It does not appear that Target's credit card portfolio is out of line with its historic norms. Target has always had a credit card portfolio that is among the riskiest in the business, and this is built into the company's cost structure. Target knows that a relatively high percentage of total loans will be written off, but it makes provision for that, and as a result it has never reported losses greater than expected. Thus, the current policy does not seem to be anything particularly different.
The other factor is the timing of the concern, which was at the outset of the recession in 2008. At that time it was believe that Target should reduce its loans because more customers were going to struggle to repay them. The strategy that Target took, however, is somewhat the opposite. By extending credit, it would be able to engender greater brand loyalty among existing customers and also to attract new customers who would be otherwise unable to shop elsewhere. It is worth noting that Kmart enacted a similar strategy with its credit products as the result of the recession. Target's approach has not created too much trouble for the company, and its ability to identify good people to which to lend money does not appear to have waned. If that confuses some analysts, so be it. Target sometimes lends to riskier customers, but it has priced that into its credit policy.