According to one embodiment, the present invention relates to a method and a system for dynamically adjusting discount rates for a closed loop transaction. A computer implemented method for dynamically adjusting discount rates for a card transaction comprises the steps of identifying credit worthiness of at least one consumer; assigning a credit level to a line of credit associated with a credit product for the at least one consumer wherein the credit product is accepted at an identified one or more merchants; assigning a financing charge to the line of credit; determining a discount rate based at least in part on the credit worthiness of the at least one consumer; and applying the discount rate when at least one transaction is made with the credit product; wherein the applied discount rate is adjusted based on the credit worthiness of the at least one consumer.