Who’s The Real Winner? Understanding Card-Linked Offers

mfto/iStock/Getty Images

mfto/iStock/Getty Images

With the increased popularity of card-linked offers, we figured our rewards-savvy readers would like to learn more about them and why they’re an efficient way to maximize your spending. Our friends over at Kard specialize in card-linked offers and deals and even offer a tool that lets you find and compare these offers in real time while you’re shopping.

In the following guest post, Kard’s editorial team spells out how exactly how banks and merchants are making money from these offers – and how customers can save money by using them.

Have you ever wondered why credit card companies reward you for spending? If you’re like most, you’ve probably concluded that rewards incentivize users to spend credit they don’t intend to pay back on time. While this is the core business model for credit card companies, it is not the only reason these rewards exist; in fact, the new rewards model benefits more than just banks and consumers, and we’re here to explain how.

The Dodd Frank Act of 2010 limited the amount financial institutions could charge on interchange fees from debit cards, forcing them to make up over $14 billion in lost revenue. To do so, banks began trying to maximize the number of transactions their users made on credit cards; thus, the rise in credit card rewards. But this change also led to a new type of credit card reward. No longer were banks merely rewarding consumers for their category spending — 2X on dining, 3X on travel, 5X on groceries — they were now forming partnerships to put together hundreds of merchant-specific deals known as card-linked offers, or CLOs. These deals don’t only earn the credit card companies the interchange fee, but they also share a percentage of the sale as dictated by the terms of the agreement with each specific merchant partner. If you’ve shopped a deal through BankAmeriDeals, Discover Deals or Amex Offers, you’ve used a CLO.

Merchants are constantly trying to acquire new customers while retaining existing ones. CLOs not only offer consumer spending data for targeted marketing campaigns but also a fantastic mechanism for identifying and rewarding a brand’s most loyal customers. Retailers can now find the perfect customers to offer deals to, create a sale and maybe gain a customer for life. They can target customers who have previously shown appreciation for their brand, or simply purchased similar products in the past. Since more sales means more revenue for merchants, CLOs offer a way to increase overall sales while getting a better look into customers’ spending habits.

As the consumer, you get the savings and deals you love, minus the work of printing and saving coupons. Now with CLOs, you get either rewards points or cash back for simply being a smarter consumer. You’ve always had access to deals like these, but now the system is automated so all you have to do is add the deal and swipe your card. The value from CLOs is generally greater than category rewards, usually giving back a percentage of the purchase, or offering a hefty number of bonus points per dollar spent; expect rewards on the order of 15 percent to 30 percent.


So there you have it: a win-win-win for banks, merchants and consumers. Banks make up the missing interchange fees as well as earn a percentage of each CLO, merchants drive traffic and increase brand loyalty and consumers earn more rewards with little to no change to their typical shopping habits. What are you waiting for? Start spending saving!

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