10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

☒    QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2023

☐    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from                    to 

Commission File Number 001-33378

DISCOVER FINANCIAL SERVICES

(Exact name of registrant as specified in its charter) 

Delaware

(State or other jurisdiction of incorporation or organization)

36-2517428

(I.R.S. Employer Identification No.)

2500 Lake Cook Road, Riverwoods, Illinois 60015

(Address of principal executive offices, including zip code)

(224) 405-0900

(Registrant's telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act
Title of each class	Trading symbol(s)	Name of each exchange on which registered
Common Stock, par value $0.01 per share	DFS	New York Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes  ☒    No  ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).     Yes  ☒    No  ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of "large accelerated filer," "accelerated filer," "smaller reporting company," and "emerging growth company" in Rule 12b-2 of the Exchange Act.

Large Accelerated Filer	☒	Accelerated Filer	☐
Non-accelerated Filer	☐	Smaller Reporting Company	☐
		Emerging Growth Company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes  ☐    No  ☒

As of July 21, 2023, there were 249,947,996 shares of the registrant's Common Stock, par value $0.01 per share, outstanding.

DISCOVER FINANCIAL SERVICES

Quarterly Report on Form 10-Q for the quarterly period ended June 30, 2023

TABLE OF CONTENTS

Part I	FINANCIAL INFORMATION
Item 1.	Financial Statements	1
Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	48
Item 3.	Quantitative and Qualitative Disclosures about Market Risk	72
Item 4.	Controls and Procedures	73
Part II	OTHER INFORMATION
Item 1.	Legal Proceedings	75
Item 1A.	Risk Factors	75
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	75
Item 3.	Defaults Upon Senior Securities	76
Item 4.	Mine Safety Disclosures	76
Item 5.	Other Information	76
Item 6.	Exhibits	76

Except as otherwise indicated or unless the context otherwise requires, "Discover Financial Services," "Discover," "DFS," "we," "us," "our," and "the Company" refer to Discover Financial Services and its subsidiaries. See Glossary of Acronyms, located after Part I — Item 4, for terms and abbreviations used throughout the quarterly report.

We own or have rights to use the trademarks, trade names and service marks that we use in conjunction with the operation of our business, including, but not limited to Discover®, PULSE®, Cashback Bonus®, Discover Cashback Checking®, Discover it®, Freeze it®, College Covered® and Diners Club International®. All other trademarks, trade names and service marks included in this quarterly report on Form 10-Q are the property of their respective owners.

Part I.    FINANCIAL INFORMATION

Item 1.    Financial Statements

DISCOVER FINANCIAL SERVICES

Condensed Consolidated Statements of Financial Condition (unaudited)

(dollars in millions, except for share amounts)

	June 30, 2023		December 31, 2022
Assets
Cash and cash equivalents	$	8,605	$	8,856
Restricted cash	39		41
Investment securities (includes available-for-sale securities of $13,221 and $11,987 reported at fair value with associated amortized cost of $13,478 and $12,167 at June 30, 2023 and December 31, 2022, respectively)	13,466		12,208
Loan receivables
Loan receivables	117,906		112,120
Allowance for credit losses	(8,064)		(7,374)
Net loan receivables	109,842		104,746
Premises and equipment, net	1,053		1,003
Goodwill	255		255
Other assets	4,822		4,597
Total assets	$	138,082	$	131,706
Liabilities and Stockholders' Equity
Liabilities
Deposits
Interest-bearing deposit accounts	$	97,630	$	90,151
Non-interest bearing deposit accounts	1,357		1,485
Total deposits	98,987		91,636
Long-term borrowings	20,276		20,108
Accrued expenses and other liabilities	4,963		5,618
Total liabilities	124,226		117,362
Commitments, contingencies and guarantees (Notes 9, 12 and 13)
Stockholders' Equity
Common stock, par value $0.01 per share; 2,000,000,000 shares authorized; 570,627,982 and 569,689,007 shares issued at June 30, 2023 and December 31, 2022, respectively	6		6
Preferred stock, par value $0.01 per share; 200,000,000 shares authorized; 10,700 shares issued and outstanding at June 30, 2023 and December 31, 2022, respectively	1,056		1,056
Additional paid-in capital	4,508		4,468
Retained earnings	29,761		28,207
Accumulated other comprehensive loss	(470)		(339)
Treasury stock, at cost; 320,683,942 and 302,305,216 shares at June 30, 2023 and December 31, 2022, respectively	(21,005)		(19,054)
Total stockholders' equity	13,856		14,344
Total liabilities and stockholders' equity	$	138,082	$	131,706

The table below presents the carrying amounts of certain assets and liabilities of Discover Financial Services' consolidated variable interest entities ("VIEs"), which are included in the condensed consolidated statements of financial condition above. The assets in the table below include those assets that can only be used to settle obligations of the consolidated VIEs. The liabilities in the table below include third-party liabilities of consolidated VIEs only and exclude intercompany balances that eliminate in consolidation. The liabilities also exclude amounts for which creditors have recourse to the general credit of Discover Financial Services.

	June 30, 2023		December 31, 2022
Assets
Restricted cash	$	39	$	41
Loan receivables	$	25,165	$	25,937
Allowance for credit losses allocated to securitized loan receivables	$	(1,109)	$	(1,152)
Other assets	$	3	$	3
Liabilities
Long-term borrowings	$	11,216	$	10,259
Accrued expenses and other liabilities	$	16	$	14

See Notes to the Condensed Consolidated Financial Statements.

1

DISCOVER FINANCIAL SERVICES

Condensed Consolidated Statements of Income (unaudited)

(dollars in millions, except for share amounts)

	For the Three Months Ended June 30,				For the Six Months Ended June 30,
	2023		2022		2023		2022
Interest income
Credit card loans	$	3,466	$	2,424	$	6,787	$	4,692
Other loans	606		439		1,170		867
Investment securities	106		33		207		69
Other interest income	112		19		203		23
Total interest income	4,290		2,915		8,367		5,651
Interest expense
Deposits	905		174		1,661		313
Short-term borrowings	—		—		—		1
Long-term borrowings	208		131		397		248
Total interest expense	1,113		305		2,058		562
Net interest income	3,177		2,610		6,309		5,089
Provision for credit losses	1,305		549		2,407		703
Net interest income after provision for credit losses	1,872		2,061		3,902		4,386
Other income
Discount and interchange revenue, net	370		379		700		688
Protection products revenue	44		42		87		86
Loan fee income	186		142		352		282
Transaction processing revenue	72		61		139		118
Gains (losses) on equity investments	1		(42)		(17)		(204)
Other income	28		21		50		45
Total other income	701		603		1,311		1,015
Other expense
Employee compensation and benefits	588		515		1,213		1,015
Marketing and business development	268		254		509		446
Information processing and communications	150		121		289		246
Professional fees	216		189		448		366
Premises and equipment	20		24		42		48
Other expense	162		120		286		232
Total other expense	1,404		1,223		2,787		2,353
Income before income taxes	1,169		1,441		2,426		3,048
Income tax expense	268		338		557		712
Net income	$	901	$	1,103	$	1,869	$	2,336
Net income allocated to common stockholders	$	895	$	1,097	$	1,826	$	2,293
Basic earnings per common share	$	3.54	$	3.93	$	7.09	$	8.13
Diluted earnings per common share	$	3.54	$	3.93	$	7.09	$	8.12

See Notes to the Condensed Consolidated Financial Statements.

2

DISCOVER FINANCIAL SERVICES

Condensed Consolidated Statements of Comprehensive Income (unaudited)

(dollars in millions)

	For the Three Months Ended June 30,				For the Six Months Ended June 30,
	2023		2022		2023		2022
Net income	$	901	$	1,103	$	1,869	$	2,336
Other comprehensive loss, net of tax
Unrealized losses on available-for-sale investment securities, net of tax	(151)		(41)		(59)		(162)
Unrealized (losses) gains on cash flow hedges, net of tax	(84)		3		(72)		5
Other comprehensive loss	(235)		(38)		(131)		(157)
Comprehensive income	$	666	$	1,065	$	1,738	$	2,179

See Notes to the Condensed Consolidated Financial Statements.

3

DISCOVER FINANCIAL SERVICES

Condensed Consolidated Statements of Changes in Stockholders' Equity (unaudited)

(dollars in millions, shares in thousands)

							Additional Paid-in Capital		Retained Earnings		Accumulated Other Comprehensive Loss		Treasury Stock		Total Stockholders' Equity
	Preferred Stock			Common Stock
	Shares	Amount		Shares	Amount
For the Three Months Ended June 30, 2022
Balance at March 31, 2022	11	$	1,056	569,504	$	6	$	4,390	$	25,596	$	(213)	$	(17,639)	$	13,196
Net income	—	—		—	—		—		1,103		—		—		1,103
Other comprehensive loss	—	—		—	—		—		—		(38)		—		(38)
Purchases of treasury stock	—	—		—	—		—		—		—		(601)		(601)
Common stock issued under employee benefit plans	—	—		27	—		3		—		—		—		3
Common stock issued and stock-based compensation expense	—	—		33	—		24		—		—		—		24
Dividends — common stock ($0.60 per share)	—	—		—	—		—		(168)		—		—		(168)
Balance at June 30, 2022	11	$	1,056	569,564	$	6	$	4,417	$	26,531	$	(251)	$	(18,240)	$	13,519
For the Three Months Ended June 30, 2023
Balance at March 31, 2023	11	$	1,056	570,460	$	6	$	4,493	$	29,037	$	(235)	$	(20,297)	$	14,060
Net income	—	—		—	—		—		901		—		—		901
Other comprehensive loss	—	—		—	—		—		—		(235)		—		(235)
Purchases of treasury stock	—	—		—	—		—		—		—		(708)		(708)
Common stock issued under employee benefit plans	—	—		29	—		3		—		—		—		3
Common stock issued and stock-based compensation expense	—	—		139	—		12		—		—		—		12
Dividends — common stock ($0.70 per share)	—	—		—	—		—		(177)		—		—		(177)
Balance at June 30, 2023	11	$	1,056	570,628	$	6	$	4,508	$	29,761	$	(470)	$	(21,005)	$	13,856

See Notes to the Condensed Consolidated Financial Statements.

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							Additional Paid-in Capital		Retained Earnings		Accumulated Other Comprehensive Loss		Treasury Stock		Total Stockholders' Equity
	Preferred Stock			Common Stock
	Shares	Amount		Shares	Amount
For the Six Months Ended June 30, 2022
Balance at December 31, 2021	11	$	1,056	568,831	$	6	$	4,369	$	24,538	$	(94)	$	(16,695)	$	13,180
Net income	—	—		—	—		—		2,336		—		—		2,336
Other comprehensive loss	—	—		—	—		—		—		(157)		—		(157)
Purchases of treasury stock	—	—		—	—		—		—		—		(1,545)		(1,545)
Common stock issued under employee benefit plans	—	—		49	—		5		—		—		—		5
Common stock issued and stock-based compensation expense	—	—		684	—		43		—		—		—		43
Dividends — common stock ($1.10 per share)	—	—		—	—		—		(312)		—		—		(312)
Dividends — Series C preferred stock ($2,750 per share)	—	—		—	—		—		(16)		—		—		(16)
Dividends — Series D preferred stock ($3,062.50 per share)	—	—		—	—		—		(15)		—		—		(15)
Balance at June 30, 2022	11	$	1,056	569,564	$	6	$	4,417	$	26,531	$	(251)	$	(18,240)	$	13,519
For the Six Months Ended June 30, 2023
Balance at December 31, 2022	11	$	1,056	569,689	$	6	$	4,468	$	28,207	$	(339)	$	(19,054)	$	14,344
Cumulative effect of ASU No. 2022-02 adoption	—	—		—	—		—		52		—		—		52
Net income	—	—		—	—		—		1,869		—		—		1,869
Other comprehensive loss	—	—		—	—		—		—		(131)		—		(131)
Purchases of treasury stock	—	—		—	—		—		—		—		(1,951)		(1,951)
Common stock issued under employee benefit plans	—	—		58	—		6		—		—		—		6
Common stock issued and stock-based compensation expense	—	—		881	—		34		—		—		—		34
Dividends — common stock ($1.30 per share)	—	—		—	—		—		(336)		—		—		(336)
Dividends — Series C preferred stock ($2,750 per share)	—	—		—	—		—		(16)		—		—		(16)
Dividends — Series D preferred stock ($3,062.50 per share)	—	—		—	—		—		(15)		—		—		(15)
Balance at June 30, 2023	11	$	1,056	570,628	$	6	$	4,508	$	29,761	$	(470)	$	(21,005)	$	13,856

See Notes to the Condensed Consolidated Financial Statements.

5

DISCOVER FINANCIAL SERVICES

Condensed Consolidated Statements of Cash Flows (unaudited)

(dollars in millions)

	For the Six Months Ended June 30,
	2023		2022
Cash flows provided by operating activities
Net income	$	1,869	$	2,336
Adjustments to reconcile net income to net cash provided by operating activities:
Provision for credit losses	2,407		703
Deferred income taxes	(269)		(145)
Depreciation and amortization	248		279
Amortization of deferred revenues	(215)		(162)
Net losses on investments and other assets	37		226
Other, net	51		48
Changes in assets and liabilities:
Increase in other assets	(18)		(262)
(Decrease) increase in accrued expenses and other liabilities	(812)		323
Net cash provided by operating activities	3,298		3,346
Cash flows provided by (used for) investing activities
Maturities of available-for-sale investment securities	905		1,160
Purchases of available-for-sale investment securities	(2,163)		—
Maturities of held-to-maturity investment securities	8		22
Purchases of held-to-maturity investment securities	(33)		(27)
Net change in principal on loans originated for investment	(7,362)		(6,290)
Proceeds from the sale of other investments	4		216
Purchases of other investments	(34)		(115)
Purchases of premises and equipment	(158)		(99)
Net cash used for investing activities	(8,833)		(5,133)
Cash flows provided by (used for) financing activities
Net change in short-term borrowings	—		50
Net change in deposits	7,327		4,007
Proceeds from issuance of securitized debt	2,237		2,635
Maturities and repayment of securitized debt	(1,185)		(2,561)
Maturities and repayments of other long-term borrowings	(803)		(322)
Proceeds from issuance of common stock	6		5
Purchases of treasury stock	(1,933)		(1,545)
Dividends paid on common and preferred stock	(367)		(343)
Net cash provided by financing activities	5,282		1,926
Net (decrease) increase in cash, cash equivalents and restricted cash	(253)		139
Cash, cash equivalents and restricted cash, at the beginning of the period	8,897		11,332
Cash, cash equivalents and restricted cash, at the end of the period	$	8,644	$	11,471
Reconciliation of cash, cash equivalents and restricted cash
Cash and cash equivalents	$	8,605	$	11,439
Restricted cash	39		32
Cash, cash equivalents and restricted cash, at the end of the period	$	8,644	$	11,471

See Notes to the Condensed Consolidated Financial Statements.

6

Notes to the Condensed Consolidated Financial Statements

(unaudited)

1.    Background and Basis of Presentation

Description of Business

Discover Financial Services ("DFS" or the "Company") is a digital banking and payment services company. The Company is a bank holding company under the Bank Holding Company Act of 1956 and a financial holding company under the Gramm-Leach-Bliley Act. Therefore, the Company is subject to oversight, regulation and examination by the Board of Governors of the Federal Reserve System (the "Federal Reserve"). The Company provides digital banking products and services and payment services through its subsidiaries. The Company offers its customers credit card loans, private student loans, personal loans, home loans and deposit products. The Company also operates the Discover Network, the PULSE network ("PULSE") and Diners Club International ("Diners Club"), collectively known as the Discover Global Network. The Discover Network processes transactions for Discover-branded credit and debit cards and provides payment transaction processing and settlement services. PULSE operates an electronic funds transfer network, providing financial institutions issuing debit cards on the PULSE network with access to ATMs domestically and internationally, as well as merchant acceptance throughout the United States of America ("U.S.") for debit card transactions. Diners Club is a global payments network of licensees, which are generally financial institutions, that issue Diners Club branded credit and charge cards and/or provide card acceptance services.

The Company manages its business activities in two segments, Digital Banking and Payment Services, based on the products and services provided. See Note 16: Segment Disclosures for a detailed description of each segment's operations and the allocation conventions used in business segment reporting.

Basis of Presentation

The accompanying condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the U.S. ("GAAP") for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by GAAP for complete consolidated financial statements. In the opinion of management, the financial statements reflect all adjustments necessary for the fair presentation of results for the interim period. All such adjustments are of a normal, recurring nature. The preparation of financial statements in conformity with GAAP requires the Company to make estimates and assumptions that affect the amounts reported in the condensed consolidated financial statements and related disclosures. These estimates are based on information available as of the date of the condensed consolidated financial statements. The Company believes that the estimates used in the preparation of the condensed consolidated financial statements are reasonable. Actual results could differ from these estimates. These interim condensed consolidated financial statements should be read in conjunction with the Company's 2022 audited consolidated financial statements filed with the Company's annual report on Form 10-K for the year ended December 31, 2022.

Immaterial Restatement of Prior Period Financial Statements

Beginning around mid-2007, the Company incorrectly classified certain credit card accounts into its highest merchant and merchant acquirer pricing tier. The Company determined the revenue impact of the incorrect card product classification was immaterial to the consolidated financial statements for all impacted prior periods. For comparative purposes, the Company has made these corrections to the consolidated financial statements for the prior periods presented in this Form 10-Q. Additionally, prior period amounts in the applicable notes to the consolidated financial statements have been corrected. The impacts of the misclassification and subsequent corrections are contained entirely within the Digital Banking segment. See Note 18: Immaterial Restatement of Prior Period Financial Statements for additional information and quantification of the prior period restatement impacts.

Recently Issued Accounting Pronouncement (Not Yet Adopted)

In March 2023, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2023-02, Investments—Equity Method and Joint Ventures (Topic 323): Accounting for Investments in Tax Credit Structures Using the Proportional Amortization Method. The ASU expands the use of the proportional amortization method of accounting for tax credit investments. Currently, the method is limited to Low Income Housing Tax Credit investments. Under the amended guidance, use of proportional amortization will be available to any qualifying tax credit investments, including but not limited to investments in New Markets Tax Credit and Renewable Energy Tax Credit programs. The

7

amendments in the ASU are to be applied on a retrospective or modified retrospective basis. The ASU is effective for the Company on January 1, 2024. Management does not expect the amendments to have a material impact on the Company’s consolidated financial statements.

