Target Red Card: A Good Thing or Not?

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With all of the ways to save money, one thing I hear many of you say all of the time is to use your Target card so you can save 5%!    I agree that saving money is great, but at what cost?

First of all, let me explain what the card is and what it offers.  When you use your Target Red card, you can save 5% off of all of your purchases – all of the time.  You can also get free shipping when you shop on-line.  You can sign up for either a Target RedCard Visa credit card or you can get the debit card, which will be attached to your checking account.  The choice is yours, depending upon your spending and/or lifestyle.

So, if I can save money, why wouldn’t I?  The reason is simple.  Cash.   I just don’t believe in using plastic for these types of purchases.  When the average person uses their credit or debit card, they usually spend more.  It just human nature. It’s probably even happened to some of you.  You walk into Target to get 4 item and end up walking out with 10.  Would you do the same if you had cash in your pocket vs. plastic?    Probably not.

You may have saved 5%, but if you don’t pay off that credit card right away, you will have to pay interest.  The interest you pay could be more than what you ended up saving on your initial purchase – which means you are paying them to save money.  I know some people are dedicated with doing this (and kudos to you) — however, many fall into the simplicity and ease of paying only the minimums each month.  If you do elect to get a Target RedCard, please do so only if you can pay it off each month and never pay interest.

I also hear some people say that they use their debit card and not the credit card, so it is like using cash.  Well, yes and no.  Yes, it is tied to your checking account and is immediately withdrawn to pay for your purchase.  However, it is not cash.  Cash is the green stuff in your wallet.  Again, when you use cash, you really do tend to watch your spending.

Spending the green stuff is much more difficult than pulling out the plastic.  Not only that, if you trying to get out of debt and using the envelope system, you really should not be using your checking account anyhow – right?  I have people say they budget for it and leave it in the account.  Many of those same people tell me that they also tend to exceed the monthly budgeted amount as well.  It is just too easy to say “Oh – it is only an extra $20 over my budget.”  But, when you have cash, you can’t spend that extra $20 — you just don’t have it to spend!

I also want to make sure you really know how much you end up saving.  If you spend $100 a month at Target or $1200 a year, you will save $60 by using their card.  That is about $5 a month.  Yep – just five bucks.

For me, the Target RedCards are not worth the savings.  The reason is simply based upon our beliefs when it comes to budgeting and spending.  However, it might work for you.  Just make sure you take all of these factors into consideration before applying so you know what you are doing and can make sure that you do not allow the hype of saving 5% to overrule your clear thinking.


  1. Noelle Monaghan says

    I just wanted to say that while you might not save a lot of money using the Red Card, if you sign up to donate money to your childs school through the program, 1% of your purchase goes directly to the school of your choice and it is absolutely free.

  2. Melissa says

    I agree with you, if I use cash I spend less money. That being said I rarely carry cash because I am too lazy sometimes to just go to the bank. I do about 60% of our household shopping at Target and frequently pay with my debit card. I recently got he Target debit card and look at it as if I am saving most of the sales tax on my order by using their card the same way I would have already used my check card. Our local sales tax is 7%, it saves me 5%. The other plus is by having the card you get lots of flyers and coupons in the mail, that I can stack with other coupons, so it I definitely think it saves me money 🙂

  3. emma says

    I disagree, I have a debit RedCard and love it. I rarely use cash to pay for things, I use debit, the envelope system is too cumbersome with small children, juggling that and using coupons is very time consuming. Plus the free shipping is the best part about it. Not going to the store and picking up unneeded items and saving me from a possible child meltdown is a huge incentive for our family. I guess if you are an all cash family then it won’t benefit you, but most people I know are not using an all cash system.

  4. Amber says

    I agree with the cash thing but if you get the Target DEBIT card not the credit one it just comes out of your checking account. No interest or paying it off or anything. It’s just like using your normal debit card it’s just that it’s only for Target and you save 5% every time you use it.

  5. Oralia says

    I find that I spend more when I have cash. Mainly because its right there. If I’m going to use my debit card and its something as low as $5 I think twice about getting it by asking myself if I really need it. I dislike carrying cash. I go to the bank to withdrawl cash for the rent. I hate it, the tellers seem to think that I want to get into a conversation about my day. Yes I know, their just being friendly but I just want to get in and out.

