rewards (up to a $6,000 annual cap) on spending at U.S. supermarkets, 2% at U.S. gas stations and select U.S. department stores and 1% on all other purchases. Looking for a simple cash back card with solid rewards? This card is a near perfect-match for you. This card offers a 0% for 12 Months introductory purchase and balance transfer APR, then 13.99%-24.99% Variable. You will also earn a $100 statement credit after you spend $1,000 in purchases on your new card in the first 3 months. This card comes with no annual fee.
Solid everyday cash rewards include 1% cash back on every purchase, 2% at grocery stores and wholesale clubs, and 3% on gas up to the first $2,500 in combined grocery/wholesale club/gas purchases each quarter. You will ring up a $150 online cash rewards bonus after you spend at least $500 on purchases in the first 90 days of account opening. You will get an introductory APR of 0% Introductory APR on purchases for 12 billing cycles and 0% Intro APR for 12 billing cycles for balance transfers made in the first 60 days, then 13.99% - 23.99% Variable APR. This card comes with no annual fee.
Added Benefit: It pays to be loyal. With this credit card, maximize cash rewards when you have a Bank of America checking or savings account. Get a 10% customer bonus every time you redeem your cash back into a Bank of America® checking or savings account. If you are a Preferred Rewards client, you can increase that bonus to 25-75%.
Store-branded credit cards, like the Target REDcard, are notorious for high-interest rates that hurt shoppers when they carry a balance or are late on a payment. The Target REDcard is guilty as charged with its high APR at 23.65%. The Target REDcard’s main appeal for shoppers is the 5% discount at checkout. If you are late on a payment, fees up to $38 will apply, which will quickly wipe out any benefit from your last shopping trip. Plus, you are imprisoned in their Target-only rewards system, which limits your cash-back possibilities.
The next time the cashier asks you if you'd like to apply for the Target REDcard. You can say no with confidence, knowing you can get a much better deal with the cards mentioned in this article.
*Editorial Note: This content is not provided or commissioned by the credit card issuer. Any opinions, analyses, reviews or recommendations expressed in this article are those of the author’s alone, and 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.