2.    Investments

The Company's investment securities consist of the following (dollars in millions):

	June 30, 2023		December 31, 2022
U.S. Treasury(1) and U.S. GSE(2) securities	$	12,714	$	11,423
Residential mortgage-backed securities - Agency(3)	752		785
Total investment securities	$	13,466	$	12,208

(1)Includes $292 million and $97 million of U.S. Treasury securities pledged as swap collateral as of June 30, 2023 and December 31, 2022, respectively.

(2)Consists of a security issued by the Federal Home Loan Bank.

(3)Consists of securities issued by Fannie Mae, Freddie Mac, or Ginnie Mae.

The amortized cost, gross unrealized gains and losses and fair value of available-for-sale and held-to-maturity investment securities are as follows (dollars in millions):

	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value
At June 30, 2023
Available-for-Sale Investment Securities(1)
U.S. Treasury and U.S. GSE securities	$	12,947	$	5	$	(238)	$	12,714
Residential mortgage-backed securities - Agency	531		—		(24)		507
Total available-for-sale investment securities	$	13,478	$	5	$	(262)	$	13,221
Held-to-Maturity Investment Securities(2)
Residential mortgage-backed securities - Agency(3)	$	245	$	—	$	(21)	$	224
Total held-to-maturity investment securities	$	245	$	—	$	(21)	$	224
At December 31, 2022
Available-for-Sale Investment Securities(1)
U.S. Treasury and U.S. GSE securities	$	11,580	$	21	$	(178)	$	11,423
Residential mortgage-backed securities - Agency	587		—		(23)		564
Total available-for-sale investment securities	$	12,167	$	21	$	(201)	$	11,987
Held-to-Maturity Investment Securities(2)
Residential mortgage-backed securities - Agency(3)	$	221	$	—	$	(22)	$	199
Total held-to-maturity investment securities	$	221	$	—	$	(22)	$	199

(1)Available-for-sale investment securities are reported at fair value.

(2)Held-to-maturity investment securities are reported at amortized cost.

(3)Amounts represent residential mortgage-backed securities ("RMBS") that were classified as held-to-maturity as they were entered into as a part of the Company's community reinvestment initiatives.

The Company invests in U.S. Treasury obligations and securities issued by government agencies and government-sponsored enterprises of the U.S. ("U.S. GSEs"), which have long histories with no credit losses and are explicitly or implicitly guaranteed by the U.S. federal government. Therefore, management has concluded that there is no expectation of non-payment on its investment securities and does not record an allowance for credit losses on these investments. In addition, the Company does not have the intent to sell any available-for-sale securities in an unrealized loss position and does not believe it is more likely than not that it will be required to sell any such security before recovery of its amortized cost basis.

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The following table provides information about available-for-sale investment securities with aggregate gross unrealized losses and the length of time that individual investment securities have been in a continuous unrealized loss position (dollars in millions):

	Number of Securities in a Loss Position	Less than 12 months				More than 12 months
		Fair Value		Unrealized Losses		Fair Value		Unrealized Losses
At June 30, 2023
Available-for-Sale Investment Securities
U.S. Treasury and U.S. GSE securities	183	$	8,357	$	(133)	$	3,288	$	(105)
Residential mortgage-backed securities - Agency	32	$	415	$	(19)	$	92	$	(5)
At December 31, 2022
Available-for-Sale Investment Securities
U.S. Treasury and U.S. GSE securities	123	$	9,060	$	(175)	$	106	$	(3)
Residential mortgage-backed securities - Agency	34	$	559	$	(22)	$	5	$	(1)

There were no proceeds from sales or recognized gains or losses on available-for-sale securities during the three and six months ended June 30, 2023 and 2022. See Note 8: Accumulated Other Comprehensive Income for unrealized gains and losses on available-for-sale securities during the three and six months ended June 30, 2023 and 2022.

Maturities of available-for-sale debt securities and held-to-maturity debt securities are provided in the following table (dollars in millions):

At June 30, 2023	One Year or Less		After One Year Through Five Years		After Five Years Through Ten Years		After Ten Years		Total
Available-for-Sale Investment Securities — Amortized Cost
U.S. Treasury and U.S. GSE securities	$	1,875	$	10,737	$	335	$	—	$	12,947
Residential mortgage-backed securities - Agency(1)	2		78		41		410		531
Total available-for-sale investment securities	$	1,877	$	10,815	$	376	$	410	$	13,478
Held-to-Maturity Investment Securities — Amortized Cost
Residential mortgage-backed securities - Agency(1)	$	—	$	—	$	—	$	245	$	245
Total held-to-maturity investment securities	$	—	$	—	$	—	$	245	$	245
Available-for-Sale Investment Securities — Fair Values
U.S. Treasury and U.S. GSE securities	$	1,844	$	10,539	$	331	$	—	$	12,714
Residential mortgage-backed securities - Agency(1)	2		74		39		392		507
Total available-for-sale investment securities	$	1,846	$	10,613	$	370	$	392	$	13,221
Held-to-Maturity Investment Securities — Fair Values
Residential mortgage-backed securities - Agency(1)	$	—	$	—	$	—	$	224	$	224
Total held-to-maturity investment securities	$	—	$	—	$	—	$	224	$	224

(1)Maturities of RMBS are reflective of the contractual maturities of the investment.

Other Investments

As a part of the Company's community reinvestment initiatives, the Company has made equity investments in certain limited partnerships and limited liability companies that finance the construction and rehabilitation of affordable rental housing and stimulate economic development in low- to moderate-income communities. These investments are accounted for using the equity method of accounting and are recorded within other assets. The related commitment for future investments is recorded in accrued expenses and other liabilities within the condensed consolidated statements of financial condition. The portion of each investment's operating results allocable to the Company reduces the carrying value of the investments and is recorded in other expense within the condensed consolidated statements of income. The Company further reduces the carrying value of the investments by recognizing any amounts that are in excess of future net tax benefits in other expense. The Company earns a return primarily through tax credits allocated to the affordable housing projects and the community revitalization projects. The Company does not consolidate these investments as the Company does not have a controlling financial interest in the investee entities. As of June 30, 2023 and December 31, 2022, the Company had outstanding

9

investments in these entities of $411 million and $416 million, respectively, and related contingent liabilities for unconditional and legally binding delayed equity contributions of $103 million and $111 million, respectively. Of the above outstanding equity investments, the Company had $377 million and $375 million of investments related to affordable housing projects as of June 30, 2023 and December 31, 2022, respectively, which had $96 million and $100 million of related contingent liabilities for unconditional and legally binding delayed equity contributions, respectively.

The Company holds non-controlling equity positions in several payment services entities and third-party venture capital funds which invest in such entities. Most of these investments are not subject to equity method accounting because the Company does not have significant influence over the investee. The common or preferred equity securities that the Company holds typically do not have readily determinable fair values. As a result, the majority of these investments are carried at cost minus impairment, if any. As of June 30, 2023 and December 31, 2022, the carrying value of these investments, which are recorded within other assets on the Company's condensed consolidated statements of financial condition, was $34 million and $39 million, respectively.

The Company also holds non-controlling equity positions in payment services entities that have publicly traded stock and therefore have readily determinable fair values. As a result, these investments are carried at fair value based on the quoted share prices. As of June 30, 2023 and December 31, 2022, the carrying value of these investments, which are recorded within other assets on the Company's condensed consolidated statements of financial condition, was $33 million and $41 million, respectively. During the three and six months ended June 30, 2023, the Company recognized an immaterial net gain and an immaterial net loss, respectively, on the condensed consolidated statements of income related to these investments. The Company recognized net losses of $42 million and $207 million during the three and six months ended June 30, 2022, respectively.

3.    Loan Receivables

The Company has two loan portfolio segments: credit card loans and other loans.

The Company's classes of receivables within the two portfolio segments are depicted in the following table (dollars in millions):

	June 30, 2023		December 31, 2022
Credit card loans(1)(2)	$	93,955	$	90,113
Other loans(3)
Private student loans(4)	10,241		10,308
Personal loans	9,106		7,998
Other loans	4,604		3,701
Total other loans	23,951		22,007
Total loan receivables	117,906		112,120
Allowance for credit losses	(8,064)		(7,374)
Net loan receivables	$	109,842	$	104,746

(1)Amounts include carrying values of $14.3 billion and $13.5 billion underlying investors' interest in trust debt at June 30, 2023 and December 31, 2022, respectively, and $10.7 billion and $12.2 billion in seller's interest at June 30, 2023 and December 31, 2022, respectively. See Note 4: Credit Card and Private Student Loan Securitization Activities for additional information.

(2)Unbilled accrued interest receivable on credit card loans, which is presented as part of other assets in the Company's condensed consolidated statements of financial condition, was $622 million and $611 million at June 30, 2023 and December 31, 2022, respectively.

(3)Accrued interest receivable on private student, personal and other loans, which is presented as part of other assets in the Company's condensed consolidated statements of financial condition, was $515 million, $56 million and $15 million, respectively, at June 30, 2023 and $468 million, $49 million and $11 million, respectively, at December 31, 2022.

(4)At June 30, 2023 and December 31, 2022, there were $6.0 billion of private student loans in repayment.

10

Credit Quality Indicators

As part of credit risk management activities, on an ongoing basis, the Company reviews information related to the performance of a customer's account with the Company and information from credit bureaus, such as FICO or other credit scores, relating to the customer's broader credit performance. The Company actively monitors key credit quality indicators, including FICO scores and delinquency status, for credit card, private student and personal loans. These indicators are important to understand the overall credit performance of the Company's customers and their ability to repay.

FICO scores are generally obtained at the origination of the account and are refreshed monthly or quarterly thereafter to assist in predicting customer behavior. Historically, the Company has noted that accounts with FICO scores below 660 have larger delinquencies and credit losses than those with higher credit scores.

The following table provides the distribution of the amortized cost basis (excluding accrued interest receivable presented in other assets) by the most recent FICO scores available for the Company's customers for credit card, private student and personal loan receivables (dollars in millions):

	Credit Risk Profile by FICO Score
	June 30, 2023								December 31, 2022
	660 and Above				Less than 660 or No Score				660 and Above				Less than 660 or No Score
	$		%		$		%		$		%		$		%
Credit card loans	$	76,591	82	%	$	17,364	18	%	$	73,827	82	%	$	16,286	18	%
Private student loans by origination year(1)(2)
2023	$	259	96	%	$	12	4	%
2022	1,563		95	%	87		5	%	$	1,172	94	%	$	77	6	%
2021	1,573		95	%	83		5	%	1,668		95	%	81		5	%
2020	1,266		95	%	66		5	%	1,365		95	%	65		5	%
2019	1,121		94	%	68		6	%	1,221		95	%	67		5	%
Prior	3,880		94	%	263		6	%	4,306		94	%	286		6	%
Total private student loans	$	9,662	94	%	$	579	6	%	$	9,732	94	%	$	576	6	%
Personal loans by origination year
2023	$	2,927	99	%	$	20	1	%
2022	3,408		96	%	143		4	%	$	4,270	98	%	$	77	2	%
2021	1,464		94	%	93		6	%	1,958		96	%	91		4	%
2020	537		94	%	34		6	%	790		95	%	40		5	%
2019	281		91	%	28		9	%	444		92	%	38		8	%
Prior	141		82	%	30		18	%	249		86	%	41		14	%
Total personal loans	$	8,758	96	%	$	348	4	%	$	7,711	96	%	$	287	4	%

(1)A majority of private student loan originations occur in the third quarter and disbursements can span multiple calendar years.

(2)FICO score represents the higher credit score of the cosigner or borrower.

11

Delinquencies are an indicator of credit quality at a point in time. A loan balance is considered delinquent when contractual payments on the loan become 30 days past due.

The amortized cost basis (excluding accrued interest receivable presented in other assets) of delinquent loans in the Company's loan portfolio is shown below for credit card, private student and personal loan receivables (dollars in millions):

	June 30, 2023						December 31, 2022
	30-89 Days Delinquent		90 or More Days Delinquent		Total Past Due		30-89 Days Delinquent		90 or More Days Delinquent		Total Past Due
Credit card loans	$	1,420	$	1,269	$	2,689	$	1,250	$	1,028	$	2,278
Private student loans by origination year(1)
2023	$	—	$	—	$	—
2022	2		1		3		$	—	$	—	$	—
2021	11		4		15		6		1		7
2020	16		5		21		14		3		17
2019	19		6		25		19		5		24
Prior	115		39		154		128		36		164
Total private student loans	$	163	$	55	$	218	$	167	$	45	$	212
Personal loans by origination year
2023	$	4	$	1	$	5
2022	30		10		40		$	12	$	3	$	15
2021	17		6		23		15		6		21
2020	7		2		9		8		2		10
2019	5		2		7		6		2		8
Prior	4		3		7		6		3		9
Total personal loans	$	67	$	24	$	91	$	47	$	16	$	63

(1)Private student loans may include a deferment period, during which borrowers are not required to make payments while enrolled in school at least half time as determined by the school. During a deferment period, these loans do not advance into delinquency.

12

Allowance for Credit Losses

The following tables provide changes in the Company's allowance for credit losses (dollars in millions):

	For the Three Months Ended June 30, 2023
	Credit Card Loans		Private Student Loans		Personal Loans		Other Loans		Total Loans
Balance at March 31, 2023	$	6,135	$	872	$	622	$	62	$	7,691
Additions
Provision for credit losses(1)	1,232		9		50		6		1,297
Deductions
Charge-offs	(1,051)		(38)		(64)		—		(1,153)
Recoveries	209		6		14		—		229
Net charge-offs	(842)		(32)		(50)		—		(924)
Balance at June 30, 2023	$	6,525	$	849	$	622	$	68	$	8,064
	For the Three Months Ended June 30, 2022
	Credit Card Loans		Private Student Loans		Personal Loans		Other Loans		Total Loans
Balance at March 31, 2022	$	5,120	$	870	$	613	$	44	$	6,647
Additions
Provision for credit losses(1)	568		(11)		(20)		2		539
Deductions
Charge-offs	(587)		(33)		(39)		—		(659)
Recoveries	206		6		18		—		230
Net charge-offs	(381)		(27)		(21)		—		(429)
Balance at June 30, 2022	$	5,307	$	832	$	572	$	46	$	6,757
	For the Six Months Ended June 30, 2023
	Credit Card Loans		Private Student Loans		Personal Loans		Other Loans		Total Loans
Balance at December 31, 2022	$	5,883	$	839	$	595	$	57	$	7,374
Cumulative effect of ASU No. 2022-02 adoption(2)	(66)		—		(2)		—		(68)
Balance at January 1, 2023	5,817		839		593		57		7,306
Additions
Provision for credit losses(1)	2,234		69		118		11		2,432
Deductions
Charge-offs	(1,930)		(71)		(118)		—		(2,119)
Recoveries	404		12		29		—		445
Net charge-offs	(1,526)		(59)		(89)		—		(1,674)
Balance at June 30, 2023	$	6,525	$	849	$	622	$	68	$	8,064
	For the Six Months Ended June 30, 2022
	Credit Card Loans		Private Student Loans		Personal Loans		Other Loans		Total Loans
Balance at December 31, 2021	5,273		843		662		44		6,822
Additions
Provision for credit losses(1)	746		34		(50)		2		732
Deductions
Charge-offs	(1,128)		(57)		(77)		—		(1,262)
Recoveries	416		12		37		—		465
Net charge-offs	(712)		(45)		(40)		—		(797)
Balance at June 30, 2022	$	5,307	$	832	$	572	$	46	$	6,757

(1)Excludes an $8 million and $10 million adjustment of the liability for expected credit losses on unfunded commitments for the three months ended June 30, 2023 and 2022, respectively, and $25 million and $29 million for the six months ended June 30, 2023 and 2022, respectively, as the liability is recorded in accrued expenses and other liabilities in the Company's condensed consolidated statements of financial condition.

(2)Represents the adjustment to the allowance for credit losses as a result of the adoption of ASU No. 2022-02 on January 1, 2023, which eliminated the requirement to apply discounted cash flow measurements for certain troubled debt restructurings.

The allowance for credit losses was approximately $8.1 billion at June 30, 2023, which reflects a $373 million build over March 31, 2023 and a $690 million build from December 31, 2022. The build in the allowance for credit losses for the three and six months ended June 30, 2023 was primarily driven by loan growth.

13

The allowance estimation process begins with a loss forecast that uses certain macroeconomic variables and multiple macroeconomic scenarios among its inputs. In estimating the allowance at June 30, 2023, the Company used a macroeconomic forecast that projected the following weighted average amounts: (i) unemployment rate ending 2023 at 4.0% and peaking at 4.3% in mid 2024 and (ii) 1.56% growth rate in real gross domestic product in 2023.

In estimating expected credit losses, the Company considered the uncertainties associated with borrower behavior and payment trends, as well as recent and expected macroeconomic conditions, such as high consumer price inflation and the fiscal and monetary policy responses to that inflation. The Federal Reserve raised its federal funds rate target range substantially during 2022 and the first half of 2023 in an effort to slow economic growth and reduce inflation. Most economists and financial market participants expect U.S. economic growth and inflation to slow gradually during 2023 as the economy responds to the lagged effects of tighter monetary policy and credit conditions.

The forecast period the Company deemed to be reasonable and supportable was 18 months for all periods presented. The 18 months reasonable and supportable forecast period was deemed appropriate given the current economic conditions. For all periods presented, the Company determined that a reversion period of 12 months was appropriate for the same reason. The Company applied a weighted reversion method to provide a more reasonable transition to historical losses for all loan products for all periods presented.

The net charge-offs for credit card loans increased for the three and six months ended June 30, 2023, when compared to the same periods in 2022, primarily due to continued credit normalization and the seasoning of vintages from the past two years. The net charge-offs for private student and personal loans increased for the three and six months ended June 30, 2023, when compared to the same periods in 2022, primarily due to continued credit normalization.

