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Target REDcard Credit Card: A Good Deal If You Know How to Use It

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When the words “retail store branded credit card” (or some variation of the phrase) are uttered, your response should be to turn and run. Store cards are notorious for being “bad” financial products for a variety of reasons.

The incentive that’s meant to rope you in – like 10% of your purchase – is temporary; the interest rates on the cards are upwards of 20%; the minimum payments are incredibly low, which encourage people to maintain high balances that rack up that nasty amount of interest; and many come with hidden fees (or just high fees) that can cost you even more money.

But there’s one store card that might offer a slight exception to the rule that says avoid store credit cards at all costs: the Target REDcard™ Credit Card. Let’s take a look at this card to see if it can benefit frequent shoppers – or if it’s just another credit trap waiting for uneducated consumers.

How the REDcard Works

The Target REDcard™ Credit Card offers shoppers 5% off in the form of an instant discount on every purchase made in stores or online (some restrictions apply). It’s a store branded card that does not have an annual fee – or a complicated rewards program, as again, the reward is given immediately upon purchase. The card can only be used at Target stores and Target.com.

Target REDcard vs. Target Prepaid REDcard

The Target REDcard™ Credit Card is a regular credit card, not to be confused with Target's prepaid REDcard product.

A prepaid card is loaded with funds each month by the user who can then use those funds as they wish, like a regular debit card. Most people use prepaid cards as a budgeting tool or as an alternative to a checking account. Prepaid cards do not factor into your credit report and, as a result, have no impact on your credit score.

With a credit card, you are borrowing funds from a bank and must pay them back each month or face penalties, fees, and a likely hit to your credit score.

What Do You Get with a REDcard? 

The best thing about a Target REDcard™ Credit Card is that you get your 5% at Target & Target.com discount at every checkout, no gimmicks or strings attached. It applies to everything you can buy in the store, including items already marked down or on sale, and you can use it while applying other coupons to your purchase.

The exception is that you will not receive 5% off the following purchases:

  • Prescriptions, over-the-counter items located behind the pharmacy counter and clinic services at Target
  • Target Optical™ eye exams
  • Target gift cards and prepaid cards, and Stockpile and Gift of College gift cards
  • Certain restaurant merchants in Target stores, such as D’Amico & Sons Italian Kitchen and Pret A Manger
  • Gift wrap and shipping and handling charges on Target.com purchases
  • Wireless protection program purchases and deposits required by a mobile carrier

In addition to the 5% discount, you’ll receive free shipping on any purchase online, an added benefit if you’re an online shopper.

There are no points to earn and redeem, no statement credits to request, no hoops to jump through. Just straight-up 5% off on your purchase – and free shipping if you’re shopping Target.com.

The Pitfalls of Target’s REDcard You Must Avoid

Of course, the benefits quickly evaporate should you make one tiny mistake with your Target REDcard™ Credit Card. The variable interest rate – at 25.15% Variable APR – is high, and makes the 5% savings completely inconsequential if you’re only paying the minimum.

Ultimately, despite the better-than-average perks, the Target REDcard™ Credit Card is a store branded credit card and comes with the typical pitfalls: high interest rate, high fees, low minimum payment requirement designed to encourage people to revolve balances.

Not to mention, most REDcards come with low limits since you can only use them at Target stores. This could hurt your credit utilization ratio – and therefore, your credit score as a whole – if you don’t have many other credit cards. Remember, credit utilization is based on your total credit limit, not per card.

If you’re just starting to build your credit, the REDcard’s 5% may not be worth the downsides of holding the card.

Fine Print

To sum up, here’s what you need to know before considering this credit card:

  • The REDcard grants you a 5% discount on nearly every purchase at Target and Target.com. This discount is immediate upon checkout, so it’s more like a guaranteed discount on your Target purchase than other forms of money back.
  • You’ll receive free shipping online at Target.com when you use your Target credit card.
  • The APR can be as high as 25.15% Variable.
  • Minimum payments are low, which encourages consumers to make small payments on balances over long periods of time – costing an incredible amount in interest fees.
  • Late payment fees run up to $38. Returned payment fees run up to $27.

If you miss a payment, are late on a payment, or only pay the minimum balance, your 5% savings will be automatically negated.

