Discover 2015 Annual Report Download - page 25

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Student Loans
The terms and conditions governing our student loans vary by product and are specified in the borrower's
promissory note and disclosures. Each borrower signs a promissory note and accepts the loan terms during the
application process. Student loans feature zero origination fees, fixed or variable interest rates, and potential rewards
for good grades. Student loans may include a deferment period, during which borrowers are not required to make
payments while enrolled in school at least half time. This period begins on the date the loan is first disbursed and ends
six to nine months after the borrower ceases to be enrolled in school at least half time. We also offer an optional "In-
School Payment" product that requires a student to make monthly payments while in school. The standard repayment
period is 15 to 20 years, depending on the type of student loan. Borrowers can choose to receive electronic
communications, in which case they will receive email notifications of the availability of their monthly billing statements
online. There is no prepayment penalty and borrowers may decide whether or not to apply any excess payments
toward their next monthly payments and advance their next due date.
We calculate interest on a daily basis on the outstanding principal loan balance until the loan is paid in full. The
interest rate will never be higher than 18%, as stated in the promissory note and disclosures. The variable interest rate
we offer, is equal to a variable index (e.g., based on the prime rate or London Interbank Offered Rate ("LIBOR") plus a
fixed margin assigned to the loan during origination. Variable interest rates may adjust quarterly if the index changes.
In certain circumstances, we may offer borrower assistance programs including forbearance periods of up to 12 months
over the life of the loan or short-term payment reductions. We accrue interest when loans are in forbearance or in other
payment assistance programs.
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. In certain circumstances, we may offer customers temporary and permanent assistance
programs, which may reduce payments, extend loan terms and/or reduce the interest rate on loan balances.
Home Equity Loans
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 insured by the Federal Deposit Insurance
Corporation (the "FDIC") 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 are primarily 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.