Target’s cash-back credit offer


MONEY SAVING MOMENT: In violation of a key rule on The Clark Howard Show, Target has an offer of credit that makes me reluctantly suggest dedicated shoppers open a store card account at the Red Retailer!

Target and its competitor Wal-Mart are both reporting terrible sales numbers that show they’re having a hard time getting customers to come in and spend like they have in the past. It’s an era of high gas prices and unemployment remains stubbornly high. People are reluctant to open their wallet even at discounters.

Wal-Mart’s customer base is just plum out of money most of the time. Shoppers who receive government assistance money flood the stores around the first of the month. But then the stores empty out as each month wears on.

Target shoppers, however, are generally of a higher income, so typically there’s no measurable trend there about customers on government assistance. Yet people still aren’t spending like they once did.

So Target has come up a program to boost sales that I’ve discussed in the past because I find it so intriguing. They will give you 5% cashback every time you use their store debit card, store-only credit card or Target-branded Visa card in a Target.

There are no gotchas; it’s 5% back on anything you buy.

Now, I don’t like the idea of telling people to get another extension of credit. However, if you are a dedicated Target shopper, I have to say this is the right thing for you to do. It’s a clear exception to my normal rule against store credit. That 5% is a significant enough number to make me rethink my typical advice.

If you don’t want the extension of credit, one of my listeners suggested you get the Target debit card and tie it into an account that’s separate from your normal checking account. That way you still get the 5% cash-back benefit on Target purchases, but you limit the risk of losing money if there’s an account breach, which is a drawback of all debit cards.

Editor’s note: This segment originally aired in June 2011.

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