Discover 2011 Annual Report Download - page 20

8
Discover Card Terms and Conditions
The terms and conditions governing our credit card products vary by product and change over time. Each credit card
customer enters into a cardmember agreement governing the terms and conditions of the customer's account. Discover card's
terms and conditions are generally uniform from state to state. The cardmember agreement permits us, to the extent permitted
by law, to change any term of the cardmember agreement, including any finance charge, rate or fee, or add or delete any term of
the cardmember agreement, with notice to the customer as required by law. The customer has the right to opt out of certain
changes of terms and pay their balance off under the unchanged terms. Each cardmember agreement provides that the account
can be used for purchases, cash advances and balance transfers. Each Discover card account is assigned a credit limit when the
account is initially opened. Thereafter, individual credit limits may be increased or decreased from time to time, at our
discretion, based primarily on our evaluation of the customer's creditworthiness. We offer various features and services with the
Discover card accounts, including the Cashback Bonus rewards programs described under “ - Marketing - Rewards/Cashback
Bonus.”
All Discover card accounts generally have the same billing structure, though there are some differences between the
consumer and business credit cards. We generally send a monthly billing statement to each customer who has an outstanding
debit or credit balance. Customers also can waive their right to receive a physical copy of their bill, in which case they will
receive email notifications of the availability of their billing statement online. Discover card accounts are grouped into multiple
billing cycles for operational purposes. Each billing cycle has a separate billing date, on which we process and bill to customers
all activity that occurred in the related accounts during a period of approximately 28 to 32 days that ends on the billing date.
Discover card accounts are assessed periodic finance charges using fixed and/or variable interest rates. Certain account
balances, such as balance transfers, may accrue periodic finance charges at lower fixed rates for a specified period of time.
Variable rates are indexed to the highest prime rate published in The Wall Street Journal on the last business day of the month.
Periodic finance charges are calculated using the daily balance (including current transactions) method, which results in daily
compounding of periodic finance charges, subject to a grace period on new purchases. The grace period essentially provides
that periodic finance changes are not imposed on new purchases, or any portion of a new purchase, that is paid by the due date
on the customer's current billing statement if the customer paid the balance on their previous billing statement in full by the due
date on that statement. Neither cash advances nor balance transfers are subject to a grace period.
Each consumer with an outstanding debit balance on his or her Discover card account must generally make a minimum
payment each month. If a customer exceeds his or her credit limit as of the last day of the billing period, we may include all or
a portion of this excess amount in the customer's minimum monthly payment. A customer may pay the total amount due at any
time. We also may enter into arrangements with delinquent customers to extend or otherwise change payment schedules, and to
waive finance charges and/or fees, including re-aging accounts in accordance with regulatory guidance.
In addition to periodic finance charges, we may impose other charges and fees on Discover card accounts, including cash
advance transaction fees, late fees where a customer has not made a minimum payment by the required due date, balance
transfer fees and returned payment fees. We also charge fees each time we decline to honor a balance transfer check, cash
advance check, or other promotional check due to such reasons as insufficient credit availability, delinquency or default.
The Credit Card Accountability Responsibility and Disclosure Act of 2009 required us, beginning February 2011, to
review, every six months, certain interest rates that were increased on accounts since January 1, 2009 to determine whether to
reduce the interest rate based on the factors that prompted the increase or factors we currently consider in determining interest
rates applicable to similar new credit card accounts. The amount of any rate decrease must be determined based upon our
reasonable policies and procedures. Any reduced interest rate must be applied to the account not later than 45 days after
completion of the review.
Terms and conditions may vary for other products, such as the Discover business card and personal and student loans.
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