Why I’m in No Rush to Get an American Express Target REDcard

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American Express Target REDcard.

The New American Express Target REDcard

As you may have heard, American Express is slowly rolling out its third alternative checking account product. The new American Express Target REDcard (Prepaid REDcard) uses the same backend system as both Bluebird and Serve, meaning each person can only have one.

Last week I created a chart comparing all of the limits and fees for the three different cards. While they are mostly the same, each card has its advantages. Here is a breakdown:

  • Bluebird – 2x Walmart Bucks with Savings Catcher (Until February 2015), Paper checks.
  • Serve – Online credit card loads (some reports of cash advance fees), higher limits with Softcard version.
  • REDcard – 5% off at Target, free shipping, extended return period.

A few days after I created that chart, the Frequent Miler reported that he was successfully able to load a REDcard at Target with his credit card. Currently Bluebird & Serve only allow you to load with cash or debit cards. As it stands, based on Frequent Miler’s reports, you can load $5,000 per month to REDcard with a credit card. That is huge!

Not Switching Yet

American Express Target REDcard

So why then am I not rushing to get this product? Well a few reasons.

Firstly, the REDcard has not rolled out to stores in my area. I am traveling soon and should be able to get one though, so this isn’t a huge factor. The main reason I am not rushing to get the card is that I don’t believe credit card loads will last very long.

The American Express Target REDcard is new and is slowly being rolled out to work out the kinks. I scoured through the documentation for the REDcard when I put together the comparison chart and it is clear that they do not intend to allow credit card loads. I believe this loophole will be closed very soon.

While switching from one card to the other isn’t too difficult, it is a process and one I am sure American Express doesn’t want to see happen over and over. I have already recently switched from Bluebird to Serve and don’t want to rock the boat too much by switching again so soon, especially if they fix the credit card loading and I want to go back.

American Express Target REDcard’s Advantages Are Not Unique

American Express Target REDcard vs Target Debit Card.
These benefits are not unique to the American Express Target REDcard. They also come with the Target Debit card and Target Credit card.

Finally, as I mentioned above, the only real benefits (other than the current credit card loads) of the American Express Target REDcard are 5% off, free shipping and an extended return period. All of those “features” can also be had if you get the no fee Target Debit Card. (Also called the REDcard. Confusing I know.) The Target credit card has these features as well.

If the discount and free shipping means that much to you, then just get the Target Debit Card. It doesn’t come with a fee and most importantly doesn’t require that you give up your Bluebird or Serve card. I personally don’t care too much about these benefits, but the option is there if you want it.

Remember also that 5% off really isn’t 5% off. You have to pay with the REDcard to get the discount, meaning you are foregoing points/miles that would be earned on a regular credit card. Since my local Target is classified as a big box store and doesn’t earn a category bonus, I would use my Barclay’s Arrival which gives 2.2% cash back. That 5% discount just became 2.8%. Something to think about.

There are a few drawbacks to the Target Debit Card. It can only be loaded from your checking account and you can only withdraw $40 at a time at Target stores. It doesn’t work at normal ATMs. This obviously isn’t a tool for M.S., but it comes with the same three key features of the American Express Target REDcard. If those are important, then why not get it instead?

Conclusion

As we sit right now, it remains to be seen how long credit card loads will work for the American Express Target REDcard. We also don’t know how banks are going to classify Serve online credit card loads going forward, since many are charging cash advance fees.

At this point I am going to sit back and wait, but if they close the credit card load glitch, then my opinion is that the American Express Target REDcard is the weakest of the three products. For that reason I will hold off for now.


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7 COMMENTS

  1. I think the 5% off really is 5% off because say you are going to buy $100 worth of stuff. If you load your redbird with $100 using your Barclay card you still get 2.2% then when you buy the $100 worth of stuff you’ll get your 5% discount. Anything wrong with this example?

  2. It’s so tempting to just try and jump on every opportunity that comes along. Thanks for offering some perspective, Shawn.

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