You can apply for a Target credit card online or at their store. But before you fill out an application in 2014, read this review.
Fine print on the rewards?
The card from Target is touted as a way to save 5 percent every time you shop at their stores. This is much better than their old REDcard which gave 10 percent off for one day after your application was approved.
So 5 percent sounds great, right? Is there any fine print behind it? I read the fine print on the Target 5 percent discount program and here are the exclusions:
- Gift and prepaid cards
- Prescriptions, optical, and clinic services
- “Target Mobile” purchases
- “Target Commercial Interiors” purchases
- Shipping and gift wrapping
Conclusion? The Target REDcard's 5 percent discount exclusions seem to be quite reasonable and straightforward. I don't see any tricks buried in the fine print or anything else. This is definitely a competitive program when compared to other 5 percent cash-back credit cards.
Since the Visa version from Target is no longer available, you will want to have a Visa or MasterCard from another issuer that has a good rewards program.
Going back to the review of Target REDcard, here's what else there is to know about it...
From bad to good?
Before the Great Recession, they offered two different cards; a store-only version and a Target Visa credit card. Due to their poor rewards and rampant customer service complaints, they were two of the worst credit cards on the market.
But a couple years ago they totally re-vamped their program. They dropped the Visa card and bolstered the rewards on their Target REDcard to offer a 5 percent discount on purchases at Target. So it went from being bad to good.
However there is a big catch. Since the Target Visa has been discontinued, the only version available is the REDcard for store purchases. That means it can't be used outside of Target stores and its website. So your account is of very little use since it's only good at one place.
Fees and interest rates?
The credit card from Target has no annual fee and as I write this review, the only interest rate listed on the application is 22.90 percent.
Unfortunately giving everyone that same rate of 22.90 percent is a worse arrangement than what they were previously offering in 2011, which was the different tiers of 13.25 percent, 17.25 percent, or 22.90 percent (depending on the applicant's credit). Now, the application makes no mention of those two lower tiers.
Credit score requirements?
Target National Bank (the issuer) got burned pretty badly during the economic downturn, which is rumored to be the main reason they discontinued the Target Visa credit card.
Although they don't publicly disclose the credit score qualifications needed to be approved, according to customer reviews it sounds like the card can sometimes be hard to get approved for... so beware if you have a history of recent bankruptcy or charge-offs. When it comes to store charge cards, this is probably one of the harder ones to qualify for. I've heard they reportedly pull from Equifax (instead of the other two credit bureaus) when reviewing an app.
Has the customer service been improved?
The verdict is still out on this one. There are a ton of Target credit card complaints from the past but the new card seems to have less so far.
But you should know that back in 2012 they sold their credit card business to TD Bank, who is now the issuer/manager of accounts. So you will be dealing with a third-party when you call customer service, unfortunately.
So should you apply for the REDcard now that the rewards have been improved? Well, I would say for the first time in years, this card is actually a good idea if you frequently shop at Target. There is a credit card application online. Then of course you can always apply in-store.
However one thing to be aware of is that there seems to be quite a few complaints online about the credit limits being low (as little as the low hundreds) even for people who allegedly have great credit scores. If true, I wouldn't be surprised considering it's a store card. But it's still something to keep in mind as a low limit may make it more difficult to maintain a low debt-to-available-credit ratio (which is important if you want to have a good credit score).