Instant discount reward systems

Instant discounts are a reward system that is increasingly being used by credit cards, particularly those that are tied to brands.

The predominant rewards scheme that is used by credit card companies is to base rewards on a points system.  This means that for every dollar spent on a card then there will be a certain amount of rewards points.  These rewards are then redeemed against goods that are offered for a certain amount of points.

Sometimes there are two or three tiers to the rewards program.  For example there may be one rate for all purchases.  There is then another tier for the brand that is behind the card.  There may be a third tier for special offers.

This system is criticized as being reasonably slow, and so people who spend on cards can take a while before choosing and receiving their rewards.  They can also be seen as too complex with differing rules for building up and redeeming points.

Instant discounts rewards programs deal with these issues.  In essence this sort of rewards program will give discounts immediately whenever the card is used in certain locations.  Unlike a cash back credit card it cannot get the reward anywhere, but only in a certain amount of limited outlets.  However there is a far larger discount than would be had with a cash back card.

The first cards that used instant discounts extensively were store cards.  These cards are cards that are issued by big name stores, and they tend to have some of the highest interest rates on the credit card market.  However they also tend to have some of the best discounts on the market.
One of the ways in which rewards are given out is through instant discounts on goods if they are paid for with the card.  This can either be as a sign up discount or as an ongoing reward with the card.

Although store cards have used this particular rewards method for years, they have tended to be alone as more widely distributed bank cards have been wedded to points based rewards systems.

A number of banks have recently tied up with some brands and offered instant rewards programs.  This has helped both the card issuer, who has a more compelling reason to sell the card and the company that is making the consumer offer, who can attract more clients.