Only use the Target REDcard™ Credit Card if you have established a history of paying your balances in full and on time – and can manage your money so you only purchase what you budgeted for and truly need.

There’s also one more issue that consumers should be aware of, although whether it’s “good” or “bad” is probably a matter of personal preference. In the interest of full disclosure, however, we believe in making note of the fact that Target does use its branded store cards to collect data and information about you and what you buy.

In Conclusion

Target’s REDcard is a great financial product for people who frequently shop at the store for everyday purchases on necessary items like toiletries, household goods, school supplies, and clothing. There’s no annual fee and the automatic 5% discount is an excellent way to save even more money when you do your regular shopping.

However, there are big consequences for missing payments or getting trapped into revolving your balances month to month. The late payment and missed payment fees are high, and the variable interest rate is alarming at 24.15%.

You may want to avoid picking up this card if you’re not a normal Target shopper – and the promise of a “reward” will encourage you to spend money that you would not otherwise. And most certainly avoid this store card like you would any other if you struggle to manage your money and your credit.

Otherwise – if you’re experienced in managing your purchases and your credit, and already have good credit – the REDcard is a great option if you’re looking to save even more on necessary purchases and spending you already do.

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Target REDcard™ Credit Card

Annual fee
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Rewards Rate
5% at Target & Target.com
Regular Purchase APR
25.15% Variable

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Kali Hawlk
Kali Hawlk |

Kali Hawlk is a writer at MagnifyMoney. You can email Kali at [email protected]

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Vacation Loans: Find the Lowest Rate Options

Editorial Note: The editorial content on this page is not provided or commissioned by any financial institution. Any opinions, analyses, reviews, statements or recommendations expressed in this article are those of the author’s alone, and may not have been reviewed, approved or otherwise endorsed by any of these entities prior to publication.

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Updated November 03, 2017
Travel is a huge priority for many people in their 20s and 30s. Seeing the world and collecting those experiences can make a big impact on you as you continue to develop into the person you want to be, and it’s just easier to get out there and go when you’re young.

You have fewer responsibilities to tend to back home, and long-term relationships, houses, or children might not be tying you down.

But if you’re early on in your career and still dealing with burdens like student loan debt from your college days, you also have less money to spend on travel when you’re young. Money can be a major limiting factor in your ability to take vacations and see more of the world right now.

If you’re set on taking vacations even when your budget is limited, you may be tempted to look into loans to fund your trips.

Can You Get a Loan for Travel?

While “vacation loans” aren’t really a thing, you do have options if you look into getting a loan to fund a vacation. Many lenders will provide personal loans instead.

You can get a secured or unsecured personal loan. A secured personal loan means you put up some asset as collateral against the loan, so if you don’t repay the money you borrowed you lose that collateral. (That collateral is often something like your car.)

You may be able to borrow more at a better interest rate if your loan is secured, but you risk losing whatever asset you used as collateral.

When you apply for a personal loan, you’ll need to provide a reason for borrowing the money. Some institutions accept things like travel and vacations as legitimate reasons for borrowing. And while taking out a loan for your vacation may sound crazy, it could be a better financial option than loading up travel expenses on your credit cards.

Funding Vacations with Personal Loans

If you do an online search for personal loans to fund your vacation with, you’ll likely come across a number of lenders that offer funds for this purpose. SoFi, Prosper, Earnest, LendingClub, Karrot, and Upstart are all legitimate companies to explore if you want to take out a personal loan for travel.

These are all online loan companies that offer personal loans, along with other financial products. (SoFi, for example, offers student loan refinancing.) The amount you can borrow will vary depending on a number of factors. Karrot allows borrowers to request up to $35,000. Upstart’s minimum loans vary by state, but all max out at $50,000 as well. SoFi offers personal loans in amounts from $5,000 and $100,000.

Earnest is a little different. The company offers “merit-based” unsecured personal loans up to $75,000. These loans are designed for individuals who may have limited credit histories but demonstrate that they’re financially responsible.

There are a number of other companies that aren’t as reputable as those listed above, and are considered predatory. Predatory lenders tend to make loans with extortionate interest rates with complicated terms that are in favor of the lender, not the borrower.

You can quickly end up owing far, far more than what you initially borrowed if you’re not careful – especially when searching for a loan specifically to fund a vacation.

