Discover 2014 Annual Report Download - page 24

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Personal Loans
The terms and conditions governing personal loans are set at the time the loan is accepted and generally do not
change for the life of the loan. Personal loan account terms and conditions are generally uniform from state to state. All
personal loan accounts generally have the same billing structure. Customers receive monthly statements approximately
20 days prior to payment due dates. The statement provides detail on all transactions processed since the last statement
was generated, as well as a summary of the current amount due. Customers also can waive their right to receive
physical copies of their bills, in which case they will receive email notifications of the availability of their billing
statements online. Personal loan accounts are assessed periodic finance charges using simple interest. We may impose
other charges, including late charges when a customer has not made a minimum payment by the required due date
and a returned check charge. There is no prepayment penalty for repaying a personal loan balance in full prior to the
scheduled maturity date.
Home Loans and Home Equity Loans
We offer prime adjustable, fixed-rate conforming, jumbo, FHA and VA first lien home loans to qualified
applicants. The terms of the loan are set at closing. Substantially all funded loans and the related loan servicing rights
are sold to investors in the secondary market, generally within 30 days of funding.
Home equity loans are fixed-rate loans that carry a monthly payment over the term of the loan and are secured
by a first or second lien on a customer's home. The terms of the loan are set at closing. Customers are sent monthly
statements 20 days in advance of the payment due date. The statements provide the customer the allocation of any
payments made since the last billing date as well as the payment due on the next scheduled payment date. The
customer has the ability to view their account information as well as make payments online through the account center.
Customers are also subject to additional charges, including late fees and returned payment charges. The customer has
the ability to make larger than minimum payments on the loans and early payoffs are not subject to a prepayment
penalty.
Deposits
We offer four main types of deposit products directly to consumers on a national basis: certificates of deposit,
savings accounts, money market and checking accounts, though at the current time we are offering checking accounts
only to existing credit card or deposit customers. All of these deposits are FDIC insured to the maximum permitted by
law. Interest is compounded daily and credited to each account on a monthly basis, using the daily balance method.
We do not pay interest generally on checking account balances, but instead offer cashback rewards for certain
transactions. We offer a range of ownership options, including single, joint, trust and custodial. Deposit accounts may
be funded through electronic funds transfer, check or wire transfer. Customers may service their accounts through a
variety of convenient methods, including online at www.discoverbank.com, mobile and tablet device applications, and
by telephone.
Certificates of deposit are offered on a full range of tenors from three months through 10 years with interest rates
that are fixed for the full period. We provide automatic renewal along with options on reinvestment or disbursement of
interest. There are minimum balance requirements to open certificates of deposit and penalties for early withdrawals.
Money market accounts are transactional accounts with minimum balance requirements. Money market account funds
may be accessed through electronic funds transfer, checks, wire transfer and debit cards. Savings accounts may be
accessed through electronic funds transfer, wire transfer and official checks. Money market accounts and savings
accounts have limitations on withdrawal frequency, as required by law. Interest rates on money market accounts and
savings accounts are subject to change at any time. Fees apply to some transactions, and availability of funds varies
based on product and method of funding.
We also issue certificates of deposit through select contracted brokerage firms. All of these deposits are also FDIC
insured to the maximum allowed by law. All settlements occur through the Depository Trust Company. Tenors issued,
interest and commission rates are determined weekly with tenor issuances of five months to ten years. Simple interest is
applied to brokered certificates of deposit. At any given time, we may choose to not issue these certificates of deposit or
to issue only certain tenors in a given week. Early redemption of these certificates occurs only in the event of death or
adjudication of incompetence. We have also entered into several third-party agreements which provide structured
sweep deposit balances.