Target's REDcard: What You Need to Know (TGT)

Target Corporation’s (TGT) REDcard program is a leading loyalty program among retailers in the United States. The program is accessible to everyone and is integrated seamlessly into customers’ payment methods. With lower barriers to entry than other loyalty programs, Target effectively builds a relationship with its customers and can personalize the promotions and advertising offered to the consumer. (For related reading, see: "Why Target's Express Store Concept Is Flourishing.")

Target’s REDcard comes in two forms: a credit card or a debit card. The debit card is linked to customers' existing checking accounts, and for the credit card, users can charge in-store purchases or buy online with the credit card at Target.com. Users receive a monthly bill and can manage their accounts at https://www.target.com/c/redcard/-/N-4tfyn.

According to PYMNTS.com, nearly one-quarter of all Target purchases are made with a Target REDcard. All cards offer 5% off purchases every day at both in-store and online locations and free two-day shipping on most items. Users also have an extended return facility giving them 30 extra days to return products to Target or Target.com, although this does not apply to target mobile purchases, purchases with a fixed return date and non-returnable items.

The REDcard has a high APR at 24.65%, which varies with the market based on the prime rate. According to Experian, the average variable credit card APR is around 17% as of April 5, 2018. There is also a late payment fee of up to $38 and a return payment fee of $27. Customers looking to combine the benefits of the REDcard with a more traditional credit card can sign up for a Mastercard Incorporated (MA) REDcard through Toronto-Dominion Bank (TD). 

In 2013, Target suffered a massive data breach of its REDcard program, and the subsequent settlements cost Target upwards of $300 million. The new REDcards have PIN technology, a more secure form of payment that requires customers to insert their cards and enter a PIN rather than swiping and signing. PIN cards are used worldwide and have significantly cut down on fraudulent charges.

Most companies use loyalty programs to collect customer data in addition to building loyalty among patrons. Target’s data collection system is thorough. Every purchase, email or phone call is tracked and data is applied to algorithms for marketing and planning purposes. By collecting data, the company can personalize deals and discounts for its shoppers. 

While still popular, growth in Target-branded payment cards has slowed. Target is, therefore, exploring a new rewards program called “Target Red.” This new program will not be linked to a debit or credit card. With Target Red, shoppers receive 1% off purchases that can be applied to future visits without having to use a Target-branded credit card. Members can also waive the $5 charge for Target Restock. They also can receive 50 percent off the first year of a Shipt membership a grocery delivery service. Target acquired Shipt for $550 million in December 2017. 

Target's REDcard can be used for both in-store and online ordering for user convenience. Once a customer is signed up, Target begins to collect data from that individual's profile. The program is appealing to shoppers because it provides generous discounts and community donations. However, users should be aware of the high interest rate and the late payment fees, which could cause debt to mount if the balance is not paid off each month.