2/27/2012 3:36 PM ET|
Is Target 5% discount card worth it?
Customers may find the REDcard a good deal, but they should know that the retailer will collect -- and possibly share -- their personal information.
Target REDcard credit and debit cards offer a generous 5% discount on your purchases, along with other benefits like free shipping for online orders at Target.com. But the discount comes with a price. Information about your purchases will be sliced, diced and combined with other personal information to create a profile that the retail giant will then use to try to entice you to buy more stuff from it.
While Target isn't alone in using customer spending data this way, it happens to be very, very good at it, as a recent, much-discussed New York Times story documents.
Given all that, it's no surprise that a reader named John wrote me with the following question:
Hi Gerri, I just read your two-part blog on the Target REDcard. There is no mention of what Target gets out of this deal, although I can guess customer loyalty and maybe credit history, which they then sell to other organizations?
I know for a fact that businesses like Target do not do anything for the sheer benefit of the consumer, there is a hidden benefit for Target somehow.
Can you explain? --John
It's a great question. The Target REDcard 5% discount on virtually all purchases is more generous than other loyalty reward programs and general purpose credit card reward programs, and is certainly better than other debit card reward programs, many of which are no longer around since the Durbin amendment limited debit card swipe fees. On top of that, Target will donate 1% of the amount you purchase on one of these cards to a local school you designate. Target wouldn't continue to offer those rebates if the program wasn't lucrative for it.
John's thinking -- that customer loyalty and information must be worth something to Target -- is logical. So what kind of information is it collecting from cardholders, and what does it do with it?
To summarize, Target says it may share personal information gathered in the course of using your Target REDcard (credit or debit card):
- Our everyday business purposes -- such as to process your transactions, maintain your account(s), respond to court orders and legal investigations or report to credit bureaus.
- Our marketing purposes -- to offer our products and services to you.
- Joint marketing with other financial companies.
- Our affiliates' everyday business purposes -- information about your transactions and experiences (Target defines its affiliates as companies related by common ownership or control, including Target National Bank, Target Bank, Target Stores and websites and Target Commercial Interiors).
- For nonaffiliates to market to you.
Unfortunately, you can't opt out of having your information shared for any of the above purposes, with one exception. You can instruct Target that you don't want it to share your information with nonaffiliates in order to market to you. Everything else is fair game.
What's it worth to you?
But is it really so bad for Target to collect and use your information for marketing, either internally or with other companies? The recent New York Times article, by Charles Duhigg, suggests Target places a lot of value on your personal information. He writes:
"For decades, Target has collected vast amounts of data on every person who regularly walks into one of its stores. Whenever possible, Target assigns each shopper a unique code -- known internally as the Guest ID number -- that keeps tabs on everything they buy."
Duhigg reports that Target will collect information from credit card purchases, coupons, surveys -- and presumably your REDcard -- and supplement that with demographic data it may gather from other sources, all in an effort to understand what you buy and to find ways to encourage you to buy more at Target.
To be fair, this may not be that different from what other retailers do through loyalty programs and the like. But the article implied that Target is very, very good at mining and using data. The article gave an example of a father who found out about his teen daughter's pregnancy after noticing that Target was sending her coupons for maternity and infant products and then confronting her with that information.
More from Credit.com:
VIDEO ON MSN MONEY
And Amazon's card is only 3%...and you can't get iPads :)
Good for Target...they know how to buy my information from me and puts it to good use--maybe with an offer for something I'd like.
Come to think of it, those grocery stores have been making me swipe my shoppers card for about 20 years from now...I'm not sure I've received anything of use from them.
I will say this much and as an employee of Target, not all of this information is accurate. Yes, the Target Credit Card is easier to use to obtain consumer info, but the Target Debt Card, which is much easier to handle, is the one we recommend. Why do we recommend it? Although the debit card can be used at Target, only, the card is set up directly to the customers OWN checking account and does not use Target's banks or it's affiliates, which gives the customer better control over the usage of the card.
Besides, think of the benefit of the debit card over the credit card... with the debit card, only the consumer knows the Personal Identification Number (PIN) that is attached to that card and it is set up to be just a debit card, ONLY! If the debit card is lost, it is safer because if a person with bad intentions picks up that card, they will not be able to use it, because they do not know the customers PIN.
If the consumers credit card is lost, that same person (with bad intentions) could use that card,and just sign their own name on that keypad, and by the time the person gets caught, if the consumer is lucky enough for them to have gotten caught, it is already too late, because that person may have already used the credit card to make a huge purchase.
So, once again, even though both cards DO save you 5% on all your purchases, just keep in mind that even though information may be collected, it may not be accurate info, on the consumer, because they have risked using the credit card, instead of the debit card, where they know they were the only ones able to make the purchase, instead of someone else making one, without them knowing.
hey brimo timo... your daughter is in a very pushy Target store then, that probably isnt meeting their goals, or the employess are not trying hard enough. I've worked for three different stores and each one of them has said, get what you can, if you cant, don't worry about it. Either the guest will want it, or they dont. It is not our job to push the cards on the customers, but to explain to them the benefits of how they can save money by using the card. And I agree with whatwas said, earlier, any store can track your info, no matter what kind of card you use. It is the customers risk, no matter which way they go. /some of thenm just seem to have the mentality that the world is out to get them. I think you should have your daughters store reprimanded, some how. They are not being fair to their employees. Maybe she should transfer to a different store where there isnt so much emphasis, on it.
Is her store using motivational tools to help the employees want to offer more cards? The stores Ive been with usually have a contest like, the person that ets the most "redcards" a day gets a drink or something from the store cafe.
I refused the Target card offer. I don't think they need access to my checking account information. Security breaches are problematic enough without them asking me for my checking account number...
Their credit card isn't worth what I would save, so again no thanks Target.
Like tracking a comment , the games people play ! The cold War, Walmart Vs Target !
MSN Playing the red army card on Target ?
If you're using credit now, why not use their credit? If you have a cash/envelope system, maybe it isn't for you. But when I go through the line, most people not using a redcard are using a visa. The arguments for cash systems aren't even valid, almost no one here uses cash. I always see that as the reason, use cash, but people aren't using cash to begin with.
Hmmm? Nothing in it for TARGET? My daughter works for Target and is required to get two customers to apply on every shift she works. If she does not meet this quota she will get counseling from her team leader, then written up, and finally terminated if no success from their prior scolding’s. I think we should receive a discount for paying with cash. The cost involved to use a credit card is eventually passed to the customer anyways. The bank charges the merchant a fee for all credit card transactions, the customer will lose its 5% discount to finance charge if the balance is not paid in full. The bank is winning, thanks TARGET!
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