Home > Personal Finance > The Target REDcard Debit Card: Savings…and Safety?

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Editor’s note: If you’re looking for more information on the data breach involving 40 million credit cards and debit cards used at Target stores, see Burned in the Target Data Breach? How to Protect Yourself.

There is a Target store just a couple of blocks from my home and I am in there every week it seems. It also seems that I can’t get out of the store without spending at least $50 (and I’ve tried!). So when the clerk recently offered me a 5% discount every time I shop there* – without signing up for a Target Credit Card – she got my attention. She explained that Target offers a debit card that would allow my purchase to be deducted from my checking account.

Of course, my first thought was about safety. How safe is it to tie my checking account to one of these cards? What happens if the card is lost or stolen? But I had other questions as well. So I contacted Target’s public relations department where Molly Koenst provided me with some answers, via email, about this card:

A Target Debit Card can be a good option for guests who do not want a credit card, as it draws right from an existing checking account, just like writing a check. In addition, Target now offers guests 5% off nearly all purchases at Target when they use a Target Debit Card (or any other Target REDcard). This new 5% off program provides great value for our guests. The benefits are easier to understand, and guests are rewarded every time they shop at Target with a Target Debit Card.

I also asked Ms. Koenst whether Target checks credit when someone wants to open up one of these accounts, and she replied:

There is no credit check (nothing that reports to Experian, Equifax or Trans Union). However, there is a process to validate the checking account status. When a guest applies for a debit card, Target does an internal check of check writing history, specifically at Target. In addition, Target receives additional information from a consumer reporting agency on overall check writing history.

[Related: Specialty Consumer Reporting Agencies: Chexsystems, Certegy Check Systems and Telecheck]

“What happens if someone else uses your Target debit card without your knowledge?” I asked. “What is the customer’s liability if the card is lost or stolen? Is there a PIN required for these transactions or are they signature based?”

First, with a Target Debit Card it is a PIN-based transaction. The protections are similar to writing a paper check with the additional protection of a personal PIN, and depending on the transaction size, a supporting signature. The guest is not liable for unauthorized transactions. (Target would verify that it was an unauthorized transaction.)

Not to be cynical, but I in my line of work I often hearing from people who are facing the worst-case scenario. I wanted to double check that cardholders wouldn’t be responsible for unauthorized transactions, so I decided to dig a little deeper.

Read Part II where I reveal what I learned about the safety of these cards…

*The discount does not apply to gift cards or prepaid cards, prescriptions, Target Clinic services, Target Mobile, and Target Optical Eye Exams.

Image by Mr. T in DC, via Flickr

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  • Rebecca

    I, too, was hastily denied the Target card. I didn’t realize at the time it was a debit card, either. I thought it was a Target credit card. No wonder I was denied the card — in this age of electronic bill paying, I write perhaps one check every 3-4 months or so. WHY BOTHER ME?

  • http://www.acsMarcom.com Annette Tierney

    I consider myself a frequent customer at Target – spending anywhere from $300 to $1000 monthly. I use my debit card at all retail establishments – as I have for over 10 years. Every trip to target, means I have to endure the “debit card” sales pitch at the checkout stand. Imagine my embarrassment on being denied when I finally decide to apply for a Target debit card. After being passed from customer service to the credit agency and back, I was further infuriated to discover that I was “denied” because of my LACK of check writing history at Target? Well, I’ve already stated that I use my DEBIT card as do most other folks these days. It’s bull sh*&ET that the credit agency they use reviews other check writing history as well. If they had with my application, they would have discovered an excellent check writing history with a credit score in the 800s. My theory, and one I plan to pursue, is that Target doesn’t want good customers to save 5%. They would prefer customers use and apply for their credit card instead and carry revolving debt so that they can make more money and force consumers already struggling in this economy to go further into debt.

    Their “customer care” department is choosing to ignore me. How convenient. But they don’t understand the power of an angry consumer who is social media savvy:)!!!

  • Dave Pace

    I’ve searched the Internet about this question after talking with Target agent in India and not getting any good answers.
    First there is no credit involved with a debit card! Why do consumers everywhere on the Internet miss this point? Target could do a credit check as you give them permission to in your application for the debit card.

    So what are the hidden costs? The debit “application” gives Target access to ALL your credit history. All this invasion of privacy for stinking debit card. Then they sell this to other companies..
    Refunds are difficult with this card and can take up to a month. My Amazon Visa pays me back 1% with easy, prompt returns, no risky direct access to my bank account (like PayPal/Ebay) and no invasion of my detailed credit history.
    There is no free lunch.

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