Target RedCard credit card review: 5% discount at Target and few other benefits

The Target RedCard credit card is a store credit card that can only be used for Target purchases (online and in-store). This card provides a healthy 5% discount on most Target transactions and a handful of other benefits such as free two-day shipping.

Depending on your credit, you might get an offer to upgrade to the Target RedCard Mastercard, which also works for non-Target purchases. However, even this card struggles to match the value provided by many of the best cash-back credit cards.

Below, CNBC Select details the Target RedCard credit card's features and offers alternative rewards credit cards that might better suit your spending habits. Note that there are several versions of Target's RedCard, including debit and prepaid RedCards, but this review focuses on the RedCard credit card and the Target RedCard Mastercard.

• Welcome bonus
• Benefits and perks
• Target RedCard rewards
• Rates and fees
• Target RedCard Credit Card alternatives
• Is the Target RedCard Credit Card right for you?
• Bottom line

Save $50 on a future qualifying purchase of $50 or more when you're approved for the card. This offer is available through Dec. 30, 2023 and must be redeemed through Target Circle.

All versions of the Target RedCard provide a 5% discount at Target and Target.com. The 5% discount doesn't apply to certain categories of items, including prescriptions, eye exams, Target gift cards, taxes and shipping.

You'll also get free two-day shipping and an extra 30 days for returns and exchanges. RedCard holders are also eligible for exclusive Target offers.

The Target RedCard credit card doesn't earn rewards, it only provides the 5% discount on in-store and online Target purchases.

If you're approved for a Target RedCard Mastercard, it's similar to a cash-back card, except the rewards can only be redeemed for Target gift cards. This version of the RedCard earns:

• 2% back on dining and gas purchases
• 1% back on all other purchases, except at Target where the 5% discount applies instead

The catch is, you can't directly apply for the Target RedCard Mastercard. When you apply for a RedCard credit card, you may be approved for the Mastercard version or you may be offered the opportunity to upgrade later on.

The Target RedCard credit card and RedCard Mastercard both have no annual fee and a 29.95% APR. For both of these versions of the RedCard, late payments incur a fee of up to $41 and the fee for returned payments is up to $30.

If you taped every existing rewards credit card to a wall and tossed a dart at your newly created tapestry, there's a good chance you'd hit a more rewarding card than the Target RedCard credit card. Here are two good options to consider that are more valuable for most people than even the upgraded Target RedCard Mastercard.

The Wells Fargo Active Cash® Card earns unlimited 2% cash rewards on purchases. You can use this card anywhere and redeem the cash back in a variety of ways, including statement credits, direct deposits and gift cards.

It also comes with cell phone insurance when you pay your bill with the card (up to $600 of cell phone protection against damage or theft. Subject to a $25 deductible), and you can earn a $200 bonus after spending $500 in the first three months. The 2% cash rewards return you get with the Wells Fargo Active Cash® Card is 3% less valuable than the 5% Target discount you get with a Target RedCard. But you'd have to spend over $6,600 at Target to save an additional $200 to match the Active Cash card's intro bonus, which offers $200 cash rewards after spending $500 in purchases in the first 3 months.

The Discover it® Cash Back earns 5% back on the first $1,500 you spend in rotating categories every quarter after you activate (then 1%) and 1% on all other purchases. Discover also matches all of the cash back you earn for the first year, which means you're effectively earning 10% back on the first $1,500 you spend in the bonus categories and 2% back everywhere else during that period. Target has been featured as a bonus category in the past, and this card earns true cash back rewards, which you can effectively redeem for nearly any expense.

The Target RedCard Credit Card's 5% discount on Target purchases has some long-term value for anyone who does most of their everyday shopping at Target. But it can only be used for in-store and online Target purchases. And while the Target RedCard Mastercard can be used anywhere Mastercard is accepted, you don't have any control over whether you'll get an offer to upgrade. Plus the RedCard Mastercard lacks the value you get with many no-annual-fee cash-back cards. Find yourself a cash-back card that earns 1.5% to 2% back on all purchases and you're unlikely to regret missing a 5% discount on the occasional Target visit.

The Target RedCard Credit Card is a store card that can only be used at Target (online and in-store). It offers a generous 5% discount on Target purchases, free two-day shipping and an extended return window.

Once you apply for this card or have it, you might be upgraded to the Target RedCard Mastercard, which can be used for purchases outside of Target. However, even the upgraded RedCard Mastercard earns limited rewards that can only be used for Target gift cards. There are plenty of cash-back cards that are more rewarding in almost every way.

At CNBC Select, our mission is to provide our readers with high-quality service journalism and comprehensive consumer advice so they can make informed decisions with their money. Every credit card review is based on rigorous reporting by our team of expert writers and editors with extensive knowledge of credit card products. While CNBC Select earns a commission from affiliate partners on many offers and links, we create all our content without input from our commercial team or any outside third parties, and we pride ourselves on our journalistic standards and ethics. See our methodology for more information on how we choose the best credit cards.

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For rates and fees of the Discover it® Cash Back, click here.