Net charge-offs of principal are recorded against the allowance for credit losses, as shown in the preceding table. Information regarding net charge-offs of interest and fee revenues on credit card and other loans is as follows (dollars in millions):

	For the Three Months Ended June 30,				For the Six Months Ended June 30,
	2023		2022		2023		2022
Interest and fees accrued subsequently charged-off, net of recoveries (recorded as a reduction of interest income)	$	156	$	69	$	284	$	135
Fees accrued subsequently charged-off, net of recoveries (recorded as a reduction to other income)	$	46	$	23	$	87	$	44

14

Gross principal charge-offs of the Company's loan portfolio are presented in the table below, on a year-to-date basis, for credit card, private student and personal loan receivables (dollars in millions):

	For the Six Months Ended June 30, 2023
Credit card loans	$	1,930
Private student loans by origination year
2023	$	—
2022	1
2021	6
2020	9
2019	11
Prior	44
Total private student loans	$	71
Personal loans by origination year
2023	$	1
2022	41
2021	39
2020	17
2019	13
Prior	7
Total personal loans	$	118

Delinquent and Non-Accruing Loans

The amortized cost basis (excluding accrued interest receivable presented in other assets) of delinquent and non-accruing loans in the Company's loan portfolio is shown below for each class of loan receivables (dollars in millions):(1)

	30-89 Days Delinquent		90 or More Days Delinquent		Total Past Due		90 or More Days Delinquent and Accruing		Total Non-accruing(2)
At June 30, 2023
Credit card loans	$	1,420	$	1,269	$	2,689	$	1,192	$	255
Other loans
Private student loans	163		55		218		55		8
Personal loans	67		24		91		23		8
Other loans	16		13		29		2		27
Total other loans	246		92		338		80		43
Total loan receivables	$	1,666	$	1,361	$	3,027	$	1,272	$	298
At December 31, 2022
Credit card loans	$	1,250	$	1,028	$	2,278	$	1,003	$	176
Other loans
Private student loans	167		45		212		45		8
Personal loans	47		16		63		16		7
Other loans	13		12		25		1		23
Total other loans	227		73		300		62		38
Total loan receivables	$	1,477	$	1,101	$	2,578	$	1,065	$	214

(1)The payment status of both modified and unmodified loans is included in this table.

(2)The Company estimates that the gross interest income that would have been recorded under the original terms of non-accruing credit card loans was $10 million and $5 million for the three months ended June 30, 2023 and 2022, respectively, and $18 million and $11 million for the six months ended June 30, 2023 and 2022, respectively. The Company does not separately track the amount of gross interest income that would have been recorded under the original terms of loans. Instead, the Company estimated this amount based on customers' current balances and most recent interest rates.

15

Loan Modifications to Borrowers Experiencing Financial Difficulty

The Company has internal loan modification programs that provide relief to credit card, private student and personal loan borrowers who are experiencing financial hardship. The internal loan modification programs include both temporary and permanent programs, which vary by product. External loan modification programs, through third party consumer credit counseling agencies, are also available for credit card and personal loans. Those programs feature interest rate reductions, payment delays, term extensions, or a combination thereof.

For credit card customers, the Company offers both temporary and permanent hardship programs. The temporary hardship programs consist of an interest rate reduction lasting for a period no longer than 12 months. Charging privileges on these accounts are generally suspended while in the program. However, if the customer meets certain criteria, charging privileges may be reinstated following completion of the program.

The permanent modification program involves closing the account, changing the structure of the loan to a fixed payment loan with a maturity no longer than 72 months and reducing the interest rate on the loan. The permanent modification program does not typically provide for the forgiveness of unpaid principal, but may allow for the reversal of certain unpaid interest or fee assessments. The Company also makes permanent loan modifications for customers who request financial assistance through external sources, such as a consumer credit counseling agency program. These loans typically receive a reduced interest rate, typically continue to be subject to the original minimum payment terms and do not normally include waiver of unpaid principal, interest or fees.

To assist private student loan borrowers who are experiencing temporary financial difficulties but are willing to resume making payments, the Company may offer a payment delay (in the form of hardship forbearance or a temporary payment reduction), or a temporary interest rate reduction. Typically programs are offered up to six consecutive months at one time with a lifetime usage cap, most commonly, of 12 months.

For personal loan customers, the Company offers various payment programs, including temporary and permanent programs, in certain situations. The temporary programs normally consist of reducing the minimum payment for no longer than 12 months and, in certain circumstances, the interest rate on the loan is reduced. The permanent programs involve extending the loan term and, in certain circumstances, reducing the interest rate on the loan. The total term of the loan, including modification, may not exceed nine years. The Company also allows permanent loan modifications for customers who request financial assistance through external sources, similar to the credit card customers discussed above. Payments are modified based on the new terms agreed upon with the credit counseling agency.

In addition to the programs described above, the Company will in certain cases accept partial payment in full satisfaction of the outstanding receivable. This is a form of principal forgiveness also known as a settlement. The difference between the loan balance and the amount received in settlement is recorded as a charge-off.

The Company monitors borrower performance after using payment programs or forbearance. The Company believes the programs are useful in assisting customers experiencing financial difficulties and allowing them to make timely payments. In addition to helping customers with their credit needs, these programs are designed to maximize collections and ultimately the Company’s profitability. The Company plans to continue to use payment programs to provide relief to customers experiencing financial difficulties.

ASU No. 2022-02, Financial Instruments—Credit Losses (Topic 326): Troubled Debt Restructurings and Vintage Disclosures, became effective for the Company on January 1, 2023. The new guidance eliminated Subtopic 310-40, Troubled Debt Restructurings, and implemented enhanced disclosure requirements regarding loan modifications to borrowers experiencing financial difficulty. The new disclosures are required to be applied on a prospective basis. There will be no comparative disclosures to prior periods until such time as both periods disclosed are subject to the new guidance.

16

The following table provides the period-end amortized cost basis, by modification category, of loans to borrowers experiencing financial difficulty that entered a modification program during the period (dollars in millions). Some of the loans presented in the table below may no longer be enrolled in a program at period-end:

	For the Three Months Ended June 30,			For the Six Months Ended June 30,(1)
	2023			2023
Credit card loans(2)(3)
Interest rate reduction	$	560		$	1,158
Total credit card loans(4)	$	560		$	1,158
% of total class of financing receivables	0.60		%	1.23		%
Private student loans(2)
Payment delay(5)	$	20		$	22
Interest rate reduction and payment delay(5)	21			50
Total private student loans(4)	$	41		$	72
% of total class of financing receivables	0.40		%	0.70		%
Personal loans(2)
Payment delay(5)	$	3		$	4
Term extension(6)	8			16
Interest rate reduction and payment delay(5)	16			29
Interest rate reduction and term extension(6)	8			14
Total personal loans(2)	$	35		$	63
% of total class of financing receivables	0.38		%	0.69		%

(1)    The current quarter-to-date enrollment figures, when aggregated with previously disclosed quarter-to-date amounts, will not equal the year-to-date amounts in this table because all year-to-date enrollments are presented using the current period-end amortized cost basis.

(2)    Accrued interest receivable (including unbilled accrued interest receivable for credit card loans) on modified loans to borrowers experiencing financial difficulty, which is presented as part of other assets in the Company's condensed consolidated statements of financial condition, was immaterial at June 30, 2023.

(3)    Accounts that entered a credit card loan modification program include $113 million and $231 million that were converted from revolving line-of-credit arrangements to term loans during the three and six months ended June 30, 2023, respectively.

(4)    For settlements, the amortized cost basis is zero at period-end and therefore there is no amount reported for principal forgiveness in the table above. See financial effects table below for principal forgiveness to borrowers experiencing financial difficulty.

(5)    The Company defines a payment delay as a temporary reduction in payments below the original contractually required payment amounts (e.g., interest only payments). The Company's credit card loan modification programs do not result in an other than insignificant delay in payment.

(6)    The Company defines term extensions as only those modifications for which the maturity date is extended beyond the original contractual maturity date by virtue of a change in terms other than a payment delay as defined above. Modifications to credit card loans are not considered term extensions because credit card loans do not have a fixed repayment term.

The only non-cancellable commitments the Company has to lend additional funds to borrowers experiencing financial difficulty relate to certain private student loans. As of June 30, 2023, the amount of such commitments associated with loans modified during the periods presented was immaterial.

17

The following table provides information on the financial effects of loan modifications to borrowers experiencing financial difficulty, by modification type, made during the period (dollars in millions):

	For the Three Months Ended June 30,			For the Six Months Ended June 30,
	2023			2023
Credit card loans
Weighted-average interest rate reduction	13.80		%	13.58		%
Principal forgiven	$	46		$	46
Interest and fees forgiven(1)	$	35		$	47
Private student loans
Weighted-average interest rate reduction	8.55		%	8.26		%
Payment delay duration (in months)(2)	6 to 12			6 to 12
Principal forgiven	$	—		$	—
Personal loans
Weighted-average interest rate reduction	12.01		%	11.80		%
Weighted-average term extension (in months)	39			38
Payment delay duration (in months)(2)	6 to 12			6 to 12
Principal forgiven	$	—		$	—

(1)     Represents the amount of interest and fees forgiven resulting from accounts entering into a credit card loan modification program and pre-charge off settlements. Interest and fees forgiven are reversed against the respective line items in the consolidated statements of income.

(2)    For private student loan payment delays, the Company offers up to six consecutive months of delay and most commonly limits assistance to a life of loan maximum of 12 months. For personal loan payment delays, the Company limits this assistance to a life of loan maximum of 12 months.

Loan receivables that have been modified are subject to the same requirements for the accrual of expected credit loss over their expected remaining lives as for unmodified loans. The allowance for credit losses incorporates modeling of historical loss data and thereby captures the higher risk associated with modified loans to borrowers experiencing financial difficulty based on their account attributes.

The following table presents the payment status and period-end amortized cost basis, by class of loan receivable, of loans that were modified on or after January 1, 2023 to borrowers experiencing financial difficulty (dollars in millions):(1)

	Current		30-89 Days Delinquent		90 or More Days Delinquent
At June 30, 2023
Credit card loans	$	931	$	115	$	112
Private student loans	66		5		1
Personal loans	53		7		3
Total	$	1,050	$	127	$	116

(1)    This table includes any loan that entered a modification program during the period without regard to whether it remained in a modification program as of the reporting date.

The period-end amortized cost basis of credit cards loans modified, on or after January 1, 2023 to borrowers experiencing financial difficulty which subsequently defaulted was $73 million and $84 million for the three and six months ended June 30, 2023, respectively. The period-end amortized cost basis of private student loans and personal loans modified on or after January 1, 2023 to borrowers experiencing financial difficulty which subsequently defaulted was immaterial for the three and six months ended June 30, 2023. For purposes of this disclosure, a loan is considered to be defaulted when it is 60 days or more delinquent at month end and has advanced two stages of delinquency subsequent to modification. Loans that entered a modification program in any stage of delinquency but did not experience a further payment default are included in the aging table above but are not counted as defaulted for purposes of this disclosure.

18

Troubled Debt Restructurings (Prior to 2023)

Prior to the adoption of ASU 2022-02, the Company considered a modified loan in which a concession had been granted to the borrower to be a TDR based generally on the cumulative length of the concession period and credit quality of the borrower. Due to differences between the legacy TDR requirements and current loan modification disclosure requirements, information presented in the disclosures below is not directly comparable to the disclosures under the current guidance.

To evaluate the primary financial effects that resulted from credit card loans entering into a TDR program during the three and six months ended June 30, 2022, the Company quantified the amount by which interest and fees were reduced during the periods. During the three and six months ended June 30, 2022, the Company forgave approximately $6 million and $13 million of interest and fees resulting from accounts entering into a credit card loan TDR program.

The following table provides information on loans that entered a TDR program during the period (dollars in millions):

	For the Three Months Ended June 30, 2022			For the Six Months Ended June 30, 2022
	Number of Accounts	Balances		Number of Accounts	Balances
Accounts that entered a TDR program during the period
Credit card loans(1)	49,341	$	313	103,852	$	657
Private student loans	1,523	$	29	3,278	$	60
Personal loans	1,603	$	22	2,762	$	37

(1)Accounts that entered a credit card TDR program include $71 million and $146 million that were converted from revolving line-of-credit arrangements to term loans during the three and six months ended June 30, 2022, respectively.

The following table presents the carrying value of loans that experienced a default during the period that had been modified in a TDR during the 15 months preceding the end of each period (dollars in millions):

	For the Three Months Ended June 30, 2022			For the Six Months Ended June 30, 2022
	Number of Accounts	Aggregated Outstanding Balances Upon Default		Number of Accounts	Aggregated Outstanding Balances Upon Default
TDRs that subsequently defaulted
Credit card loans(1)(2)	5,703	$	28	10,238	$	51
Private student loans(3)	161	$	3	267	$	5
Personal loans(2)	275	$	4	536	$	7

(1)For credit card loans that default from a temporary loan modification program, accounts revert back to the pre-modification terms and charging privileges remain suspended in most cases.

(2)For credit card loans and personal loans, a customer defaults from a loan modification program after either two consecutive missed payments or at charge-off, depending on the program. The outstanding balance upon default is generally the loan balance at the end of the month prior to default.

(3)For student loans, a customer defaults from a loan modification after they are 60 or more days delinquent. The outstanding balance upon default is generally the loan balance at the end of the month prior to default.

Of the account balances that defaulted as shown above for the three months ended June 30, 2022, approximately 62%, and for the six months ended June 30, 2022, approximately 63%, of the total balances were charged off at the end of the month in which they defaulted from a TDR program. For the three and six months ended June 30, 2022, for accounts that had defaulted from a TDR program and had not been subsequently charged off, the balances were included in the allowance for credit loss analysis.

4.    Credit Card and Private Student Loan Securitization Activities

The Company's securitizations are accounted for as secured borrowings and the related trusts are treated as consolidated subsidiaries of the Company. For a description of the Company's principles of consolidation with respect to VIEs, see Note 1: Background and Basis of Presentation to the consolidated financial statements in the Company's annual report on Form 10-K for the year ended December 31, 2022.

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Credit Card Securitization Activities

The Company accesses the term asset securitization market through Discover Card Master Trust I ("DCMT") and Discover Card Execution Note Trust ("DCENT"). Credit card loan receivables are transferred into DCMT and beneficial interests in DCMT are transferred into DCENT. DCENT issues debt securities to investors that are reported primarily in long-term borrowings.

The DCENT debt structure consists of four classes of securities (DiscoverSeries Class A, B, C and D notes), with the most senior class generally receiving a triple-A rating. To issue senior, higher-rated classes of notes, it is necessary to obtain the appropriate amount of credit enhancement, generally through the issuance of junior, lower-rated or more highly subordinated classes of notes. Wholly-owned subsidiaries of Discover Bank hold the subordinated classes of notes. The Company is exposed to credit risk associated with trust receivables as of the balance sheet date through the retention of these subordinated interests. The estimate of expected credit losses on trust receivables is included in the allowance for credit losses estimate.

The Company's retained interests in the trust's assets, consisting of investments in DCENT notes held by subsidiaries of Discover Bank, constitute intercompany positions that are eliminated in the preparation of the Company's condensed consolidated statements of financial condition.

Upon transfer of credit card loan receivables to the trust, the receivables and certain cash flows derived from them become restricted for use in meeting obligations to the trust's creditors. Further, the transferred credit card loan receivables are owned by the trust and are not available to the Company's third-party creditors. The trusts have ownership of cash balances, the amounts of which are reported in restricted cash within the Company's condensed consolidated statements of financial condition. Except for the seller's interest in trust receivables, the Company's interests in trust assets are generally subordinate to the interests of third-party investors in trust debt and, as such, may not be realized by the Company if needed to absorb deficiencies in cash flows that are allocated to those investors. Apart from the restricted assets related to securitization activities, the investors and the securitization trusts have no recourse to the Company's other assets or the Company's general credit for a shortage in cash flows.

The carrying values of these restricted assets, which are presented on the Company's condensed consolidated statements of financial condition as relating to securitization activities, are shown in the following table (dollars in millions):

	June 30, 2023		December 31, 2022
Restricted cash	$	31	$	33
Investors' interests held by third-party investors	11,275		10,200
Investors' interests held by wholly-owned subsidiaries of Discover Bank	2,997		3,341
Seller's interest	10,732		12,220
Loan receivables(1)	25,004		25,761
Allowance for credit losses allocated to securitized loan receivables(1)	(1,109)		(1,152)
Net loan receivables	23,895		24,609
Other assets	2		2
Carrying value of assets of consolidated variable interest entities	$	23,928	$	24,644

(1)The Company maintains its allowance for credit losses at an amount equal to lifetime expected credit losses associated with all loan receivables, which includes all loan receivables in the trusts. Therefore, the credit risk associated with the transferred receivables is fully reflected on the Company's statements of financial condition in accordance with GAAP.

The debt securities issued by the consolidated trusts are subject to credit, payment and interest rate risks on the transferred credit card loan receivables. To protect investors in the securities, there are certain features or triggering events that will cause an early amortization of the debt securities, including triggers related to the impact of the performance of the trust receivables on the availability and adequacy of cash flows to meet contractual requirements. As of June 30, 2023, no economic or other early amortization events have occurred.

The Company continues to own and service the accounts that generate the loan receivables held by the trusts. Discover Bank receives servicing fees from the trusts based on a percentage of the monthly investor principal balance outstanding. Although the fee income to Discover Bank offsets the fee expense to the trusts and thus is eliminated in consolidation, failure to service the transferred loan receivables in accordance with contractual requirements could lead to a termination of the servicing rights and the loss of future servicing income, net of related expenses.

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Private Student Loan Securitization Activities

The Company's private student loan trust receivables reported in loan receivables and the related debt issued by the trust reported in long-term borrowings were immaterial as of June 30, 2023 and December 31, 2022. The amounts are included, together with amounts related to the Company's credit card securitizations, in the supplemental information about assets and liabilities of consolidated variable interest entities, which is presented with the Company's condensed consolidated statements of financial condition.

5.    Deposits

The Company obtains deposits from consumers directly or through affinity relationships ("direct-to-consumer deposits"). Additionally, the Company obtains deposits through third-party securities brokerage firms that offer the Company's deposits to their customers ("brokered deposits"). Direct-to-consumer deposit products include savings accounts, certificates of deposit, money market accounts, IRA savings accounts, IRA certificates of deposit and checking accounts. Brokered deposit products include certificates of deposit and sweep accounts.

Customer deposits held with Discover Bank are currently insured for up to $250,000 per account holder through the Federal Deposit Insurance Corporation (“FDIC”). At June 30, 2023 and December 31, 2022, the Company had approximately $5.3 billion and $8.9 billion of uninsured deposits, respectively. The decrease in uninsured deposits reported was primarily driven by leveraging technological capabilities, beginning in the first quarter of 2023, enabling improved application of deposit account ownership attributes in deriving this amount. The amounts of uninsured deposits above were estimated based on the same methodologies and assumptions used for Discover Bank’s regulatory reporting at each respective balance sheet date.

