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For many shoppers, Target is irresistible. Its fair prices and wide variety of products have garnered a loyal following. Jokes about popping in for one item and leaving an hour later with a full cart abound on the internet. Customers are so obsessed there’s even a viral “Husbands of Target” YouTube video.
Everyone can agree on one thing, regardless of whether they frequently shop at Target for opportunistic purchases or just for household goods. A little discount like this makes a big difference, and getting one is made simple with the Target RedCardTM Credit Card*.
Target RedCard is a widely used credit card for regular Target customers, providing a 5% discount on all purchases. Nevertheless, there are certain limitations to the statement “yes, it helps build credit.”
Here’s what you need to know about the Target RedCard and building credit:
How the Target RedCard Helps Build Credit
The Target RedCard is a credit card, which means it reports your activity to the three major credit bureaus (Experian, Equifax, and TransUnion). This allows lenders to see your credit history and make decisions about approving you for other credit products, like loans and mortgages.
Here are the specific ways the Target RedCard can help build credit:
- On-time payments: Making on-time payments on your Target RedCard is crucial for building credit. Late payments can damage your credit score, making it harder to qualify for loans and other credit products with favorable terms.
- Credit utilization: Your credit utilization ratio is the amount of credit you’re using compared to your total available credit. Keeping your credit utilization low (ideally below 30%) is important for a good credit score. The Target RedCard can help you manage your credit utilization by giving you a higher credit limit than some other store cards.
- Credit history: The longer your credit history, the better your credit score will be. Using your Target RedCard responsibly and keeping it open for a long time will help build a positive credit history.
Caveats to Consider
While the Target RedCard can help build credit. there are a few things to keep in mind:
- High APR: The Target RedCard has a high APR (currently 29.95% variable), which can make it easy to rack up debt if you’re not careful. Carrying a balance on your card will hurt your credit score and make it more expensive to pay off your debt.
- Limited benefits outside of Target: The Target RedCard doesn’t offer many benefits outside of Target. If you’re looking for a card that you can use for everyday purchases and earn rewards, you might be better off with a different card.
- Temptation to overspend: The 5% discount on Target purchases can be tempting, but it’s important to stick to your budget and avoid overspending.
Overall, the Target RedCard can be a good way to build credit if you use it responsibly. However, it’s important to be aware of the potential downsides and choose a card that fits your spending habits and financial goals.
Additional Tips for Building Credit with the Target RedCard
- Pay your balance in full each month: This will help you avoid interest charges and keep your credit utilization low.
- Keep your credit utilization below 30%: This is a good rule of thumb for everyone, but it’s especially important for people who are trying to build credit.
- Don’t close your card: The longer your credit history, the better your credit score will be. Closing your Target RedCard will shorten your credit history and could hurt your score.
- Monitor your credit reports regularly: Make sure there are no errors on your credit reports that could be hurting your score. You can get free copies of your credit reports from AnnualCreditReport.com.
Although the Target RedCard can be a useful tool for establishing credit, it’s crucial to use it sensibly. Using the Target RedCard to make on-time payments, maintain a low credit utilization rate, and refrain from overspending will help you raise your credit score and become eligible for future better loan rates and other credit products.
Frequently Asked Questions (FAQs)
Can I get a Target RedCard if I have bad credit?
Yes, you can still get a Target RedCard even if you have bad credit. However, you may be offered a lower credit limit or a higher interest rate
How long does it take to build credit with the Target RedCard?
Using the Target RedCard to establish credit can take months or even years. How you use the card and your unique credit history will determine how long it takes.
What is the best way to use the Target RedCard to build credit?
The best way to use the Target RedCard to build credit is to pay your balance in full each month and keep your credit utilization low You should also avoid closing your card and monitor your credit reports regularly,
What are some other ways to build credit?
There are numerous other methods to establish credit, like getting a secured loan, adding yourself as an authorized user on someone else’s credit card, or paying your rent on schedule.
Target RedCard Mistake 3: Using Your Card Outside of Target
The RedCard is only designed for use in Target stores or at Target. com. If you try to use your debit card or entry-level credit card somewhere else while you still have it, it will be declined. Save yourself the embarrassment by saving it for Target purchases only.
Some credit cardholders are offered an upgrade to the Target Mastercard after several months of responsible use. The Mastercard version offers the same in-store benefits but can also be used outside of Target. However, just because you can doesn’t mean you should. The Target Mastercard doesn’t offer great rewards or discounts at other stores. It is preferable for you to get a separate card for other purchases, such as the Citi Double Cash Card (C2%AE%), which gives you 2% cash back on all purchases and an additional 1% when they are paid off or the Blue Cash Preferred Card (C2%AE) from American Express, which is one of the best credit cards for groceries if you shop at a traditional grocery store. S. supermarket (Terms apply. See rates & fees).
Target RedCard Mistake 1: Choosing the Wrong Version of the Card
Unlike most store cards, Target allows you to apply for two separate versions of the RedCard. Customers can choose between a debit card or a credit card. Both offer similar discounts and benefits with no annual fee.