Yeah I discovered this a few months ago, just go to a tube ticket office with your oyster and your railcard, fill out a form, and the man will 'upgrade' your oyster card, so to speak. I know that whereas tube travel in zones 1-3 (where I live) would normally cost £5.60 or something, I always cap at £3.50, and maybe something like £2 for the bus only. So well worth it.