The following table summarizes certificates of deposits maturing over the remainder of this year, over each of the next four years and thereafter (dollars in millions):

	At June 30, 2023
2023	$	10,661
2024	15,578
2025	4,097
2026	2,951
2027	3,871
Thereafter	2,174
Total	$	39,332

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6.    Long-Term Borrowings

Long-term borrowings consist of borrowings having original maturities of one year or more. The following table provides a summary of the Company's long-term borrowings and weighted-average interest rates on outstanding balances (dollars in millions):

	June 30, 2023					December 31, 2022
	Maturity	Interest Rate	Weighted-Average Interest Rate	Outstanding Amount		Outstanding Amount
Securitized Debt
Fixed-rate asset-backed securities(1)	2024-2026	0.58% - 5.03%	3.17%	$	9,917	$	8,401
Floating-rate asset-backed securities(2)	2023-2024	5.58% - 5.79%	5.74%	1,225		1,774
Total Discover Card Master Trust I and Discover Card Execution Note Trust				11,142		10,175
Floating-rate asset-backed security(3)(4)	2031	9.25%	9.25%	74		84
Total private student loan securitization trust				74		84
Total long-term borrowings - owed to securitization investors				11,216		10,259
Discover Financial Services (Parent Company)
Fixed-rate senior notes	2024-2032	3.75% - 6.70%	4.68%	3,334		3,333
Fixed-rate retail notes	2023-2031	2.85% - 4.40%	3.77%	152		154
Discover Bank
Fixed-rate senior bank notes(1)	2023-2030	2.45% - 4.65%	3.68%	4,552		5,348
Fixed-rate subordinated bank notes(1)(5)	2028	4.68%	4.68%	497		489
Floating-rate Federal Home Loan Bank advance(6)	2023	5.29%	5.29%	525		525
Total long-term borrowings				$	20,276	$	20,108

(1)The Company uses interest rate swaps to hedge portions of these long-term borrowings against changes in fair value attributable to changes in the applicable benchmark interest rates. The use of these interest rate swaps impacts the carrying value of the debt. See Note 15: Derivatives and Hedging Activities.

(2)DCENT floating-rate asset-backed securities include issuances with the following interest rate terms: 1-month LIBOR + 39 to 60 basis points as of June 30, 2023.

(3)The private student loan securitization trust floating-rate asset-backed security includes an issuance with the following interest rate term: Prime rate + 100 basis points as of June 30, 2023.

(4)Repayment of this debt is dependent upon the timing of principal and interest payments on the underlying private student loans. The date shown represents the final maturity date.

(5)The fixed-rate subordinated bank notes include a rate reset on August 9, 2023, to the 5-year SOFR spread-adjusted swap rate + 173 basis points.

(6)The floating-rate Federal Home Loan Bank (“FHLB”) advance includes the following interest rate term: SOFR + 23 basis points as of June 30, 2023.

The following table summarizes long-term borrowings maturing over the remainder of this year, over each of the next four years and thereafter (dollars in millions):

	June 30, 2023
2023	$	1,837
2024	3,727
2025	6,098
2026	4,867
2027	1,000
Thereafter	2,747
Total	$	20,276

As a member of the FHLB of Chicago, the Company has access to both short- and long-term advance structures with maturities ranging from overnight to 30 years. As of June 30, 2023, the Company had total committed borrowing capacity of $2.9 billion based on the amount and type of assets pledged, of which the outstanding balance was comprised solely of a $525 million long-term advance. As of December 31, 2022, the Company had total committed borrowing capacity of $2.2 billion based on the amount and type of assets pledged, of which the outstanding balance was comprised solely of a $525

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million long-term advance. These advances are presented as short- or long-term borrowings on the condensed consolidated statements of financial condition as appropriate.

Additionally, the Company has access to committed borrowing capacity through private securitizations to support the funding of its credit card loan receivables. As of June 30, 2023 and December 31, 2022, the total commitment of secured credit facilities through private providers was $3.5 billion, none of which was drawn. Access to the unused portions of the secured credit facilities is subject to the terms of the agreements with each of the providers. The secured credit facilities have various expirations in 2024 and 2025. Borrowings outstanding under each facility bear interest at a margin above the Term Secured Overnight Financing Rate ("SOFR") or the asset-backed commercial paper costs of each provider. The terms of each agreement provide for a commitment fee to be paid on the unused capacity and include various affirmative and negative covenants, including performance metrics and legal requirements similar to those required to issue any term securitization transaction.

7.    Preferred Stock

The table below presents a summary of the Company's non-cumulative perpetual preferred stock that is outstanding at June 30, 2023 (dollars in millions, except per depositary share amounts):

Series	Description	Initial Issuance Date	Liquidation Preference and Redemption Price per Depositary Share(1)		Per Annum Dividend Rate in effect at June 30, 2023		Total Depositary Shares Authorized, Issued and Outstanding		Carrying Value
							June 30, 2023	December 31, 2022	June 30, 2023		December 31, 2022
C(2)(3)(4)	Fixed-to-Floating Rate	10/31/2017	$	1,000	5.500	%	570,000	570,000	$	563	$	563
D(2)(5)(6)	Fixed-Rate Reset	6/22/2020	$	1,000	6.125	%	500,000	500,000	493		493
Total Preferred Stock							1,070,000	1,070,000	$	1,056	$	1,056

(1)Redeemable at the redemption price plus declared and unpaid dividends.

(2)Issued as depositary shares, each representing 1/100th interest in a share of the corresponding series of preferred stock. Each preferred share has a par value of $0.01.

(3)Redeemable at the Company’s option, subject to regulatory approval, either (i) in whole or in part on any dividend payment date on or after October 30, 2027, or (ii) in whole but not in part, at any time within 90 days following a regulatory capital treatment event (as defined in the certificate of designations for the Series C preferred stock).

(4)Any dividends declared are payable semi-annually in arrears at a rate of 5.500% per annum until October 30, 2027. Thereafter, dividends declared will be payable quarterly in arrears at a floating rate equal to 3-month LIBOR plus a spread of 3.076% per annum.

(5)Redeemable at the Company’s option, subject to regulatory approval, either (i) in whole or in part during the three-month period prior to, and including, each reset date (as defined in the certificate of designations for the Series D preferred stock) or (ii) in whole but not in part, at any time within 90 days following a regulatory capital treatment event (as defined in the certificate of designations for the Series D Preferred Stock).

(6)Any dividends declared are payable semi-annually in arrears at a rate of 6.125% per annum until September 23, 2025, after which the dividend rate will reset every 5 years to a fixed annual rate equal to the 5-year Treasury plus a spread of 5.783%.

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8.    Accumulated Other Comprehensive Income

Changes in each component of accumulated other comprehensive income ("AOCI") were as follows (dollars in millions):

	Unrealized (Losses) Gains on Available-for-Sale Investment Securities, Net of Tax		Losses on Cash Flow Hedges, Net of Tax		Losses on Pension Plan, Net of Tax		AOCI
For the Three Months Ended June 30, 2023
Balance at March 31, 2023	$	(44)	$	(2)	$	(189)	$	(235)
Net change	(151)		(84)		—		(235)
Balance at June 30, 2023	$	(195)	$	(86)	$	(189)	$	(470)
For the Three Months Ended June 30, 2022
Balance at March 31, 2022	$	(7)	$	(7)	$	(199)	$	(213)
Net change	(41)		3		—		(38)
Balance at June 30, 2022	$	(48)	$	(4)	$	(199)	$	(251)
For the Six Months Ended June 30, 2023
Balance at December 31, 2022	$	(136)	$	(14)	$	(189)	$	(339)
Net change	(59)		(72)		—		(131)
Balance at June 30, 2023	$	(195)	$	(86)	$	(189)	$	(470)
For the Six Months Ended June 30, 2022
Balance at December 31, 2021	$	114	$	(9)	$	(199)	$	(94)
Net change	(162)		5		—		(157)
Balance at June 30, 2022	$	(48)	$	(4)	$	(199)	$	(251)

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The following table presents each component of other comprehensive income ("OCI") before reclassifications and amounts reclassified from AOCI for each component of OCI before- and after-tax (dollars in millions):

	Before Tax		Tax Benefit (Expense)		Net of Tax
For the Three Months Ended June 30, 2023
Available-for-Sale Investment Securities
Net unrealized holding losses arising during the period	$	(199)	$	48	$	(151)
Net change	$	(199)	$	48	$	(151)
Cash Flow Hedges
Net unrealized losses arising during the period	$	(127)	$	31	$	(96)
Amounts reclassified from AOCI	16		(4)		12
Net change	$	(111)	$	27	$	(84)
For the Three Months Ended June 30, 2022
Available-for-Sale Investment Securities
Net unrealized holding losses arising during the period	$	(53)	$	12	$	(41)
Net change	$	(53)	$	12	$	(41)
Cash Flow Hedges
Net unrealized gains arising during the period	$	3	$	(1)	$	2
Amounts reclassified from AOCI	1		—		1
Net change	$	4	$	(1)	$	3
For the Six Months Ended June 30, 2023
Available-for-Sale Investment Securities
Net unrealized holding losses arising during the period	$	(77)	$	18	$	(59)
Net change	$	(77)	$	18	$	(59)
Cash Flow Hedges
Net unrealized losses arising during the period	$	(117)	$	29	$	(88)
Amounts reclassified from AOCI	21		(5)		16
Net change	$	(96)	$	24	$	(72)
For the Six Months Ended June 30, 2022
Available-for-Sale Investment Securities
Net unrealized holding losses arising during the period	$	(213)	$	51	$	(162)
Net change	$	(213)	$	51	$	(162)
Cash Flow Hedges
Net unrealized gains arising during the period	$	2	$	(1)	$	1
Amounts reclassified from AOCI	2		2		4
Net change	$	4	$	1	$	5

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9.    Income Taxes

The following table presents the calculation of the Company's effective income tax rate (dollars in millions):

	For the Three Months Ended June 30,						For the Six Months Ended June 30,
	2023			2022			2023			2022
Income before income taxes	$	1,169		$	1,441		$	2,426		$	3,048
Income tax expense	$	268		$	338		$	557		$	712
Effective income tax rate	23.0		%	23.5		%	23.0		%	23.4		%

The Company is subject to examination by the Internal Revenue Service and tax authorities in various state, local and foreign tax jurisdictions. The Company's federal income tax filings are open to examinations for the tax years ended December 31, 2019 and forward. The Company regularly assesses the likelihood of additional assessments or settlements in each of the taxing jurisdictions. At this time, the potential change in unrecognized tax benefits is expected to be immaterial over the next 12 months. The Company believes that its reserves are sufficient to cover any tax, penalties and interest that would result from such examinations.

10.    Earnings Per Share

The following table presents the calculation of basic and diluted earnings per share ("EPS") (dollars and shares in millions, except per share amounts):

	For the Three Months Ended June 30,				For the Six Months Ended June 30,
	2023		2022		2023		2022
Numerator
Net income	$	901	$	1,103	$	1,869	$	2,336
Preferred stock dividends	—		—		(31)		(31)
Net income available to common stockholders	901		1,103		1,838		2,305
Income allocated to participating securities	(6)		(6)		(12)		(12)
Net income allocated to common stockholders	$	895	$	1,097	$	1,826	$	2,293
Denominator
Weighted-average shares of common stock outstanding	253		279		257		282
Weighted-average shares of common stock outstanding and common stock equivalents	253		279		257		282
Basic earnings per common share	$	3.54	$	3.93	$	7.09	$	8.13
Diluted earnings per common share	$	3.54	$	3.93	$	7.09	$	8.12

Anti-dilutive securities were not material and had no impact on the computation of diluted EPS for the three or six months ended June 30, 2023 and 2022.

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11.     Capital Adequacy

DFS is subject to the capital adequacy guidelines of the Federal Reserve. Discover Bank, the Company's banking subsidiary, is subject to various regulatory capital requirements as administered by the FDIC. Failure to meet minimum capital requirements can result in the initiation of certain mandatory and possibly additional discretionary actions by regulators that, if undertaken, could limit the Company's business activities and have a direct material effect on the financial condition and operating results of DFS and Discover Bank. Under capital adequacy guidelines and the regulatory framework for prompt corrective action, DFS and Discover Bank must meet specific risk-based capital requirements and leverage ratios that involve quantitative measures of assets, liabilities and certain off-balance sheet items, as calculated under regulatory guidelines. Capital amounts and classification are also subject to qualitative judgments by the regulators about components, risk weightings and other factors.

DFS and Discover Bank are subject to regulatory and capital rules issued by the Federal Reserve and FDIC, respectively, under the Basel Committee's December 2010 framework ("Basel III rules"). Under the Basel III rules, DFS and Discover Bank are classified as "standardized approach" entities. Standardized approach entities are defined as U.S. banking organizations with consolidated total assets over $50 billion but not exceeding $250 billion and consolidated total on-balance sheet foreign exposure less than $10 billion.

In accordance with the final rule on the impact of current expected credit losses ("CECL") on regulatory capital, the Company has elected to phase in the impact over three years beginning in 2022. Accordingly, the Company's Common Equity Tier 1 ("CET1") capital ratios are higher than they otherwise would have been. The Company's CET1 capital ratios will continue to be favorably impacted by this election over the phase-in period, which ends December 31, 2024.

As of June 30, 2023 and December 31, 2022, DFS and Discover Bank met all Basel III minimum capital ratio requirements to which they were subject. DFS and Discover Bank also met the requirements to be considered "well-capitalized" under Regulation Y and prompt corrective action rules, respectively. There have been no conditions or events that management believes have changed DFS' or Discover Bank's category. To be categorized as "well-capitalized", DFS and Discover Bank must maintain minimum capital ratios outlined in the table below.

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The following table shows the actual capital amounts and ratios of DFS and Discover Bank and comparisons of each to the regulatory minimum and "well-capitalized" requirements (dollars in millions):

	Actual				Minimum Capital Requirements			Capital Requirements To Be Classified as Well-Capitalized
	Amount		Ratio(1)		Amount		Ratio	Amount(2)		Ratio(2)
June 30, 2023
Total capital (to risk-weighted assets)
Discover Financial Services	$	17,215	14.3	%	$	9,659	≥8.0%	$	12,073	≥10.0%
Discover Bank	$	16,444	13.8	%	$	9,532	≥8.0%	$	11,915	≥10.0%
Tier 1 capital (to risk-weighted assets)
Discover Financial Services	$	15,144	12.5	%	$	7,244	≥6.0%	$	7,244	≥6.0%
Discover Bank	$	13,543	11.4	%	$	7,149	≥6.0%	$	9,532	≥8.0%
Tier 1 capital (to average assets)
Discover Financial Services	$	15,144	11.1	%	$	5,458	≥4.0%	N/A		N/A
Discover Bank	$	13,543	10.1	%	$	5,377	≥4.0%	$	6,722	≥5.0%
Common Equity Tier 1 (to risk-weighted assets)
Discover Financial Services	$	14,088	11.7	%	$	5,433	≥4.5%	N/A		N/A
Discover Bank	$	13,543	11.4	%	$	5,362	≥4.5%	$	7,745	≥6.5%
December 31, 2022
Total capital (to risk-weighted assets)
Discover Financial Services(3)	$	18,004	15.8	%	$	9,139	≥8.0%	$	11,424	≥10.0%
Discover Bank	$	16,579	14.7	%	$	9,015	≥8.0%	$	11,268	≥10.0%
Tier 1 capital (to risk-weighted assets)
Discover Financial Services(3)	$	16,039	14.0	%	$	6,854	≥6.0%	$	6,854	≥6.0%
Discover Bank	$	13,683	12.1	%	$	6,761	≥6.0%	$	9,015	≥8.0%
Tier 1 capital (to average assets)
Discover Financial Services(3)	$	16,039	12.5	%	$	5,147	≥4.0%	N/A		N/A
Discover Bank	$	13,683	10.8	%	$	5,086	≥4.0%	$	6,357	≥5.0%
Common Equity Tier 1 (to risk-weighted assets)
Discover Financial Services(3)	$	14,983	13.1	%	$	5,141	≥4.5%	N/A		N/A
Discover Bank	$	13,683	12.1	%	$	5,071	≥4.5%	$	7,324	≥6.5%

    

(1)Capital ratios are calculated based on the Basel III standardized approach rules, subject to applicable transition provisions, including CECL transition provisions.

(2)The Basel III rules do not establish well-capitalized thresholds for these measures for bank holding companies. Existing well-capitalized thresholds established in the Federal Reserve's Regulation Y have been included where available.

(3)Capital amounts and ratios have been updated to reflect the impact of the restatement described in Note 18: Immaterial Restatement of Prior Period Financial Statements.

12.    Commitments, Contingencies and Guarantees

In the normal course of business, the Company enters into a number of off-balance sheet commitments, transactions and obligations under guarantee arrangements that expose the Company to varying degrees of risk. The Company's commitments, contingencies and guarantee relationships are described below.

Commitments

Unused Credit Arrangements

At June 30, 2023, the Company had unused credit arrangements for loans of approximately $229.9 billion. Such arrangements arise primarily from agreements with customers for unused lines of credit on certain credit cards and certain other loan products, provided there is no violation of conditions in the related agreements. These arrangements, substantially all of which the Company can terminate at any time and which do not necessarily represent future cash requirements, are periodically reviewed based on account usage, customer creditworthiness and loan qualification. As the Company’s credit card loans are unconditionally cancellable, no liability for expected credit losses is required for unused lines of credit. For all

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other loans, the Company records a liability for expected credit losses for unfunded commitments, which is presented as part of accrued expenses and other liabilities in the consolidated statements of financial condition.

Contingencies

See Note 13: Litigation and Regulatory Matters for a description of potential liability arising from pending litigation or regulatory proceedings involving the Company.

Guarantees

The Company has obligations under certain guarantee arrangements, including contracts, indemnification agreements and representations and warranties, which contingently require the Company to make payments to the guaranteed party based on changes in an underlying asset, liability or equity security of a guaranteed party, rate or index. Also included as guarantees are contracts that contingently require the Company to make payments to a guaranteed party based on another entity's failure to perform under an agreement. The Company's use of guarantees is disclosed below by type of guarantee.

