It’s difficult finding a credit card rewards program that gives you 5 percent back on purchases. And forget debit cards rewards, which tend to be even less generous.
So it’s exciting news that beginning this fall, customers using a Target credit and debit card for purchases at Target stores and at Target.com will receive an instant 5 percent discount. The retailer hasn’t said exactly what day the program will start.
If you’re a regular Target customer and don’t already have the store’s credit or debit card, there’s probably little reason not to get one, since you’d otherwise be leaving 5 cents of every dollar on the table. The program also applies to the Target Visa card; although the retailer no longer is accepting applications for it.
What’s the risk?
If you’re applying for the Target credit card, you’ll probably temporarily ding your credit score slightly, not a big deal unless you’re opening more than one account.
You’ll also can hurt your score if you use more than 20 percent or so of the card’s credit limit, which averages $600 to $700.
And it’s a hassle having to carry around extra cards and deal with even more bills.
Still, 5 percent is a lot of incentive.
The bigger issue, of course, is being able to pay that credit card bill off in full every month. If you don’t, you’ll be saddled with the credit card’s finance charges, which currently are based on a staggering annual rate of 25.24 percent. That would eat up that 5 percent discount fast. If credit is too tempting, go for Target’s debit card or use cash and forget the discount.
Also consider that if you use a Target card instead of your bank-issued card, you’ll be giving up whatever rewards and other benefits your bank offers, such as free warranty extensions, travel protection, or product replacement if something you buy is lost or stolen within a certain after you buy it.
We know of few credit cards, such as the Chase Freedom card that offer 5 percent rewards, mainly on certain categories that change monthly. Even debit cards are now offering some of those perks.
But the Target deal is hard to beat. Incidentally, if you’re going to apply for either card, you should do it now and take advantage of the one-time 10 percent discount you’ll get, as well as the chance to earn coupons for additional savings. Once the new offer takes effective in the fall, the 10 percent deal will be gone.
Check our website for tips on choosing a rewards credit card. —Anthony Giorgianni