Again, there are no “vacation loans.” These loans are just personal loans, but marketed to be used for vacations. Predatory lenders target keywords like vacation loans and will often show up in search results if you look for a loan to fund your trip, so be aware of companies like Loans of America who create landing pages for their products like this. Choice Personal Loans is another example of a predatory lender that you should avoid.

But perhaps a loan shouldn’t even be your first thought.

The First Option to Consider

If you have excellent credit, then a 0% purchase APR credit card may provide you with a better option than a personal loan. The benefit of using these cards is that you’ll be able to pay off your vacation over time, with no extra payments to interest.

In addition to looking for personal loans, consider a balance transfer credit card. You can find MagnifyMoney’s guide to the best balance transfer credit cards here, which is updated regularly.

Keep in mind that most of these cards provide the 0% APR as a limited-time offer and there’s a time limit. If you fail to repay your balance in full by the end of that promotion period, you’ll owe interest on what you charged to the card. Not managing your payments can cost you a tremendous amount, so charge your vacation to any credit card with caution.

You could seek out a low interest rate credit card instead, but these typically come from credit unions and are reserved for the institution’s members. It’s well worth looking into this option if you’re a member of a credit union or are considering opening an account with one in your area.

If you are wary of charging your family vacation on a credit card or are concerned about paying it off before the end of the 0% APR, then look into personal loans.

If You Have to Borrow, Here’s What You Need to Know

If you choose to seek out a personal loan for a vacation, you need to have good to excellent credit to be approved – and to get a low interest rate on the money you borrow. Getting the lowest interest rate possible is the only way a personal loan might be a viable financial solution for your trip.

None of the lenders below charge a pre-payment penalty, but some do charge origination fees – so don’t forget to factor that in to the total cost.

Earnest (From 6.99% to 18.24% APR): One of the few lenders with No origination fee and no pre-payment penalty, Earnest is an excellent choice for those with top-notch credit and employment history. Fixed rate personal loans start range from 6.99% to 18.24% APR and you can borrow up to $75,000.

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SoFi (fixed APR 5.99% – 16.24% with autopay): Similar to Earnest, SoFi also charges No origination fee, no pre-payment penalty and allows you to check your rate without harming your credit score. You can borrow a minimum of $5,000 and up to $100,000 from SoFi.

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LightStream (3.99% – 16.99% APR with AutoPay): is another lender that has No origination fee, but their interest rates run higher with the lowest starting at 3.99%. Similar to SoFi, you can borrow a minimum of $5,000 and up to $100,000. Unfortunately, there is no soft pull option and it will be a Hard Pull on your credit report to check if you’re eligible and determine your rate.

Karrot (6.44%APR): Karrot’s minimum APR is a bit lower than LightStream, but the company does charge an origination fee. This fee varies from 1.05% - 4.75% of the total loan. Karrot’s APR cap is also significantly higher than Earnest, SoFi and LightStream – which means you could end up borrowing at a rate closer to 30% APR.

Note: Karrot has suspended their personal loan program and are not currently offering new personal loans at this time. If you have an outstanding personal loan, Karrot states they are still servicing those accounts.

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Upstart (7.69% – 35.99% APR): Similar to Karrot, Upstart also charges an origination fee and has a higher maximum APR cap of 35.99% APR. The origination fee is a 0.00% - 8.00% APR on a loan up to $50,000. You can check your rate without it affecting your credit score.

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Be sure to shop around and get quotes from a number of companies, and then compare rates.

What to Do If You Have Poor Credit

The most difficult part of getting a personal loan from a reputable company for any purpose is getting approved as a borrower. Most companies require good to excellent credit scores before they’ll allow you to borrow funds.

But there are options if you have poor credit. Avant, One Main Financial, and FreedomPlus are lending options that are more lenient with borrowers. But beware: these loans will come with origination fees and much higher interest rates than what is available via companies like SoFi, Earnest, and Upstart.

Avant, for example, charges 9.95% to 35.99% APR on its loans. FreedomPlus’ loans come with an APR from 5.99% to 29.99%. Additionally, these products aren’t available in all states and rates may change depending on where you live. Avant branded credit products are issued by WebBank, member FDIC.

You can find more information on these companies by searching for their FAQ, Support, or Help pages. Before applying, you should understand all fees involved, whether or not you’ll be charged if you pay off your loan early, and what interest rates and APRs you’ll be charged.