Securitizations Representations and Warranties

As part of the Company's financing activities, the Company provides representations and warranties that certain assets pledged as collateral in secured borrowing arrangements conform to specified guidelines. Due diligence is performed by the Company, which is intended to ensure that asset guideline qualifications are met. If the assets pledged as collateral do not meet certain conforming guidelines, the Company may be required to replace, repurchase or sell such assets. In its credit card securitization activities, the Company would replace nonconforming receivables through the allocation of excess seller's interest or from additional transfers from the unrestricted pool of receivables. If the Company could not add enough receivables to satisfy the requirement, an early amortization (or repayment) of investors' interests would be triggered. In its student loan securitizations, the Company would generally repurchase the loans from the trust at the outstanding principal amount plus interest.

The maximum potential amount of future payments the Company could be required to make would be equal to the current outstanding balances of third-party investor interests in credit card asset-backed securities and the principal amount of any private student loan secured borrowings, plus any unpaid interest for the corresponding secured borrowings. The Company has recorded substantially all of the maximum potential amount of future payments in long-term borrowings on the Company's condensed consolidated statements of financial condition. The Company has not recorded any incremental contingent liability associated with its secured borrowing representations and warranties. Management believes that the probability of having to replace, repurchase or sell assets pledged as collateral under secured borrowing arrangements, including an early amortization event, is low.

Counterparty Settlement Guarantees

Diners Club and DFS Services LLC (on behalf of PULSE) have various counterparty exposures, which are listed below:

•Merchant Guarantee. Diners Club has entered into contractual relationships with certain international merchants, which generally include travel-related businesses, for the benefit of all Diners Club licensees. The licensees hold the primary liability to settle the transactions of their customers with these merchants. However, Diners Club retains a counterparty exposure if a licensee fails to meet its financial payment obligation to one of these merchants.

•ATM Guarantee. PULSE entered into contractual relationships with certain international ATM acquirers in which DFS Services LLC retains counterparty exposure if an issuer fails to fulfill its settlement obligation.

•Global Network Alliance Guarantee. Discover Network, Diners Club and PULSE have entered into contractual relationships with certain international payment networks in which DFS Services LLC retains the counterparty exposure if a network fails to fulfill its settlement obligation.

The maximum potential amount of future payments related to such contingent obligations is dependent upon the transaction volume processed between the time a potential counterparty defaults on its settlement and the time at which the Company disables the settlement of any further transactions for the defaulting party. The Company has some contractual remedies to offset these counterparty settlement exposures (such as letters of credit or pledged deposits), however, there is no limitation on the maximum amount the Company may be liable to pay.

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The actual amount of the potential exposure cannot be quantified as the Company cannot determine whether particular counterparties will fail to meet their settlement obligations. In the event all licensees and/or issuers were to become unable to settle their transactions, the Company estimates its maximum potential counterparty exposures to these settlement guarantees would be approximately $90 million as of June 30, 2023.

The Company believes that the estimated amounts of maximum potential future payments are not representative of the Company's actual potential loss exposure given Diners Club's and PULSE's insignificant historical losses from these counterparty exposures. As of June 30, 2023, the Company had not recorded any contingent liability in the condensed consolidated financial statements for these counterparty exposures and management believes that the probability of any payments under these arrangements is low.

Discover Network Merchant Chargeback Guarantees

The Company operates the Discover Network, issues payment cards and permits third parties to issue payment cards. The Company is contingently liable for certain transactions processed on the Discover Network in the event of a dispute between the payment card customer and a merchant. The contingent liability arises if the disputed transaction involves a merchant or merchant acquirer with whom the Discover Network has a direct relationship. If a dispute is resolved in the customer's favor, the Discover Network will credit or refund the disputed amount to the Discover Network card issuer, who in turn credits its customer's account. The Discover Network will then charge back the disputed amount of the payment card transaction to the merchant or merchant acquirer, where permitted by the applicable agreement, to seek recovery of amounts already paid to the merchant for payment card transactions. If the Discover Network is unable to collect the amount subject to dispute from the merchant or merchant acquirer (e.g., in the event of merchant default or dissolution or after expiration of the time period for chargebacks in the applicable agreement), the Discover Network will bear the loss for the amount credited or refunded to the customer. In most instances, a loss by the Discover Network is unlikely to arise in connection with payments on card transactions because most products or services are delivered when purchased and credits are issued by merchants on returned items in a timely fashion, thus minimizing the likelihood of cardholder disputes with respect to amounts paid by the Discover Network. However, where the product or service is not scheduled to be provided to the customer until a later date following the purchase, the likelihood of a contingent payment obligation by the Discover Network increases. Losses related to merchant chargebacks were not material for the three and six months ended June 30, 2023 and 2022.

The maximum potential amount of obligations of the Discover Network arising from such contingent obligations is estimated to be the portion of the total Discover Network transaction volume processed to date for which timely and valid disputes may be raised under applicable law and relevant issuer and customer agreements. There is no limitation on the maximum amount the Company may be liable to pay to issuers. However, the Company believes that such amount is not representative of the Company's actual potential loss exposure based on the Company's historical experience. The actual amount of the potential exposure cannot be quantified as the Company cannot determine whether the current or cumulative transaction volumes may include or result in disputed transactions.

The following table summarizes certain information regarding merchant chargeback guarantees (dollars in millions):

	For the Three Months Ended June 30,				For the Six Months Ended June 30,
	2023		2022		2023		2022
Aggregate sales transaction volume(1)	$	65,850	$	65,586	$	126,683	$	122,739

(1)Represents transactions processed on the Discover Network for which a potential liability exists that, in aggregate, can differ from credit card sales volume.

The Company did not record any contingent liability in the condensed consolidated financial statements for merchant chargeback guarantees as of June 30, 2023 and December 31, 2022. The Company mitigates the risk of potential loss exposure by withholding settlement from merchants, obtaining third-party guarantees, or obtaining escrow deposits or letters of credit from certain merchant acquirers or merchants that are considered a higher risk due to various factors such as time delays in the delivery of products or services. As of June 30, 2023 and December 31, 2022, the Company had escrow deposits and settlement withholdings of $10 million and $11 million, respectively, which are recorded in interest-bearing deposit accounts and accrued expenses and other liabilities on the Company's condensed consolidated statements of financial condition.

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13.    Litigation and Regulatory Matters

In the normal course of business, from time to time, the Company has been named as a defendant in various legal actions, including arbitrations, class actions and other litigation, arising in connection with its activities. Certain of the actual or threatened legal actions include claims for substantial compensatory and/or punitive damages or claims for indeterminate amounts of damages. The litigation process is not predictable and can lead to unexpected results. The Company contests liability and/or the amount of damages as appropriate in each pending matter.

The Company has historically offered its customers an arbitration clause in its customer agreements. The arbitration clause allows the Company and its customers to quickly and economically resolve disputes. Additionally, the arbitration clause has in some instances limited the costs of, and the Company's exposure to, litigation. Future legal and regulatory challenges and prohibitions may cause the Company to discontinue its offering and use of such clauses. From time to time, the Company is involved in legal actions challenging its arbitration clause. Bills may be periodically introduced in Congress to directly or indirectly prohibit the use of pre-dispute arbitration clauses.

The Company is also involved, from time to time, in other reviews, investigations and proceedings (both formal and informal) by governmental agencies regarding the Company's business including, among other matters, consumer regulatory, accounting, tax and other operational matters. The investigations and proceedings may result in significant adverse judgments, settlements, fines, penalties, injunctions, decreases in regulatory ratings, customer restitution or other relief. These outcomes could materially impact the Company's condensed consolidated financial statements, increase its cost of operations, or limit the Company's ability to execute its business strategies and engage in certain business activities. Certain subsidiaries of the Company are subject to a consent order with the Consumer Financial Protection Bureau ("CFPB") regarding certain private student loan servicing practices, as described below. Pursuant to powers granted under federal banking laws, regulatory agencies have broad and sweeping discretion and may assess civil money penalties, require changes to certain business practices or require customer restitution at any time.

In accordance with applicable accounting guidance, the Company establishes an accrued liability for legal and regulatory matters when those matters present loss contingencies that are both probable and estimable. Litigation and regulatory settlement-related expenses were immaterial for the three and six months ended June 30, 2023 and 2022.

There may be an exposure to loss in excess of any amounts accrued. The Company believes the estimate of the aggregate range of reasonably possible losses (meaning the likelihood of losses is more than remote but less than likely), in excess of the amounts that the Company has accrued for legal and regulatory proceedings, is up to $160 million as of June 30, 2023. This estimated range of reasonably possible losses is based on currently available information for those proceedings in which the Company is involved and considers the Company's best estimate of such losses for those matters for which an estimate can be made. It does not represent the Company's maximum potential loss exposure. Various aspects of the legal proceedings underlying the estimated range will change from time to time and actual results may vary significantly from the estimate.

The Company's estimated range noted above involves significant judgment, given the varying stages of the proceedings, the existence of numerous yet to be resolved issues, the breadth of the claims (often spanning multiple years and, in some cases, a wide range of business activities), unspecified damages and/or the novelty of the legal issues presented. The outcome of pending matters could adversely affect the Company's reputation and be material to the Company's condensed consolidated financial condition, operating results and cash flows for a particular future period, depending on, among other things, the level of the Company's income for such period.

In July 2015, the Company announced that its subsidiaries, Discover Bank, The Student Loan Corporation and Discover Products Inc. (the "Discover Subsidiaries"), agreed to a consent order with the CFPB with respect to certain private student loan servicing practices (the “2015 Order”). The 2015 Order expired in July 2020. In December 2020, the Discover Subsidiaries agreed to a consent order (the “2020 Order”) with the CFPB resolving the agency’s investigation into Discover Bank’s compliance with the 2015 Order. In connection with the 2020 Order, Discover is required to implement a redress and compliance plan and must pay at least $10 million in consumer redress to consumers who may have been harmed and has paid a $25 million civil money penalty to the CFPB.

In July 2023, the Company received a proposed consent order from the FDIC in connection with consumer compliance. This proposed consent order does not include the card product misclassification issue described below.

On March 8, 2016, a class-action lawsuit was filed against the Company, other credit card networks, other issuing banks and EMVCo in the U.S. District Court for the Northern District of California (B&R Supermarket, Inc., d/b/a Milam's

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Market, et al. v. Visa, Inc. et al.) alleging a conspiracy by defendants to shift fraud liability to merchants with the migration to the EMV security standard and chip technology. The plaintiffs assert joint and several liability among the defendants and seek unspecified damages, including treble damages, attorneys' fees, costs and injunctive relief. In May 2017, the Court entered an order transferring the entire action to a federal court in New York that is presiding over certain related claims that are pending in the actions consolidated as MDL 1720. In August 2020, the Court granted the plaintiffs' Motion to Certify a Class. The defendants appealed the ruling, which was denied in January 2021. Expert discovery closed on February 28, 2022. On June 3, 2022, the Court granted Plaintiffs' Motion to Approve Class Notices. The Company filed its renewed motion to compel arbitration, motion for summary judgment, and Daubert challenges on November 30, 2022, with briefing scheduled to close on July 27, 2023. The Company is not in a position at this time to assess the likely outcome or its exposure, if any, with respect to this matter. However, the Company will seek to defend itself vigorously against all claims asserted by the plaintiffs.

Card Product Misclassification

Beginning around mid-2007, the Company incorrectly classified certain credit card accounts into its highest merchant and merchant acquirer pricing tier. Incremental revenue resulting from this card product misclassification amounted to less than 1% of the Company's cumulative discount and interchange revenue, gross, since that time. The misclassification affected pricing for certain merchants and merchant acquirers, but not for cardholders. As of June 30, 2023, the Company’s consolidated financial statements reflect a liability of $365 million within accrued expenses and other liabilities to provide refunds to merchants and merchant acquirers as a result of the card product misclassification.

Management is taking actions to correct the card product misclassification going forward and to prepare a program to compensate affected direct merchants and merchant acquirers. It is not possible to know with certainty the final amount of potential refunds at this time given differences in individual merchant agreements, changes in network terms and availability of historical data. Regulators may require refunds or other remediation that may result in other charges or an amount different than the Company’s current estimate. An investigation into this issue by an external law firm working at the direction of the Audit Committee of the Board of Directors is ongoing.

The Company is in discussions with its regulators regarding this matter and corporate governance and risk management. The Company expects these discussions will likely result in enforcement actions, which may include, among other remedies, monetary penalties, the amount of which cannot be estimated at this time.

14.    Fair Value Measurements

Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Accounting Standards Codification ("ASC") Topic 820, Fair Value Measurement, provides a three-level hierarchy for classifying the inputs to valuation techniques used to measure fair value of financial instruments based on whether the inputs are observable or unobservable. It also requires certain disclosures about those measurements. The three-level valuation hierarchy is as follows:

•Level 1: Fair values determined by Level 1 inputs are defined as those that utilize quoted prices (unadjusted) in active markets for identical assets or liabilities that the Company has the ability to access.

•Level 2: Fair values determined by Level 2 inputs are those that utilize inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either directly or indirectly. Level 2 inputs include quoted prices for similar assets and liabilities in active or inactive markets, quoted prices for the identical assets in an inactive market and inputs other than quoted prices that are observable for the asset or liability, such as interest rates and yield curves that are observable at commonly quoted intervals. The Company evaluates factors such as the frequency of transactions, the size of the bid-ask spread and the significance of adjustments made when considering transactions involving similar assets or liabilities to assess the relevance of those observed prices. If relevant and observable prices are available, the fair values of the related assets or liabilities would be classified as Level 2.

•Level 3: Fair values determined by Level 3 inputs are those based on unobservable inputs and include situations where there is little, if any, market activity for the asset or liability being valued. In instances where the inputs used to measure fair value may fall into different levels of the fair value hierarchy, the level in the fair value hierarchy in which the measurements are classified is based on the lowest level input that is significant to the fair value measurement in its entirety. Accordingly, the Company may utilize both observable and unobservable inputs in determining the fair values of financial instruments classified within the Level 3 category.

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The Company evaluates the classification of each fair value measurement within the hierarchy at least quarterly.

The Company's assessment of the significance of a particular input to the fair value measurement in its entirety requires judgment and involves consideration of factors specific to the asset or liability. Furthermore, certain techniques used to measure fair value involve some degree of judgment and, as a result, are not necessarily indicative of the amounts the Company would realize in a current market exchange.

Assets and Liabilities Measured at Fair Value on a Recurring Basis

Assets and liabilities measured at fair value on a recurring basis are as follows (dollars in millions):

	Quoted Price in Active Markets for Identical Assets  (Level 1)		Significant Other Observable Inputs  (Level 2)		Significant Unobservable Inputs  (Level 3)		Total
Balance at June 30, 2023
Assets
Fair value - OCI
U.S. Treasury and U.S. GSE securities	$	12,706	$	8	$	—	$	12,714
Residential mortgage-backed securities - Agency	—		507		—		507
Available-for-sale investment securities	$	12,706	$	515	$	—	$	13,221
Derivative financial instruments - cash flow hedges(1)	$	—	$	2	$	—	$	2
Fair value - Net income
Marketable equity securities	$	33	$	—	$	—	$	33
Derivative financial instruments - fair value hedges(1)	$	—	$	2	$	—	$	2
Balance at December 31, 2022
Assets
Fair value - OCI
U.S. Treasury and U.S. GSE securities	$	11,416	$	7	$	—	$	11,423
Residential mortgage-backed securities - Agency	—		564		—		564
Available-for-sale investment securities	$	11,416	$	571	$	—	$	11,987
Derivative financial instruments - cash flow hedges(1)	$	—	$	1	$	—	$	1
Fair value - Net income
Marketable equity securities	$	41	$	—	$	—	$	41
Liabilities
Fair value - OCI
Derivative financial instruments - cash flow hedges(1)	$	—	$	3	$	—	$	3
Fair value - Net income
Derivative financial instruments - fair value hedges(1)	$	—	$	2	$	—	$	2

.

(1)Derivative instrument carrying values in an asset or liability position are presented as part of other assets or accrued expenses and other liabilities, respectively, in the Company's condensed consolidated statements of financial condition.

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Available-for-Sale Investment Securities

Investment securities classified as available-for-sale consist of U.S. Treasury and U.S. GSE securities and RMBS. The fair value estimates of investment securities classified as Level 1, consisting of U.S. Treasury securities, are determined based on quoted market prices for the same securities. The fair value estimates of U.S. GSE securities and RMBS are classified as Level 2 and are valued by maximizing the use of relevant observable inputs, including quoted prices for similar securities, benchmark yield curves and market-corroborated inputs.

The Company validates the fair value estimates provided by pricing services primarily by comparing to valuations obtained through other pricing sources. The Company evaluates pricing variances among different pricing sources to ensure that the valuations utilized are reasonable. The Company also corroborates the reasonableness of the fair value estimates with analysis of trends of significant inputs, such as market interest rate curves. The Company further performs due diligence in understanding the procedures and techniques performed by the pricing services to derive fair value estimates.

At June 30, 2023, amounts reported in RMBS reflect U.S. government agency and U.S. GSE obligations issued by Ginnie Mae, Fannie Mae and Freddie Mac with an aggregate par value of $531 million, a weighted-average coupon of 4.07% and a weighted-average remaining maturity of four years.

Marketable Equity Securities

The Company holds non-controlling equity positions in payment service entities that have actively traded stock and therefore have readily determinable fair values. The Company classifies these equity securities as Level 1, the fair value estimates of which are determined based on quoted share prices for the same securities.

Derivative Financial Instruments

The Company's derivative financial instruments consist of interest rate swaps and foreign exchange forward contracts. These instruments are classified as Level 2 as their fair values are estimated using proprietary pricing models, containing certain assumptions based on readily observable market-based inputs, including interest rate curves, option volatility and foreign currency forward and spot rates. In determining fair values, the pricing models use widely accepted valuation techniques, including discounted cash flow analysis on the expected cash flows of each derivative. This analysis reflects the contractual terms of the derivatives, including the period to maturity and the observable market-based inputs. The fair values of the interest rate swaps are determined using the market standard methodology of netting the discounted future fixed cash receipts (or payments) and the discounted expected variable cash payments (or receipts). The variable cash payments are based on an expectation of future interest rates derived from the observable market interest rate curves. The Company considers collateral and master netting agreements that mitigate credit exposure to counterparties in determining the counterparty credit risk valuation adjustment. The fair values of the currency instruments are valued by comparing the contracted forward exchange rate pertaining to the specific contract maturities to the current market exchange rate.

