How the Target Redcard Debit Card Works

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.

“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