So anyway, the Target debit card - not surprisingly - is a way to better track customers and get better data. Some people find this invasive. The reality is if you use a credit card at Target routinely they can track you in the exact same way anyway. Basically if you shop with anything other than cash at Target you are being tracked and data-based. So some would say you might as well get 5% for being tracked...
I have had the Target debit card for a few years and I love it, and part of the reason it's awesome is just what fiveoclockshadow pointed out--they figure out what you buy,
and they give you coupons for it. My register coupons are usually really great for me, and they mail out coupons that are relevant, as well. So not only do you save the 5%, you can end up saving much more.
Also, two additional notes:
1) I like that having the Red Card extends my ability to return items (I think it's 90 days for Red Card purchases vs. 45 days for non-Red Card purchases), and even return them without a receipt. They just swipe my card and and it's an instant return.
2) If you don't already use the Target Cartwheel app, the savings from the app stack with the Red Card savings and coupons, so you can often save much more. They put a lot of their own Up & Up branded household items (stuff you'd buy anyway: toilet paper, dish soap, cleaning products, etc.) on Cartwheel, so that makes these even cheaper.
I don't really care about the purchases not hitting my bank for a couple of days. It's kind of like paying with a check, just wait it out and you're fine.