The Company validates the fair value estimates of interest rate swaps primarily through comparison to the fair value estimates computed by the counterparties to each of the derivative transactions. The Company evaluates pricing variances among different pricing sources to ensure that the valuations utilized are reasonable. The Company also corroborates the reasonableness of the fair value estimates with analysis of trends of significant inputs, such as market interest rate curves. The Company performs due diligence in understanding the impact of any changes to the valuation techniques performed by proprietary pricing models before implementation, working closely with the third-party valuation service and reviewing the service's control objectives at least annually. The Company corroborates the fair value of foreign exchange forward contracts through independent calculation of the fair value estimates.

Assets and Liabilities Measured at Fair Value on a Non-Recurring Basis

The Company also has assets that, under certain conditions, are subject to measurement at fair value on a non-recurring basis. These assets include those associated with acquired businesses, including goodwill. For these assets, measurement at fair value in periods subsequent to the initial recognition of the assets may be applicable whenever one is tested for impairment. No impairments were recognized related to these assets during the three and six months ended June 30, 2023 and 2022.

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Financial Instruments Measured at Other Than Fair Value

The following tables disclose the estimated fair value of the Company's financial assets and financial liabilities that are not required to be carried at fair value (dollars in millions):

Balance at June 30, 2023	Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Total		Carrying Value
Assets
Amortized cost
Residential mortgage-backed securities - Agency	$	—	$	224	$	—	$	224	$	245
Held-to-maturity investment securities	$	—	$	224	$	—	$	224	$	245
Net loan receivables	$	—	$	—	$	116,379	$	116,379	$	109,842
Carrying value approximates fair value(1)
Cash and cash equivalents	$	8,605	$	—	$	—	$	8,605	$	8,605
Restricted cash	$	39	$	—	$	—	$	39	$	39
Accrued interest receivables(2)	$	—	$	1,289	$	—	$	1,289	$	1,289
Liabilities
Amortized cost
Time deposits(3)	$	—	$	39,075	$	—	$	39,075	$	39,332
Long-term borrowings - owed to securitization investors	$	—	$	10,903	$	74	$	10,977	$	11,216
Other long-term borrowings	—		8,613		—		8,613		9,060
Long-term borrowings	$	—	$	19,516	$	74	$	19,590	$	20,276
Carrying value approximates fair value(1)
Accrued interest payables(2)	$	—	$	361	$	—	$	361	$	361
Balance at December 31, 2022
Assets
Amortized cost
Residential mortgage-backed securities - Agency	$	—	$	199	$	—	$	199	$	221
Held-to-maturity investment securities	$	—	$	199	$	—	$	199	$	221
Net loan receivables	$	—	$	—	$	110,796	$	110,796	$	104,746
Carrying value approximates fair value(1)
Cash and cash equivalents	$	8,856	$	—	$	—	$	8,856	$	8,856
Restricted cash	$	41	$	—	$	—	$	41	$	41
Accrued interest receivables(2)	$	—	$	1,211	$	—	$	1,211	$	1,211
Liabilities
Amortized cost
Time deposits(3)	$	—	$	32,710	$	—	$	32,710	$	33,070
Long-term borrowings - owed to securitization investors	$	—	$	9,862	$	84	$	9,946	$	10,259
Other long-term borrowings	—		9,468		—		9,468		9,849
Long-term borrowings	$	—	$	19,330	$	84	$	19,414	$	20,108
Carrying value approximates fair value(1)
Accrued interest payables(2)	$	—	$	308	$	—	$	308	$	308

(1)The carrying values of these assets and liabilities approximate fair value due to their short-term nature.

(2)Accrued interest receivable and payable carrying values are presented as part of other assets and accrued expenses and other liabilities, respectively, in the Company's condensed consolidated statements of financial condition.

(3)Excludes deposits without contractually defined maturities for all periods presented.

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15.    Derivatives and Hedging Activities

The Company uses derivatives to manage its exposure to various financial risks. The Company does not enter into derivatives for trading or speculative purposes. Certain derivatives used to manage the Company's exposure to foreign currency are not designated as hedges and do not qualify for hedge accounting.

Derivatives may give rise to counterparty credit risk, which generally is mitigated through collateral arrangements as described under the sub-heading "— Collateral Requirements and Credit-Risk Related Contingency Features." The Company enters into derivative transactions with established dealers that meet minimum credit criteria established by the Company. All counterparties must be pre-approved before engaging in any transaction with the Company. The Company regularly monitors counterparties to ensure compliance with the Company's risk policies and limits. In determining the counterparty credit risk valuation adjustment for the fair values of derivatives, if any, the Company considers collateral and legally enforceable master netting agreements that mitigate credit exposure to related counterparties.

All derivatives are recorded in other assets at their gross positive fair values and in accrued expenses and other liabilities at their gross negative fair values. See Note 14: Fair Value Measurements for a description of the valuation methodologies used for derivatives. Cash collateral amounts associated with derivative positions that are cleared through an exchange are legally characterized as settlement of the derivative positions. Such collateral amounts are reflected as offsets to the associated derivatives balances recorded in other assets or in accrued expenses and other liabilities. Other cash collateral posted and held balances are recorded in other assets and deposits, respectively, in the condensed consolidated statements of financial condition. Collateral amounts recorded in the condensed consolidated statements of financial condition are based on the net collateral posted or held position for each applicable legal entity's master netting arrangement with each counterparty.

Derivatives Designated as Hedges

Derivatives designated and qualifying as a hedge of the exposure to variability in expected future cash flows arising from changes in interest rates, or other types of forecasted transactions, are considered cash flow hedges. Derivatives designated and qualifying as a hedge of the exposure to changes in the fair value of an asset, liability, or firm commitment attributable to a particular risk, such as interest rate risk, are considered fair value hedges.

Cash Flow Hedges

The Company uses interest rate swaps to manage its exposure to variability in cash flows related to changes in interest rates on interest-earning assets and funding instruments. These interest rate swaps qualify for hedge accounting in accordance with ASC Topic 815, Derivatives and Hedging ("ASC 815"). At June 30, 2023 and December 31, 2022, the Company's outstanding cash flow hedges primarily relate to interest receipts from credit card receivables and had an initial maximum period of four years and three years, respectively.

The change in the fair value of derivatives designated as cash flow hedges is recorded in OCI and is subsequently reclassified into earnings in the period that the hedged forecasted cash flows affect earnings. Amounts reported in AOCI related to derivatives at June 30, 2023, will be reclassified to interest income and interest expense as interest receipts and payments are accrued on the Company's then outstanding credit card receivables and certain floating-rate debt, respectively. During the next 12 months, the Company estimates it will reclassify $110 million into pretax earnings related to its cash flow hedges.

Fair Value Hedges

The Company is exposed to changes in the fair value of its fixed-rate debt obligations due to changes in interest rates. The Company uses interest rate swaps to manage its exposure to changes in the fair value of certain fixed-rate long-term borrowings, including securitized debt and bank notes, attributable to changes in the respective benchmark rates. These interest rate swaps qualify as fair value hedges in accordance with ASC 815. Changes in the fair values of both (i) the derivatives and (ii) the hedged long-term borrowings attributable to the interest-rate risk being hedged are recorded in interest expense. The changes generally provide substantial offset to one another, with any difference recognized in interest expense.

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Derivatives Not Designated as Hedges

Foreign Exchange Forward Contracts

The Company has foreign exchange forward contracts that are economic hedges and are not designated as accounting hedges. The Company enters into foreign exchange forward contracts to manage foreign currency risk. Changes in the fair value of these contracts are recorded in other income on the condensed consolidated statements of income.

Derivatives Cleared Through an Exchange

Cash variation margin payments on derivatives cleared through an exchange are legally considered settlement payments and are accounted for with corresponding derivative positions as one unit of account and not presented separately as collateral. With settlement payments on derivative positions cleared through this exchange reflected as offsets to the associated derivative asset and liability balances, the fair values of derivative instruments and collateral balances shown are generally reduced.

Derivatives Activity

The following table summarizes the fair value (including accrued interest) and outstanding notional amounts of derivative instruments and related collateral balances (dollars in millions):

	June 30, 2023							December 31, 2022
	Notional Amount		Number of Outstanding Derivative Contracts	Derivative Assets		Derivative Liabilities		Notional Amount		Derivative Assets		Derivative Liabilities
Derivatives designated as hedges
Interest rate swaps—cash flow hedge	$	8,900	15	$	2	$	—	$	5,000	$	1	$	3
Interest rate swaps—fair value hedge	$	7,750	9	2		—		$	4,425	—		2
Derivatives not designated as hedges
Foreign exchange forward contracts(1)	$	26	7	—		—		$	25	—		—
Total gross derivative assets/liabilities(2)				4		—				1		5
Less: collateral held/posted(3)				—		—				—		(5)
Total net derivative assets/liabilities				$	4	$	—			$	1	$	—

(1)The foreign exchange forward contracts have notional amounts of EUR 6 million, GBP 6 million, SGD 1 million, INR 788 million and AUD 2 million as of June 30, 2023, and notional amounts of EUR 6 million, GBP 6 million, SGD 1 million, INR 788 million and AUD 2 million as of December 31, 2022.

(2)In addition to the derivatives disclosed in the table, the Company enters into forward contracts to purchase when-issued mortgage-backed securities as part of its community reinvestment initiatives. At June 30, 2023 and December 31, 2022, the Company had one outstanding contract with a total notional amount of $16 million and $48 million, respectively, and immaterial fair values.

(3)Collateral amounts, which consist of cash and investment securities, are limited to the related derivative asset/liability balance and do not include excess collateral received/pledged.

The following amounts were recorded on the statements of financial condition related to cumulative basis adjustments for fair value hedges (dollars in millions):

	June 30, 2023				December 31, 2022
	Carrying Amount of Hedged Liabilities		Cumulative Amount of Fair Value Hedging Adjustment (Decreasing) the Carrying Amount of Hedged Liabilities(1)		Carrying Amount of Hedged Liabilities		Cumulative Amount of Fair Value Hedging Adjustment (Decreasing) the Carrying Amount of Hedged Liabilities(1)
Long-term borrowings	$	7,615	$	(100)	$	4,386	$	(3)

(1)The balance includes $18 million and $28 million of cumulative hedging adjustments related to discontinued hedging relationships as of June 30, 2023 and December 31, 2022, respectively.

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The following table summarizes the impact of the derivative instruments on income and indicates where within the condensed consolidated financial statements such impact is reported (dollars in millions):

	Location and Amount of (Losses) Gains Recognized on the Condensed Consolidated Statements of Income
	Interest Expense
	Long-Term Borrowings		Interest Income (Credit Card)		Other Income
For the Three Months Ended June 30, 2023
Total amounts of income and expense line items presented in the condensed consolidated statements of income, where the effects of fair value or cash flow hedges are recorded	$	(208)	$	3,466	$	28
The effects of cash flow and fair value hedging
Gains (losses) on fair value hedging relationships
Amounts reclassified from OCI into earnings	$	2	$	(18)	$	—
Gains (losses) on fair value hedging relationships
Gains on hedged items	$	122	$	—	$	—
Losses on interest rate swaps	(149)		—		—
Total losses on fair value hedging relationships	$	(27)	$	—	$	—
For the Three Months Ended June 30, 2022
Total amounts of income and expense line items presented in the condensed consolidated statements of income, where the effects of fair value or cash flow hedges are recorded	$	(131)	$	2,424	$	21
The effects of cash flow and fair value hedging
Losses on cash flow hedging relationships
Amounts reclassified from OCI into earnings	$	(1)	$	—	$	—
Gains (losses) on fair value hedging relationships
Gains on hedged items	$	22	$	—	$	—
Losses on interest rate swaps	(18)		—		—
Total gains on fair value hedging relationships	$	4	$	—	$	—
The effects of derivatives not designated in hedging relationships
Gains on derivatives not designated as hedges	$	—	$	—	$	1

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	Location and Amount of (Losses) Gains Recognized on the Condensed Consolidated Statements of Income
	Interest Expense		Interest Income (Credit Card)
	Long-Term Borrowings				Other Income
For the Six Months Ended June 30, 2023
Total amounts of income and expense line items presented in the condensed consolidated statements of income, where the effects of fair value or cash flow hedges are recorded	$	(397)	$	6,787	$	50
The effects of cash flow and fair value hedging
Gains (losses) on cash flow hedging relationships
Amounts reclassified from OCI into earnings	$	4	$	(25)	$	—
Gains (losses) on fair value hedging relationships
Gains on hedged items	$	87	$	—	$	—
Losses on interest rate swaps	(128)		—		—
Total losses on fair value hedging relationships	$	(41)	$	—	$	—
For the Six Months Ended June 30, 2022
Total amounts of income and expense line items presented in the condensed consolidated statements of income, where the effects of fair value or cash flow hedges are recorded	$	(248)	$	4,692	$	45
The effects of cash flow and fair value hedging
Losses on cash flow hedging relationships
Amounts reclassified from OCI into earnings	$	(2)	$	—	$	—
Gains (losses) on fair value hedging relationships
Gains on hedged items	$	69	$	—	$	—
Losses on interest rate swaps	(50)		—		—
Total gains on fair value hedging relationships	$	19	$	—	$	—
The effects of derivatives not designated in hedging relationships
Gains on derivatives not designated as hedges	$	—	$	—	$	1

For the impact of the derivative instruments on OCI, see Note 8: Accumulated Other Comprehensive Income.

Collateral Requirements and Credit-Risk Related Contingency Features

The Company has master netting arrangements and minimum collateral posting thresholds with its counterparties for its fair value and cash flow hedge interest rate swaps and foreign exchange forward contracts. The Company has not sought a legal opinion in relation to the enforceability of its master netting arrangements and, as such, does not report any of these positions on a net basis. Collateral is required by either the Company or its subsidiaries or the counterparty depending on the net fair value position of the derivatives held with that counterparty. These collateral receivable or payable amounts are generally not offset against the fair value of these derivatives but are recorded separately in other assets or deposits. Most of the Company's cash collateral amounts relate to positions cleared through an exchange and are reflected as offsets to the associated derivatives balances recorded in other assets and accrued expenses and other liabilities.

The Company also has agreements with certain of its derivative counterparties that contain a provision under which the Company could be declared in default on any of its derivative obligations if the Company defaults on any of its indebtedness, including default where the lender has not accelerated repayment of the indebtedness.

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16.    Segment Disclosures

The Company manages its business activities in two segments: Digital Banking and Payment Services.

•Digital Banking: The Digital Banking segment includes Discover-branded credit cards issued to individuals on the Discover Network and other consumer products and services, including private student loans, personal loans, home loans and other consumer lending and deposit products. The majority of Digital Banking revenues relate to interest income earned on the segment's loan products. Additionally, the Company's credit card products generate substantially all revenues related to discount and interchange, protection products and loan fee income.

•Payment Services: The Payment Services segment includes PULSE, an automated teller machine, debit and electronic funds transfer network; Diners Club, a global payments network; and the Company's Network Partners business, which provides payment transaction processing and settlement services on the Discover Network. The majority of Payment Services revenues relate to transaction processing revenue from PULSE and royalty and licensee revenue from Diners Club.

The business segment reporting provided to and used by the Company's chief operating decision-maker is prepared using the following principles and allocation conventions:

•The Company aggregates operating segments when determining reportable segments.

•Corporate overhead is not allocated between segments; all corporate overhead is included in the Digital Banking segment.

•Through its operation of the Discover Network, the Digital Banking segment incurs fixed marketing, servicing and infrastructure costs that are not specifically allocated among the segments, except for an allocation of direct and incremental costs driven by the Company's Payment Services segment.

•The Company's assets are not allocated among the operating segments in the information reviewed by the Company's chief operating decision-maker.

•The revenues of each segment are derived from external sources. The segments do not earn revenue from intercompany sources.

•Income taxes are not specifically allocated between the operating segments in the information reviewed by the Company's chief operating decision maker.

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The following table presents segment data (dollars in millions):

	Digital Banking		Payment Services		Total
For the Three Months Ended June 30, 2023
Interest income
Credit card loans	$	3,466	$	—	$	3,466
Private student loans	255		—		255
Personal loans	278		—		278
Other loans	73		—		73
Other interest income	218		—		218
Total interest income	4,290		—		4,290
Interest expense	1,113		—		1,113
Net interest income	3,177		—		3,177
Provision for credit losses	1,305		—		1,305
Other income	586		115		701
Other expense	1,359		45		1,404
Income before income taxes	$	1,099	$	70	$	1,169
For the Three Months Ended June 30, 2022
Interest income
Credit card loans	$	2,424	$	—	$	2,424
Private student loans	196		—		196
Personal loans	206		—		206
Other loans	37		—		37
Other interest income	52		—		52
Total interest income	2,915		—		2,915
Interest expense	305		—		305
Net interest income	2,610		—		2,610
Provision for credit losses	549		—		549
Other income	546		57		603
Other expense	1,186		37		1,223
Income before income taxes	$	1,421	$	20	$	1,441

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	Digital Banking		Payment Services		Total
For the Six Months Ended June 30, 2023
Interest income
Credit card loans	$	6,787	$	—	$	6,787
Private student loans	507		—		507
Personal loans	526		—		526
Other loans	137		—		137
Other interest income	410		—		410
Total interest income	8,367		—		8,367
Interest expense	2,058		—		2,058
Net interest income	6,309		—		6,309
Provision for credit losses	2,407		—		2,407
Other income	1,108		203		1,311
Other expense	2,701		86		2,787
Income before income taxes	$	2,309	$	117	$	2,426
For the Six Months Ended June 30, 2022
Interest income
Credit card loans	$	4,692	$	—	$	4,692
Private student loans	386		—		386
Personal loans	412		—		412
Other loans	69		—		69
Other interest income	92		—		92
Total interest income	5,651		—		5,651
Interest expense	562		—		562
Net interest income	5,089		—		5,089
Provision for credit losses	703		—		703
Other income (loss)	1,021		(6)		1,015
Other expense	2,278		75		2,353
Income (loss) before income taxes	$	3,129	$	(81)	$	3,048

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17.    Revenue from Contracts with Customers

ASC Topic 606, Revenue from Contracts with Customers ("ASC 606"), generally applies to the sales of any good or service for which no other specific accounting guidance is provided. ASC 606 defines a principles-based model under which revenue from a contract is allocated to the distinct performance obligations within the contract and recognized in income as each performance obligation is satisfied. The Company's revenue that is subject to this model includes discount and interchange, protection products fees, transaction processing revenue and certain amounts classified as other income.