Look into Alternatives to Borrowing Money

At the end of the day, getting a personal loan is an option for funding your vacation — but it may not be the best money move to make. Instead of borrowing money, whether through a loan or by charging costs to a credit card, make a plan to explore financially sound alternatives.

The best way to fund your travels is to create a plan and start a travel savings fund for the trip or vacation you want to take. Consider using banks that offer great interest rates on cash savings accounts, like the ones in this post all offering APY of 1.05% or higher.

Then plan your trip and get an idea of the total cost. Let’s say you want to take a trip in the next year or so and you know your vacation will cost you $5,000. By giving yourself 18 months to save, you can set a goal to transfer $278 per month to your travel savings fund.

That will allow you to pay for your trip yourself, without taking out loans or using credit cards and subsequently paying more in fees and interest charges.

Feel like you can’t wait that long for your vacation? Your next option is to look at how you can reduce costs and take a trip that fits in your budget right now. Some solutions may include taking a trip with other people and splitting the cost of things like accommodations, or looking for low-cost alternatives to your dream trip. Perhaps you can stay in hostels or use Airbnb to find cheap rooms instead of splurging at pricey hotels every night.

And you can still use credit cards in a smart, responsible way. You can maximize your current spending and rack up reward points for travel. Then, you can use those rewards and points to cover your vacation expenses instead of paying for all costs with cash.

Advertiser Disclosure: The products that appear on this site may be from companies from which MagnifyMoney receives compensation. This compensation may impact how and where products appear on this site (including, for example, the order in which they appear). MagnifyMoney does not include all financial institutions or all products offered available in the marketplace.

Kali Hawlk
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Kali Hawlk is a writer at MagnifyMoney. You can email Kali at [email protected]

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Health

What Does Medicare Really Cover?

Editorial Note: The editorial content on this page is not provided or commissioned by any financial institution. Any opinions, analyses, reviews, statements or recommendations expressed in this article are those of the author’s alone, and may not have been reviewed, approved or otherwise endorsed by any of these entities prior to publication.

Approaching retirement and curious to know how you’ll handle health care expenses? Medicare will likely play a role in helping you mitigate those costs in your golden years.

The federal government offers Medicare as an insurance program for permanently disabled Americans and those 65 or older. The Social Security Administration is responsible for funding the program, and most of its funding comes from a Medicare payroll tax you might have noticed on your pay stubs (it ranges from 1.45% to 3.8%, depending on your employment status and income level).

But what does Medicare actually cover? Read on for a quick overview.

Who’s Eligible for Medicare Coverage?

The majority of working Americans become eligible for Medicare coverage when they turn 65. You may also qualify if you’re younger and have been disabled for at least two years and receive Social Security benefits, if you receive kidney dialysis treatment, or if you are in end-stage renal failure.

In most cases, you’re automatically enrolled into Medicare once you start receiving Social Security payments. You need to opt out if you don’t want the coverage.

John K. Ross IV, an elder law attorney and partner at Ross & Shoalmire with multiple offices in Texas says eligibility is straightforward because it’s simply based on age. But the program does become much more complicated when you start digging into the details of what specific benefits make the most sense for you.

“Retirees need to make decisions around whether they’ll choose the traditional Medicare program versus Medicare Advantage,” he says. He adds that disputing Medicare’s coverage refusals is something most participants in the program will deal with at some point.

How Do You Enroll in Medicare Coverage?

You’ll be automatically enrolled into Medicare if you:

  • Already receive Social Security benefits
  • Are under 65 and are disabled, or have ALS
  • Receive benefits from the Railroad Retirement Board

But you need to sign up for Medicare if:

  • You don’t get Social Security benefits (which could be the case if you’re 65 or older but still working)
  • You have end-stage renal disease

If you need to manually apply, you can do so online here. You also have the option of going to your local Social Security office or calling to apply at 1-800-772-1213.

The Basics of What Medicare Really Covers (and What It Doesn’t)

The main part of Medicare is broken down into two parts: A and B.

What Medicare Part A Covers

It covers several broad categories of hospital care and services you receive while hospitalized.

That includes:

  • Hospital care limited to 90 days each benefit period and a lifetime reserve of 60 additional days for those who exhausted the initial 90 days coverage
  • Skilled nursing care
  • Home health services
  • Care in hospice for those with a life expectancy of less than six months

You can receive this coverage for free as long as you paid at least 10 years into Social Security.

