Discover 2010 Annual Report Download - page 17

delinquencies through controls within the authorizations system and criteria based account suspension and revocation. In
situations involving customers with financial difficulties, we may enter into arrangements to extend or otherwise change
payment schedules, lower their interest rates and/or waive fees to aid customers in becoming current on their obligations
to us.
Marketing
In addition to working with our credit risk management personnel on account acquisition and portfolio management,
our marketing group provides other key functions, including product development, management of our Cashback Bonus
and other rewards programs, fee product management, and brand and advertising management.
Product Development
In order to attract and retain customers and merchants, we continue to develop new products, features, and benefits
and market them through a variety of channels, including mail, phone and online. Targeted offers may include balance
transfers, fee products and reinforcement of our Cashback Bonus and other rewards programs. Through the development
of a large prospect database, use of credit bureau data and use of a customer contact strategy and management system,
we have been able to improve our modeling and customer engagement capabilities, which helps optimize product,
pricing and channel selection.
Rewards/Cashback Bonus
Under our Cashback Bonus program, we provide our credit card customers with up to 1% Cashback Bonus, based
upon their spending level and type of purchases. Customers earn 0.25% on their first $3,000 in annual purchases and
1% once their total annual purchases exceed $3,000. Purchases made at warehouse clubs and discount stores earn a
fixed Cashback Bonus of 0.25%.
Customers can choose from several card products that allow them to earn their rewards based on how they want to use
credit as set forth below.
•Discover More card offers 5% Cashback Bonus on purchases up to a specified amount, subject to certain limitations,
in large retail categories such as gasoline, grocery, restaurants, travel, department stores and home improvement
stores, that change throughout the year, and up to 1% unlimited Cashback Bonus on all other purchases.
•Discover Motiva card provides customers with Cashback Bonus as a reward for making on-time payments and up to
1% unlimited Cashback Bonus on all other purchases.
•Miles by Discover customers receive two miles for every $1 on the first $3,000 in travel and restaurant purchases
each year and one mile for every $1 on all other purchases.
•Escape by Discover customers earn two miles for every $1 on all purchases that can be redeemed for travel credits,
gift cards, cash or merchandise. This card has a $60 annual fee.
•Discover Open Road card customers can earn 2% Cashback Bonus on the first $250 in gas and restaurant
purchases each billing period and up to 1% Cashback Bonus on all other purchases.
•Discover Business card offers 5% Cashback Bonus on the first $2,000 in office supply purchases, 2% Cashback
Bonus on the first $2,000 in gas purchases and up to 1% unlimited Cashback Bonus on all other purchases each
year.
Customers who are not delinquent or otherwise disqualified may redeem their Cashback Bonus starting at $20 for
partner gift cards that turn their Cashback Bonus into bigger rewards, brand-name merchandise with free shipping,
Discover gift cards or a charitable donation to select charities. For customers who prefer cash, Cashback Bonus can be
redeemed starting at $50 in the form of a statement credit or direct deposit to a bank account in increments of $50.
Miles can be redeemed for travel credits starting at 10,000 miles, merchandise starting at 4,000 miles, partner gift
cards starting at 1,000 miles, Discover gift cards starting at 5,000 miles, cash in the form of statement credits or direct
deposit to a bank account starting at 5,000 miles or charitable donations starting at 5,000 miles.
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