  6. Amy Ramos says

    I really do like the Target red card, however, I find I am spending less time in there as I can spend more. I have been buying most of my items through or
    Also, with the debit card, it is not out instantly. There is about three day delay so if you are not careful, you could forget about it and then overdraw in your account. This part really irks me as it should instant. The more I think about it, the more I may cancel the card.
    I have tried using the envelope system however many of our bills are on automatic payment. The only time I would use cash is for grocery shopping or anything else (haircuts, eating, entertainment).

  7. melaniek says

    I wanted the target red card debit card but my bank is too tiny to qualify so I had to get the credit version, I do pay my balance off every month so I never pay interest or fees and I like knowing that 1% is going to my son’s school. I hate HATE carrying cash because it seems like the more cash I have in my pocket the more I use it on stupid stuff (bottled water/ sodas etc)…. so I guess its really a matter of what works for you. I feel like especially with the credit version I am more careful because I sure don’t want to see a high bill hit my email! I weigh most purchases pretty carefully and go in with a clear idea of what I need to buy there.

  8. Tracie says

    I find the envelope system very simple to use…once you use it long enough it become routine and you just “get it.”

    As far as spending more – if you have to account for every cent you use, then you won’t. It is not just pulling a $20 out of your wallet – it is a $20 from your limited amount of $100 for groceries for the week (for instance). And then, you have to account for it.

    When you set up accountability, it can help reign in spending — whether using cash or debit. I will agree that I use to HATE to use cash and thought that doing so was the dumbest thing and that I thought I’d spend more and it would be horrible. However, I have learned the opposite is true. I spend less, I save more and I really think twice about spending cash vs. whipping out my debit card.

    It is all how you look at it and like I said, it does not work for me, but it may work for others. I just wanted to ensure everyone knew it was out there and how it worked — each of us has to decide what works best for our situations as none of them are the same.

  9. nancy carl says

    i also use my target red card for purchases but i know what i have to spend because the cash is in my purse as soon as i use my redcard and get the 5 % off i immediately go to service desk and pay for my purchases thus saving the 5% but have no charge card balance to deal with

  10. says

    Tracie, thanks for writing about these things! Cash vs. plastic is such a hot issue… for some reason. It always amazes me that people refuse to try going all-cash and just claim it wouldn’t work for them. (Of course, five years ago, I was one of those people.) Going all-cash has changed our LIVES! It was the first HUGE step that has led to us being debt-free — and we will never go back! Cash is king. 🙂

  11. Michelle says

    We run a strict household budget and that makes the financial decisions for us. Whether it’s a credit card, a debit card, or cash, all purchases must pass the ‘is-it-allowed-in-the-budget’ test. Since credit and debit cards are just a means of paying for the budgeted purchase (we pay our credit card bill in full each month), we have the liberty of taking advantage of credit cards and debit cards (like Target’s Redcard) that offer benefits and rewards. With our credit card, we earn up to $300 a year in cash and never pay a dime in interest. Following a budget has been a huge blessing.

  12. Kristen says

    I still swear by my Discover card. It’s gotten me over $2,000 in FREE STUFF over the last FOUR years. And the only reason I would use the Red Card would be for the free shipping.

    Do I overspend sometimes? Sure. But I’ve NEVER NOT about able to pay off my cards in full every month.

  13. Debbie says

    I love my Target Red Card. I use it all the time. I have the debit card, not the credit card. I don’t spend more using it. It’s awesome saving an extra 5% on every purchase. 🙂

  14. says

    I have a Target RedCard (debit only). I rarely use it because I’m usually paying with Target gift cards. But the few times that I have used it, I like the extra 5% savings, and don’t end up spending more than I want 🙂

  15. Glenn says

    As others have stated, if you tie it to your debit card, you won’t have to worry about interest rates. In addition, when you pay for 5 prescriptions, you get a 5% card good for an entire shopping experience, plus the 5% you save with your card. So, you can save 10% if you shop right. Also, on Black Friday, if they have great deals, and you use your 5% savings card, along with the 5% savings on your Target Debit Card and spend even $250, you could save $25. Plus you get 5 cents credit using your own bags. If your’re comparing prices with WalMart, Toys R Us, or Best Buy, that 5% or 10% COULD save you some big bucks. Like everything else, use in moderation.