The following table presents revenue from contracts with customers disaggregated by business segment and reconciles revenue from contracts with customers to total other income (dollars in millions):

	Digital Banking		Payment Services		Total
For the Three Months Ended June 30, 2023
Other income subject to ASC 606
Discount and interchange revenue, net(1)	$	349	$	21	$	370
Protection products revenue	44		—		44
Transaction processing revenue	—		72		72
Other income	7		21		28
Total other income subject to ASC 606(2)	400		114		514
Other income not subject to ASC 606
Loan fee income	186		—		186
Gains on equity investments	—		1		1
Total other income not subject to ASC 606	186		1		187
Total other income by operating segment	$	586	$	115	$	701
For the Three Months Ended June 30, 2022
Other income subject to ASC 606
Discount and interchange revenue, net(1)	$	359	$	20	$	379
Protection products revenue	42		—		42
Transaction processing revenue	—		61		61
Other income	3		18		21
Total other income subject to ASC 606(2)	404		99		503
Other income not subject to ASC 606
Loan fee income	142		—		142
Gains (losses) on equity investments	—		(42)		(42)
Total other income (loss) not subject to ASC 606	142		(42)		100
Total other income by operating segment	$	546	$	57	$	603

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	Digital Banking		Payment Services		Total
For the Six Months Ended June 30, 2023
Other income subject to ASC 606
Discount and interchange revenue, net(1)	$	659	$	41	$	700
Protection products revenue	87		—		87
Transaction processing revenue	—		139		139
Other income	10		40		50
Total other income subject to ASC 606(2)	$	756	$	220	$	976
Other income not subject to ASC 606
Loan fee income	352		—		352
Gains (losses) on equity investments	—		(17)		(17)
Total other income (loss) not subject to ASC 606	352		(17)		335
Total other income by operating segment	$	1,108	$	203	$	1,311
For the Six Months Ended June 30, 2022
Other income subject to ASC 606
Discount and interchange revenue, net(1)	$	646	$	42	$	688
Protection products revenue	86		—		86
Transaction processing revenue	—		118		118
Other income	6		39		45
Total other income subject to ASC 606(2)	738		199		937
Other income not subject to ASC 606
Loan fee income	282		—		282
Gains (losses) on equity investments	1		(205)		(204)
Total other income (loss) not subject to ASC 606	283		(205)		78
Total other income (loss) by operating segment	$	1,021	$	(6)	$	1,015

(1)Net of rewards, including Cashback Bonus rewards, of $788 million and $743 million for the three months ended June 30, 2023 and 2022, respectively, and $1.5 billion and $1.4 billion for the six months ended June 30, 2023 and 2022. respectively.

(2)Excludes $3 million and $10 million of deposit product fees that are reported within net interest income for the three and six months ended June 30, 2023, respectively. Deposit product fees were immaterial for the three and six months ended June 30, 2022.

For a detailed description of the Company's significant revenue recognition accounting policies, see Note 2: Summary of Significant Accounting Policies to the consolidated financial statements in the Company's annual report on Form 10-K for the year ended December 31, 2022.

18.    Immaterial Restatement of Prior Period Financial Statements

Beginning around mid-2007, the Company incorrectly classified certain credit card accounts into its highest merchant and merchant acquirer pricing tier. The card product classification impacts the pricing and charging of discount and interchange revenue, which is recorded within discount and interchange revenue, net, on the consolidated statements of income. The Company determined the revenue impact of the incorrect card product classification was immaterial to the consolidated financial statements for all impacted prior periods. For comparative purposes, the Company has made these immaterial corrections to the recognition of discount and interchange revenue, as well as the related impacts to assets, liabilities and retained earnings in the prior periods presented in this Form 10-Q. Assets were impacted by adjustments to deferred tax assets, and liabilities were impacted by an adjustment to the liability for estimated refunds to merchants and merchant acquirers.

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The prior period impacts to the Company's consolidated statement of financial condition were as shown below (dollars in millions):

	March 31, 2023						December 31, 2022
	As Previously Reported		Restatement Impacts		As Restated		As Previously Reported		Restatement Impacts		As Restated
Assets
Other Assets	$	4,381	$	80	$	4,461	$	4,519	$	78	$	4,597
Total Assets	$	133,061	$	80	$	133,141	$	131,628	$	78	$	131,706
Liabilities and Stockholders' Equity
Liabilities
Accrued Expenses and other liabilities	$	4,843	$	335	$	5,178	$	5,294	$	324	$	5,618
Total Liabilities	$	118,746	$	335	$	119,081	$	117,038	$	324	$	117,362
Stockholders' Equity
Retained Earnings	$	29,292	$	(255)	$	29,037	$	28,453	$	(246)	$	28,207
Total Stockholders' Equity	$	14,315	$	(255)	$	14,060	$	14,590	$	(246)	$	14,344
Total Liabilities and Stockholders' Equity	$	133,061	$	80	$	133,141	$	131,628	$	78	$	131,706

The prior period impacts to the Company's consolidated statements of income and the related impacts to the consolidated statements of comprehensive income were as shown below (dollars in millions):

	For the Three Months Ended March 31, 2023
	As Previously Reported		Restatement Impacts		As Restated
Other income
Discount and interchange revenue, net	$	341	$	(11)	$	330
Total other income	$	621	$	(11)	$	610
Income before income taxes	$	1,268	$	(11)	$	1,257
Income tax expense	$	292	$	(3)	$	289
Net Income	$	976	$	(8)	$	968
Net income allocated to common stockholders	$	939	$	(8)	$	931
Basic earnings per common share	$	3.58	$	(0.03)	$	3.55
Diluted earnings per common share	$	3.58	$	(0.03)	$	3.55

	For the Three Months Ended June 30, 2022						For the Six Months Ended June 30, 2022
	As Previously Reported		Restatement Impacts		As Restated		As Previously Reported		Restatement Impacts		As Restated
Other income
Discount and interchange revenue, net	$	390	$	(11)	$	379	$	710	$	(22)	$	688
Total other income	$	614	$	(11)	$	603	$	1,037	$	(22)	$	1,015
Income before income taxes	$	1,452	$	(11)	$	1,441	$	3,070	$	(22)	$	3,048
Income tax expense	$	341	$	(3)	$	338	$	717	$	(5)	$	712
Net Income	$	1,111	$	(8)	$	1,103	$	2,353	$	(17)	$	2,336
Net income allocated to common stockholders	$	1,105	$	(8)	$	1,097	$	2,309	$	(16)	$	2,293
Basic earnings per common share	$	3.96	$	(0.03)	$	3.93	$	8.19	$	(0.06)	$	8.13
Diluted earnings per common share	$	3.96	$	(0.03)	$	3.93	$	8.18	$	(0.06)	$	8.12

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The prior period impacts to the Company's consolidated statements of changes in stockholders' equity were as shown below (dollars in millions):

	Retained Earnings		Total Stockholders' Equity
As Previously Reported
For the Three Months Ended June 30, 2022
Balance at March 31, 2022	$	25,833	$	13,433
Net Income	$	1,111	$	1,111
Balance at June 30, 2022	$	26,776	$	13,764
Restatement Impacts
For the Three Months Ended June 30, 2022
Balance at March 31, 2022	$	(237)	$	(237)
Net Income	$	(8)	$	(8)
Balance at June 30, 2022	$	(245)	$	(245)
As Restated
For the Three Months Ended June 30, 2022
Balance at March 31, 2022	$	25,596	$	13,196
Net Income	$	1,103	$	1,103
Balance at June 30, 2022	$	26,531	$	13,519
	Retained Earnings		Total Stockholders' Equity
As Previously Reported
For the Six Months Ended June 30, 2022
Balance at December 31, 2021	$	24,766	$	13,408
Net Income	$	2,353	$	2,353
Balance at June 30, 2022	$	26,776	$	13,764
Restatement Impacts
For the Six Months Ended June 30, 2022
Balance at December 31, 2021	$	(228)	$	(228)
Net Income	$	(17)	$	(17)
Balance at June 30, 2022	$	(245)	$	(245)
As Restated
For the Six Months Ended June 30, 2022
Balance at December 31, 2021	$	24,538	$	13,180
Net Income	$	2,336	$	2,336
Balance at June 30, 2022	$	26,531	$	13,519

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The prior period impacts to the Company's consolidated statements of cash flows were as follows (dollars in millions):

	For the Three Months Ended March 31, 2023						For the Six Months Ended June 30, 2022
	As Previously Reported		Restatement Impacts		As Restated		As Previously Reported		Restatement Impacts		As Restated
Cash flows provided by operating activities
Net Income	$	976	$	(8)	$	968	$	2,353	$	(17)	$	2,336
Adjustments to reconcile net income to net cash provided by operating activities:
Deferred income taxes	$	(112)	$	(3)	$	(115)	$	(140)	$	(5)	$	(145)
Changes in assets and liabilities:
(Decrease) increase in accrued expenses and liabilities	$	(387)	$	11	$	(376)	$	301	$	22	$	323
Net cash provided by operating activities	$	1,791	$	—	$	1,791	$	3,346	$	—	$	3,346

19.    Subsequent Events

The Company has evaluated events and transactions that have occurred subsequent to June 30, 2023, and determined that there were no subsequent events that would require recognition or disclosure in the condensed consolidated financial statements.

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Item 2.     Management's Discussion and Analysis of Financial Condition and Results of Operations

The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our condensed consolidated financial statements and related notes included elsewhere in this quarterly report. This quarterly report contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Such statements, which speak to our expected business and financial performance, among other matters, contain words such as "believe," "expect," "anticipate," "intend," "plan," "aim," "will," "may," "should," "could," "would," "likely," "forecast," and similar expressions. Such statements are based on the current beliefs and expectations of our management and are subject to significant risks and uncertainties. Actual results may differ materially from those set forth in the forward-looking statements. These forward-looking statements speak only as of the date of this quarterly report and there is no undertaking to update or revise them as more information becomes available.

The following factors, among others, could cause actual results to differ materially from those set forth in the forward-looking statements: changes in economic variables, such as the availability of consumer credit, the housing market, energy costs, the number and size of personal bankruptcy filings, the rate of unemployment, the levels of consumer confidence and consumer debt and investor sentiment; the impact of current, pending and future legislation, regulation, supervisory guidance and regulatory and legal actions, including, but not limited to, those related to accounting guidance, tax reform, financial regulatory reform, consumer financial services practices, anti-corruption and funding, capital and liquidity; the actions and initiatives of current and potential competitors; our ability to manage our expenses; our ability to successfully achieve card acceptance across our networks and maintain relationships with network participants and merchants; our ability to sustain and grow our private student loan, personal loan and home loan products; difficulty obtaining regulatory approval for, financing, closing, transitioning, integrating or managing the expenses of acquisitions of or investments in new businesses, products or technologies; our ability to manage our credit risk, market risk, liquidity risk, operational risk, legal and compliance risk and strategic risk; the availability and cost of funding and capital; access to deposit, securitization, equity, debt and credit markets; the impact of rating agency actions; the level and volatility of equity prices, commodity prices and interest rates, currency values, investments, other market fluctuations and other market indices; losses in our investment portfolio; limits on our ability to pay dividends and repurchase our common stock; limits on our ability to receive payments from our subsidiaries; fraudulent activities or material security breaches of our or others' key systems; our ability to remain organizationally effective; our ability to increase or sustain Discover card usage or attract new customers; our ability to maintain relationships with merchants; the effect of political, economic and market conditions, geopolitical events, climate change, pandemics and unforeseen or catastrophic events; our ability to introduce new products and services; our ability to manage our relationships with third-party vendors, as well as those with which we have no direct relationship such as our employees' internet service providers; our ability to maintain current technology and integrate new and acquired systems and technology; our ability to collect amounts for disputed transactions from merchants and merchant acquirers; our ability to attract and retain employees; our ability to protect our reputation and our intellectual property; our ability to comply with regulatory requirements; and new lawsuits, investigations or similar matters or unanticipated developments related to current matters. We routinely evaluate and may pursue acquisitions of or investments in businesses, products, technologies, loan portfolios or deposits, which may involve payment in cash or our debt or equity securities.

Additional factors that could cause our results to differ materially from those described below can be found in this section of this quarterly report and in "Risk Factors," "Business," and "Management's Discussion and Analysis of Financial Condition and Results of Operations" in our annual report on Form 10-K for the year ended December 31, 2022, which is filed with the Securities and Exchange Commission ("SEC") and available at the SEC's internet site (https://www.sec.gov).

Introduction and Overview

Discover Financial Services ("DFS") is a digital banking and payment services company. We provide digital banking products and services and payment services through our subsidiaries. We offer our customers credit card loans, private student loans, personal loans, home loans and deposit products. We also operate the Discover Network, the PULSE network ("PULSE") and Diners Club International ("Diners Club"), collectively known as the Discover Global Network. The Discover Network processes transactions for Discover-branded credit and debit cards and provides payment transaction processing and settlement services. PULSE operates an electronic funds transfer network, providing financial institutions issuing debit cards on the PULSE network with access to ATMs domestically and internationally and merchant acceptance throughout the United States of America ("U.S.") for debit card transactions. Diners Club is a global payments network of licensees, which are generally financial institutions, that issue Diners Club branded credit and charge cards and/or provide card acceptance services.

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Our primary revenues consist of interest income earned on loan receivables and fees earned from customers, financial institutions, merchants and issuers. The primary expenses required to operate our business include funding costs (interest expense), credit loss provisions, customer rewards and expenses incurred to grow, manage and service our loan receivables and networks. Our business activities are funded primarily through consumer deposits, securitization of loan receivables and the issuance of unsecured debt.

Quarter Highlights

The highlights below compare results as of and for the three months ended June 30, 2023, against results for the same period in the prior year.

•Net income was $901 million, or $3.54 per diluted share, compared to net income of $1.1 billion, or $3.93 per diluted share, in the prior year.

•Total loans grew $18.6 billion, or 19%, to $117.9 billion.

•Credit card loans grew $14.7 billion, or 19%, to $94.0 billion.

•The net charge-off rate for credit card loans increased 167 basis points to 3.68% and the delinquency rate for credit card loans over 30 days past due increased 110 basis points to 2.86%.

•Direct-to-consumer deposits grew $14.1 billion, or 22%, to $77.3 billion.

•Payment Services transaction volume for the segment was $89.3 billion, up 8%.

Outlook

The outlook below provides our current expectations for our financial results based on market conditions, the regulatory and legal environment and our business strategies.

•We expect continued loan growth driven by recent account growth, moderation in the payment rate and our current expectation of sales trends.

•Based on the current interest rate environment, net interest margin is expected to be relatively flat in comparison to 2022.

•We expect the total net charge-off rate to increase, in comparison to the prior year, driven by continued credit normalization and seasoning of recent vintages.

•Total expenses are expected to increase, driven by investments in acquisition and brand, risk identification, governance and compliance management systems, technology and analytics. We remain committed to managing expenses while continuing to make investments in profitable long-term growth.

Regulatory Environment and Developments

Banking

Capital Standards and Stress Testing

As a bank holding company, DFS is subject to mandatory supervisory stress tests every other year and is required to submit annual capital plans to the Federal Reserve based on forward-looking internal analysis of income and capital levels under baseline and stressful conditions. DFS is also subject to capital buffer requirements, including the Stress Capital Buffer ("SCB"), which requires maintenance of regulatory capital levels above a threshold based on the results of supervisory stress tests after accounting for planned dividend payments.

In January 2021, the Federal Reserve finalized regulatory amendments that made targeted changes to the capital planning, regulatory reporting and SCB requirements for firms subject to Category IV standards, including DFS, to be consistent with the Federal Reserve’s regulatory tailoring framework. The final rules generally align to instructions the Federal Reserve previously provided to Category IV firms regarding their respective capital plan submissions. The amended rules also provide Category IV firms with the option to submit to supervisory stress tests during off years if they wish for the Federal Reserve to reset the stress test portion of their SCB requirement. The Federal Reserve also revised the scope of application of its existing regulatory guidance for capital planning to align with the tailoring framework. However, the timing

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and substance of any additional changes to existing guidance or new guidance are uncertain. Moreover, following the failure of two domestic banks during March 2023, members of Congress, the President of the United States and various bank regulatory authorities have made public statements indicating a desire for additional prudential regulation for Category IV firms like DFS. While we cannot currently predict the timing or substance of any such regulatory change, if any such change were adopted, it could roll back some or all of the regulatory tailoring currently applicable to DFS or otherwise tighten the prudential regulatory requirements that would apply to DFS.

In June 2022, the Federal Reserve released results of the 2022 Comprehensive Capital Analysis and Review ("CCAR") exercise. Our capital levels demonstrated resiliency under stress, staying well above regulatory minimums. Based on these results, in August 2022, our new SCB was set at 2.5%, the lowest possible requirement. This new SCB is effective October 1, 2022, through September 30, 2023. In accordance with the capital plan rule amendments, we elected not to participate in the 2023 supervisory stress tests. Nevertheless, we submitted to the Federal Reserve on April 5, 2023, a capital plan based on a forward-looking internal assessment of income and capital under baseline and stressful conditions. On June 28, 2023, the Federal Reserve disclosed preliminary SCB requirements to firms subject to Category IV standards that did not opt-in to this year’s stress test. While the Federal Reserve will not announce final SCB requirements until August 2023, our preliminary SCB is unchanged at 2.5%, the lowest possible requirement.

London Interbank Offered Rate

In July 2017, the UK Financial Conduct Authority ("FCA") announced that it would no longer encourage or compel banks to continue to contribute quotes and maintain the London Interbank Offered Rate ("LIBOR") after 2021. To support a smooth transition away from LIBOR, the Federal Reserve and the Federal Reserve Bank of New York convened the Alternative Reference Rates Committee ("ARRC"), a group of private-market participants tasked with facilitating a successful transition from U.S. dollar ("USD") LIBOR to a more robust reference rate. The ARRC identified the Secured Overnight Financing Rate ("SOFR") as its recommended alternative reference rate for USD LIBOR. The ARRC has also established several priorities and milestones to support the use of SOFR and SOFR-based indices, including developing contractual "fallback" language for capital markets and consumer products; providing clarity on legal, tax, accounting and regulatory matters; promoting broad outreach and education efforts around the LIBOR transition; and recommending spread adjustments for SOFR and SOFR-based indices.