“If you’re not eligible for free Part A coverage, the cost in 2017 is $413 per month if you paid into Medicare for less than 30 quarters while working,” says Desmond Henry, CFP® and founder of Afflora Financial Life Planning. “It costs $227 per month if you paid in between 30 and 39 quarters.”

What Medicare Part B Covers

Medicare Part B covers doctor’s visits and outpatient care. This can include medical equipment and physical therapy. It may cover some preventive care services, too, like screening for certain diseases including cancer and glaucoma.

Here’s a full list of what Part B provides for:

  • All outpatient services
  • Doctor’s visits and home health visits that don’t require a hospital stay
  • Medical equipment
  • Clinical research
  • Ambulance services
  • Durable medical equipment
  • Mental health and preventative services
  • Second option prior to surgery
  • Limited outpatient prescription drugs and drugs that cannot be self administered
  • Diagnostic tests

The costs for Part B are more complicated than Part A. “The standard Part B premium for 2017 is $134 per month, but this may be higher based upon your income level,” says Henry.

And as important as it is to understand what Medicare really covers, it’s also essential to know what the program does not offer to those on the plan.

“Medicaid does not pay for long-term care such as in-home sitters services, and assisted living and nursing-home costs,” says Ross.

Henry goes into even greater detail. “Medicare won’t pick up the tab for hearing aids, eye exams and glasses, and dental care,” he says.

Henry explains other services like cosmetic surgery and alternative medicine get excluded from coverage, too. “People don’t typically realize that Medicare generally does not cover medical expenses when you are outside the United States or territories, either,” he adds.

What Medicare Part C Covers

Medicare coverage gets more complicated when you look at additional parts of the program. There’s also Medicare Part C, which is also known as Medicare Advantage Plans.

Whereas Medicare is a program offered by the federal government, private insurance companies offer coverage with Medicare Advantage Plans (which the government still regulates).

Medicare Advantage must provide services that are comparable or “equivalent” to what’s covered by Medicare Parts A and B. Some Part C plans offer more services not included in traditional Medicare, including prescription drug coverage.

That might help you get the coverage you need if Medicare Parts A and B aren’t sufficient for you — but that also means there’s a huge variation between all the Medicare Part C plans available, both in terms of services provided as well as the costs of the plans.

Prices also depend on the state you live in, the provider you choose, and whether you choose an HMO or PPO plan. eHealthInsurance has a tool that can help you compare a variety of Medicare Advantage plans to see which one may work best for you.

Don’t Forget About Medicare Part D

Parts A and B of Medicare provide for both hospital care as well as outpatient services and doctor’s visits — but it doesn’t cover prescription drugs. That’s where Medicare Part D comes in.

Part D plans are also offered by private insurers and are separate policies from Medicare Parts A and B. Just like Part C coverage, Part D plans vary widely in what they cover and their costs.

What’s the Future for Medicare Under the Trump Administration?

The White House and Republicans in Congress have promised to repeal the Affordable Care Act and are in the process of proposing radical changes to the current health care system.

But most of the proposed changes affect Medicaid, not Medicare. There are proposals that would change the “funding mechanism” for the Medicare program, but beneficiaries are unlikely to feel those changes directly.

And there’s disagreement between the Trump administration and House Republicans over how Medicare should be handled moving forward. Trump has merely said he wouldn’t cut the program.

But Speaker Paul Ryan has talked about making the following changes:

  • Introducing exchanges to Medicare, allowing cartier jewelry replica private insurers to compete with the traditional, government-run program.
  • Providing subsidies to help people pay their premiums, based on income.
  • Requiring insurers to offer coverage to all to ensure everyone in Medicare retained access to benefits.

Again, this is all just talk for now. The House’s initial bill to change the Affordable Care Act failed to pass, and any suggested changes are a long way from implementation.

Advertiser Disclosure: The products that appear on this site may be from companies from which MagnifyMoney receives compensation. This compensation may impact how and where products appear on this site (including, for example, the order in which they appear). MagnifyMoney does not include all financial institutions or all products offered available in the marketplace.

Kali Hawlk
Kali Hawlk |

Kali Hawlk is a writer at MagnifyMoney. You can email Kali at [email protected]

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