If you shop regularly at one of America’s major retailers, you may be able to trim your receipts by using a store card. This is the card you most likely have been asked to open at the cash register. There’s ample reason to take the advice, although be sure to read the fine print and look for any expensive downsides attached to the card.
Target, for example, offers two store cards that come with a variety of perks for shopping with the department store, either online or at a physical location. Called REDcard, either one can only be used with Target, which is an obvious disadvantage. But loyal Target shoppers might find some bonuses that make one of them worthwhile.
The first one is a credit card that automatically grants 5% back for every Target purchase. That’s a lucrative offer that co-branded cards won’t deliver. The 5% rebate applies to Starbucks stores that are located inside of a Target location. It does not cover all Target purchases, however. A few items are exempt, such as prescriptions and eye exams. While there is no annual fee, the credit card’s APR is usually fairly steep. It can be avoided by not carrying a balance.
The second REDcard is a debit card that links to an existing bank account. It also comes with 5% cash back on Target purchases. A PIN needs to be added to this card, and every purchase at a Target terminal is eligible for a $40 cash withdrawal.
Both REDcards come with additional perks. For instance, there is always free standard shipping on Target.com orders. Some items are excluded from this policy. Target also offers cardholders an extended return policy. Whether purchased at a brick-and-mortar store or on the web, all purchases made with a REDcard can be returned a month later than goods bought using other payment methods.
Special offers and early access to events are also available exclusively to REDcard members. Target issues coupons to cardholders for a variety of products. Additional savings on products that are already on sale are sometimes up for grabs, for example.
One of Target’s major rivals, Walmart, offers a suite of cards, too, and one of these cards is co-branded with Mastercard. This means the credit card can be used outside of Walmart anywhere Mastercard is accepted. That’s the first advantage the card offers over either REDcard.
Applicants who don’t qualify for the Mastercard can receive the Walmart store card, which can be used at any store in the Walmart world. These businesses include Walmart Supercenters, Neighborhood Markets, Walmart.com, Murphy USA Gas Stations, and Sam’s Clubs. The store card does come with a higher APR than the Mastercard, which itself has an above-average interest rate.
Neither credit card carries an annual fee. Both earn cash back on purchases. Walmart.com transactions earn a 3% statement credit, while gasoline purchases at Walmart and Murphy USA locations get a lower 2%. Purchases at a Walmart brick-and-mortar location or anywhere Mastercard is accepted earn just 1%. If an order is placed on Walmart.com, but paid for in a store, the transaction earns 1%. Rewards earned with either Walmart card are credited to the card’s monthly statement as long as the card is in good standing. The points don’t expire.
Although Walmart’s figures don’t quite measure up to Target’s 5% rebate, elsewhere Walmart’s cards may be more attractive. Either Walmart card may offer a sign-up bonus for making a first purchase, something that Target may not offer.
It’s difficult to conclude that one company offers better cards than the other. Target has the more generous cash back program, but only Walmart provides a co-branded card that can be used with other retailers.
