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TD Bank Target REDCard – permanent coupon or security hazard?

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The TD Bank Target REDCard store credit card has been in some hot water lately. Does this mean you should avoid it? Why would you want to use a store card anyway? What are the benefits of using it if you do? These are some of the pointy issues that this review is going to attempt to address.

You may be familiar with the controversy of the winter season of 2013-2014 that surrounds the TD Bank Target REDCard. Hackers broke into the database and stole the financial information of tens-of-millions of customers. This kind of hacking, and the fraudulent charges that may result from it, are the very thing that consumers fear most about sharing their financial information in return for credit.

Target Outsourced Financial Services To TD Bank

In the fall of 2012 Target sold its loan and card portfolio to TD Bank, the American subsidiary of The Toronto-Dominion Bank of Canada, who one of the ten largest financial services companies in North America. This is a fairly common financial arrangement these days, as corporations attempt to focus on the activities that are most relevant to their businesses overall. This means that all Target cards and visa cards are now managed by TD Bank.

Companies do this sort of thing because they believe, probably correctly, that it will be more cost effective if they leave financial services to banks and sticking to their core businesses that have enable them to grow into nationally recognized brands. This appears to be the reasoning that Target followed when they sold their consumer loan portfolio and card services operation to TD Bank. The U.S. based financial services subsidiary of Toronto-Dominion Bank of Canada, TD Bank Group and its subsidiaries are the sixth largest bank in North America and, at that time, this was probably a winning move for both the bank and Target.

How Target Became A Target

The news came out drip-by-drip that up to 70 million customers of Target had their personal information stolen by hackers. After an initially slow and clumsy response Target has promised that customers will not be liable for any fraudulent activity on their TD Bank Target REDCards and has also arranged free credit monitoring with Experian.

I refuse to indulge in any more target related puns, you’ll be glad to read, because this is something that could have happened to many of the banks and financial services companies that offer consumer credit cards. Possibly, Target was picked because it had so many customers. The solution will be implemented slowly across the entire U.S. market beginning in late 2015.

The fact that the TD Bank Target REDCard database was hacked may or may not have something to do with their security policies. However this could happen to many other retailers and will continue to happen until the US is completely switched over to chipped cards, replacing the much more vulnerable magnetic strip cards presently in use.

The difference from magnetic strip cards is that the chip cards encrypt your card number and pin. Only you and your bank see it as it passes through an electronic point of sale system. This transition is due to take place in late 2015. Until that time, all card use is vulnerable. The best solution is to take advantage of the credit monitoring and watch your account statement for any suspicious activity.

The TD Bank Target REDCard Rewards & Benefits

Rewards are a simple, 5% savings on store purchases with an extra 30 days on the returns period. There is no initial offer or redemption process for the TD Bank Target REDCard it’s entirely up-front. There are no balance transfer options or any other such features it’s just a store card that gives additional discount. This makes it a competitive retail users card for one of the largest store brands in the United States. The APR is 22.90% as of this writing, check the rates and fees at the time you apply, if you decide to do so.

Free Credit monitoring with identity theft protection for all guests who’ve shopped at their U.S. stores. The impact of the recent data breach on the TD Bank Target REDCard has sent them scrambling to provide answers and peace of mind to customers. They have arranged with Experian to provide credit monitoring for all their card members at no charge. They are also promising zero liability for fraudulent charges that might be made on a card if it does in fact get duplicated and used. This doesn’t stop thieves from opening other accounts in your name of course but it’s a good faith effort to reassure their customers that they are trying to put the problem behind them.

A Middle of The Road Review

On credit karma 96 reviews of the TD Bank Target REDCard, with 32% as four to five stars and 68% one to three stars. The average rating for the TD Bank Target REDCard, on creditkarma.com, is just 2.5 stars. The biggest reason for complaints seems to be that they are very reluctant to increase credit limits. This may be a good policy for Target as it limits the utilization levels of enough customers to reduce risk. The fallout is that they get negative reviews. This may be a consideration for the long-term, as you might want to use it for holiday season shopping but as with many of the reviewers, find your limit restricts your spending.

The TD Bank Target REDCard is useful for getting the extra 5% discount on purchases at Target stores. The security breach is unsettling of course but this could happen to many other cards and probably will before security measures are in place nationally. Target has taken steps to prevent the worst outcome for customers by offering free credit monitoring through Experian and guaranteeing zero liability for fraudulent charges on the card. If you do much of your shopping at Target and you want a modest line of credit as well as the discount then you might be willing to sign up for the TD Bank Target REDCard.

 

 

 

 

 

 

 

 

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