In March 2021, the FCA announced the future cessation and loss of representativeness for all LIBOR benchmark settings. Several less frequently referenced USD LIBOR settings ceased publication immediately after December 31, 2021, while commonly referenced USD LIBOR settings ceased publication immediately after June 30, 2023, triggering fallback provisions in many financial contracts that require conversion of the benchmark index from LIBOR to an alternative rate. In July 2021, the ARRC announced its recommendation of forward-looking term rates based on SOFR as additional alternative reference rate options.

The Consumer Financial Protection Bureau ("CFPB") finalized a rule to facilitate transition from LIBOR, which became effective on April 1, 2022. Specifically, this final rule provides guidance on LIBOR replacements and the LIBOR transition for purposes of Regulation Z. We have communicated with the CFPB regarding our plans for the LIBOR transition.

A cross-functional team is overseeing and managing our transition away from the use of LIBOR. This team assesses evolving industry and marketplace norms and conventions for LIBOR-indexed instruments, evaluates the impacts stemming from the future cessation of LIBOR publication and oversees and takes actions to transition our LIBOR exposures to alternative benchmark rates, usually SOFR. At the time of LIBOR publication cessation, our LIBOR exposures were limited to two instruments — variable-rate student loans and capital markets securities.

As of June 30, 2023, LIBOR-indexed variable-rate loans comprised approximately 35% of our private student loan portfolio and approximately 3% of our aggregate loan portfolio. These outstanding student loans indexed to LIBOR will convert to a SOFR index at the first benchmark determination date after June 30, 2023. As of November 2021, we no longer originate new variable-rate student loans indexed to LIBOR. Instead, new originations of such loans are indexed solely to 3-month term SOFR published by the Chicago Mercantile Exchange ("CME").

We ceased entering into new LIBOR-indexed interest rate derivatives in 2018 and have since actively eliminated LIBOR exposures in our derivatives portfolio. During the third quarter of 2021, we terminated our last LIBOR-indexed interest rate swap maturing after June 2023; our last LIBOR-indexed interest rate swap matured in January 2022.

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In June 2023, we announced that $1.8 billion of our LIBOR-based capital markets securities would transition to the corresponding tenor for CME term SOFR plus the applicable tenor spread adjustment in a manner consistent with the Adjustable Interest Rate Act ("LIBOR Act") and the Regulation Implementing the LIBOR Act issued by the Board of Governors of the Federal Reserve System ("Regulation ZZ"). The aforementioned transitions will occur with the first setting of the interest rate for each security after June 30, 2023. Approximately $500 million of Discover Bank's subordinated notes have a rate reset in August 2023 that contain fallback provisions that may not be covered under the LIBOR Act or Regulation ZZ. If Discover Bank does not exercise its option to redeem the subordinated notes, and the designated screen page for the benchmark rate is not populated and no successor page is identified, the rate for these securities will be determined by the Fiscal and Paying Agent by reference to a dealer poll, parameters of which are expected to be in accordance with the ARRC's recommended formula.

Consumer Financial Services

The CFPB regulates consumer financial products and services and examines certain providers of consumer financial products and services, including Discover. The CFPB's authority includes rulemaking, supervisory and enforcement powers with respect to federal consumer protection laws; preventing "unfair, deceptive or abusive acts or practices" ("UDAAP") and ensuring that consumers have access to fair and transparent financial products and services. Historically, the CFPB's policy priorities focused on several financial products of the type we offer (e.g., credit cards and other consumer lending products). In addition, the CFPB is required by statute to undertake certain actions including its biennial review of the consumer credit card market.

The CFPB’s priorities have continued to focus on, among other things, increased enforcement of existing consumer protection laws, with a particular focus on fees charged to consumers, UDAAP, fair lending, student lending and servicing, debt collection and credit reporting. The CFPB has proposed a rule to alter Regulation Z’s late fee standards that includes caps on fees for late payments which could result in increased cardholder delinquencies and credit losses. Additionally, detection of repeat offenders, such as companies that violate a formal court or agency order, has become a priority for the CFPB. Director Chopra, in March 2022, identified, as repeat offenders, several companies that have had multiple enforcement actions, including Discover. The CFPB has recently taken action against financial institutions for violating prior enforcement actions. Enhanced regulatory requirements, potential supervisory findings, or enforcement actions and ratings could negatively impact our ability to implement certain consumer-focused enhancements to product features and functionality and business strategies, limit or change our business practices, limit our consumer product offerings, cause us to invest more management time and resources in compliance efforts or limit our ability to obtain related required regulatory approvals. The additional expense, time and resources needed to comply with ongoing or new regulatory requirements may adversely impact the cost of and access to credit for consumers and results of business operations.

In December 2020, certain of our subsidiaries entered into a consent order with the CFPB regarding identified private student loan servicing practices. See Note 13: Litigation and Regulatory Matters to our condensed consolidated financial statements for more information.

Data Security and Privacy

Policymakers at the federal and state levels remain focused on enhancing data security and data breach incident response requirements. Furthermore, regulations and legislation at various levels of government continue to be proposed and enacted to augment consumer data privacy standards, including the capture and use of consumer biometrics. For example, the California Consumer Privacy Act ("CCPA"), which became effective in 2020, created a broad set of privacy rights and remedies modeled in part on the European Union's General Data Protection Regulation. The California Privacy Rights Act ("CPRA"), which became effective on January 1, 2023, amends the CCPA, enhancing consumer privacy protections and creating a new California Privacy Protection Agency ("CPPA"). A California court recently issued an order delaying enforcement of the CPRA regulations from July 1, 2023, until March 29, 2024, although the CPPA may still decide to enforce the provisions of the CCPA, as amended. We continue to evaluate the impact of the CCPA, as well as other federal and state laws, on our businesses and other providers of consumer financial services.

Environmental, Social and Governance Matters

Environmental, social and governance ("ESG") issues, including climate change, human capital and governance practices, are a significant area of focus by lawmakers at the state and federal levels, regulatory agencies, shareholders and other stakeholders. Legislation and rulemakings have been proposed or recently issued, including those to require disclosure of climate, cybersecurity and other ESG metrics and risk. The potential impact to us of these legislative and regulatory developments is uncertain at this time.

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In particular, in March 2022, the Securities and Exchange Commission proposed climate-related disclosure requirements. Through an enterprise-wide working group, we continue to assess the potential impact of the proposed rules, if adopted.

Segments

We manage our business activities in two segments, Digital Banking and Payment Services, based on the products and services provided. For a detailed description of the operations of each segment, as well as the allocation conventions used in our business segment reporting, see Note 16: Segment Disclosures to our condensed consolidated financial statements.

The following table presents segment data (dollars in millions):

	For the Three Months Ended June 30,				For the Six Months Ended June 30,
	2023		2022		2023		2022
Digital Banking
Interest income
Credit card loans	$	3,466	$	2,424	$	6,787	$	4,692
Private student loans	255		196		507		386
Personal loans	278		206		526		412
Other loans	73		37		137		69
Other interest income	218		52		410		92
Total interest income	4,290		2,915		8,367		5,651
Interest expense	1,113		305		2,058		562
Net interest income	3,177		2,610		6,309		5,089
Provision for credit losses	1,305		549		2,407		703
Other income	586		546		1,108		1,021
Other expense	1,359		1,186		2,701		2,278
Income before income taxes	1,099		1,421		2,309		3,129
Payment Services
Other income (loss)	115		57		203		(6)
Other expense	45		37		86		75
Income (loss) before income taxes	70		20		117		(81)
Total income before income taxes	$	1,169	$	1,441	$	2,426	$	3,048

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The following table presents information on transaction volume (dollars in millions):

	For the Three Months Ended June 30,				For the Six Months Ended June 30,
	2023		2022		2023		2022
Network Transaction Volume
PULSE Network	$	69,008	$	62,992	$	134,276	$	122,828
Network Partners	10,408		11,532		21,036		22,215
Diners Club(1)	9,897		8,381		19,108		15,557
Total Payment Services	89,313		82,905		174,420		160,600
Discover Network — Proprietary(2)	57,099		55,838		108,925		103,967
Total Network Transaction Volume	$	146,412	$	138,743	$	283,345	$	264,567
Transactions Processed on Networks
Discover Network	$	940	$	916	$	1,790	$	1,747
PULSE Network	1,761		1,524		3,386		2,923
Total Transaction Processed on Networks	$	2,701	$	2,440	$	5,176	$	4,670
Credit Card Volume
Discover Card Volume(3)	$	58,774	$	57,384	$	112,903	$	106,763
Discover Card Sales Volume(4)	$	55,229	$	53,860	$	105,817	$	100,189

(1)Diners Club volume is derived from data provided by licensees for Diners Club branded cards issued outside North America and is subject to subsequent revision or amendment.

(2)Represents gross Discover card sales volume on the Discover Network.

(3)Represents Discover card activity related to sales net of returns, balance transfers, cash advances and other activity.

(4)Represents Discover card activity related to sales net of returns.

Digital Banking

Our Digital Banking segment reported pretax income of $1.1 billion and $2.3 billion, respectively, for the three and six months ended June 30, 2023, as compared to $1.4 billion and $3.1 billion, respectively, for the three and six months ended June 30, 2022.

Net interest income increased for the three and six months ended June 30, 2023, as compared to the same periods in 2022, primarily driven by a higher yield on loans and a higher average level of loan receivables, partially offset by higher funding costs. Interest income increased for the three and six months ended June 30, 2023, as compared to the same periods in 2022, primarily due to higher market rates and a higher average level of loan receivables. Interest expense increased for the three and six months ended June 30, 2023, as compared to the same periods in 2022, primarily due to higher funding costs driven by higher market rates and a larger funding base.

For the three and six months ended June 30, 2023, the provision for credit losses increased as compared to the same periods in 2022, primarily driven by loan growth and credit normalization. For a detailed discussion on provision for credit losses, see "— Loan Quality — Provision and Allowance for Credit Losses."

Total other income for the Digital Banking segment increased for the three and six months ended June 30, 2023, as compared to the same periods in 2022, primarily due to an increase in loan fee income driven by a higher volume of late payments.

Total other expense increased for the three and six months ended June 30, 2023, as compared to the same periods in 2022, primarily due to increases in employee compensation and benefits, professional fees, other expense and information processing and communication. The increase in employee compensation and benefits was driven primarily by higher headcount. Professional fees increased primarily due to increased consulting supporting consumer compliance initiatives and investments in technology. Other expense increased due to higher legal reserves. The increase in information processing and communications was driven primarily from software write-downs. The total expense increase for the six months ended June 30, 2023, was also driven by an increase in marketing and business development due primarily from growth investments in consumer banking products.

Discover card sales volume was $55.2 billion and $105.8 billion, respectively, for the three and six months ended June 30, 2023, which was an increase of 2.5% and 5.6%, respectively, as compared to the same periods in 2022. This volume growth was primarily driven by higher consumer spending.

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Payment Services

Our Payment Services segment reported pretax income of $70 million and $117 million, respectively, for the three and six months ended June 30, 2023, as compared to pretax income of $20 million and a pretax loss of $81 million, respectively, for the same periods in 2022. The increase in segment pretax income was primarily due to the losses on equity investments in the prior periods, which were the result of larger mark-to-market adjustments for equity investments measured at fair value.

Critical Accounting Estimates

In preparing our consolidated financial statements in conformity with accounting principles generally accepted in the U.S. ("GAAP"), management must make judgments and use estimates and assumptions about the effects of matters that are uncertain. For estimates that involve a high degree of judgment and subjectivity, it is possible that different estimates could reasonably be derived for the same period. For estimates that are particularly sensitive to changes in economic or market conditions, significant changes to the estimated amount from period to period are also possible. Management believes the current assumptions and other considerations used to estimate amounts reflected in our consolidated financial statements are appropriate. However, if actual experience differs from the assumptions and other considerations used in estimating amounts in our consolidated financial statements, the resulting changes could have a material effect on our consolidated results of operations and, in certain cases, could have a material effect on our consolidated financial condition. Management has identified the estimates related to our allowance for credit losses as a critical accounting estimate.

Allowance for Credit Losses

The allowance for credit losses was $8.1 billion at June 30, 2023, which reflects a $373 million build from the amount of the allowance for credit losses at March 31, 2023. The allowance for credit losses represents management’s estimate of expected credit losses over the remaining expected life of our financial assets measured at amortized cost. Changes in the allowance for credit losses, and in the related provision for credit losses, can materially affect net income.

In estimating the expected credit losses, we use a combination of statistical models and qualitative analysis. There is a significant amount of judgment applied in selecting inputs and analyzing the results produced to estimate the allowance for credit losses. For more information on these judgments and our accounting policies and methodologies used to determine the allowance for credit losses, see "Management's Discussion and Analysis of Financial Condition and Results of Operations — Loan Quality," Note 4: Loan Receivables and Note 2: Summary of Significant Accounting Policies to our consolidated financial statements in our annual report on Form 10-K for the year ended December 31, 2022.

One of the key assumptions requiring significant judgment in estimating the current expected credit losses ("CECL") on a quarterly basis is the determination of the macroeconomic forecasts used in the loss forecast models. For the reasonable and supportable loss forecast period, we consider forecasts of multiple economic scenarios that generally include a base scenario with one or more optimistic (upside) or pessimistic (downside) scenarios. These scenarios comprise a variety of macroeconomic variables, including annualized gross domestic product growth and unemployment rate. The scenarios that are chosen each quarter and the amount of weighting given to each scenario depend on a variety of factors including recent economic events, leading economic indicators, views of internal and third-party economists and industry trends. Assumptions about the macroeconomic environment are inherently uncertain and, as a result, actual changes in the allowance for credit losses may be different from the simulated scenario presented below.

To demonstrate the sensitivity of the estimated credit losses to the macroeconomic scenarios, we measured the impact of altering the weighting of macroeconomic scenarios used in our loss forecast. Our allowance for credit losses would increase by approximately $458 million at June 30, 2023 if we applied 100% weight to the most adverse scenario in our sensitivity analysis to reflect continued inflationary pressures, including persistent supply-chain disruptions and the influence of geopolitical events, as well as high interest rates and reduced credit availability.

The sensitivity disclosed above is hypothetical. It is difficult to estimate how potential changes in any one factor or input, such as the weighting of macroeconomic forecasts, might affect the overall allowance for credit losses because we consider a variety of factors and inputs in estimating the allowance for credit losses. The macroeconomic scenarios used are constructed with interrelated projections of multiple economic variables and loss estimates are produced that consider the historical correlation of those economic variables with credit losses. The inputs in the macroeconomic scenarios may not change at the same rate and may not be consistent across all geographies or product types, and changes in factors and inputs may be directionally inconsistent, such that improvement in one factor or input may offset deterioration in others. As a result, the sensitivity analysis above does not necessarily reflect the nature and extent of future changes in the allowance for credit losses. It is intended to provide insights into the impact of different judgments about the economy on our modeled loss

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estimates for the loan portfolio and does not imply any expectation of future losses. Furthermore, the hypothetical increase in our allowance for credit losses for loans does not incorporate the impact of management judgment for qualitative factors applied in the current allowance for credit losses, which may have a positive or negative effect on our actual financial condition and results of operations.

The overall economic environment directly impacts the macroeconomic variables that are used in the loss forecast models. If management used different assumptions about the economic environment in estimating expected credit losses, the impact to the allowance for credit losses could have a material effect on our consolidated financial condition and results of operations. In addition, if we experience significant instability in the economic environment, the uncertainty around the credit loss forecasts may increase, both due to the uncertainty of the economic forecasts and the challenges our models may have in incorporating them.

Earnings Summary

The following table outlines changes in our condensed consolidated statements of income (dollars in millions):

	For the Three Months Ended June 30,				2023 vs. 2022 Increase (Decrease)				For the Six Months Ended June 30,				2023 vs. 2022 Increase (Decrease)
	2023		2022		$		%		2023		2022		$		%
Interest income	$	4,290	$	2,915	$	1,375	47	%	$	8,367	$	5,651	$	2,716	48	%
Interest expense	1,113		305		808		265	%	2,058		562		1,496		266	%
Net interest income	3,177		2,610		567		22	%	6,309		5,089		1,220		24	%
Provision for credit losses	1,305		549		756		138	%	2,407		703		1,704		242	%
Net interest income after provision for credit losses	1,872		2,061		(189)		(9)	%	3,902		4,386		(484)		(11)	%
Other income	701		603		98		16	%	1,311		1,015		296		29	%
Other expense	1,404		1,223		181		15	%	2,787		2,353		434		18	%
Income before income taxes	1,169		1,441		(272)		(19)	%	2,426		3,048		(622)		(20)	%
Income tax expense	268		338		(70)		(21)	%	557		712		(155)		(22)	%
Net income	$	901	$	1,103	$	(202)	(18)	%	$	1,869	$	2,336	$	(467)	(20)	%
Net income allocated to common stockholders	$	895	$	1,097	$	(202)	(18)	%	$	1,826	$	2,293	$	(467)	(20)	%

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Net Interest Income

The tables that follow this section have been provided to supplement the discussion below and provide further analysis of net interest income, net interest margin and the impact of rate and volume changes on net interest income. Net interest income represents the difference between interest income earned on our interest-earning assets and the interest expense incurred to finance those assets. We analyze net interest income in total by calculating net interest margin (net interest income as a percentage of average total loan receivables) and net yield on interest-earning assets (net interest income as a percentage of average total interest-earning assets). We also separately consider the impact of the level of loan receivables and the related interest yield and the impact of the cost of funds related to each of our funding sources, along with the income generated by our liquidity portfolio, on net interest income.

Our interest-earning assets consist of: (i) cash and cash equivalents primarily related to amounts on deposit with the Federal Reserve Bank of Philadelphia, (ii) restricted cash, (iii) other short-term investments, (iv) investment securities and (v) loan receivables. Our interest-bearing liabilities consist primarily of deposits, both direct-to-consumer and brokered, and long-term borrowings, including amounts owed to securitization investors. The following factors influence net interest income:

•The level and composition of loan receivables, including the proportion of credit card loans to other loans, as well as the proportion of loan receivables bearing interest at promotional rates as compared to standard rates;

•The credit performance of our loans, particularly with regard to charge-offs of finance charges, which reduce interest income;

•The terms of long-term borrowings and certificates of deposit upon initial offering, including maturity and interest rate;

•The interest rates necessary to attract and maintain direct-to-consumer deposits;

•The level and composition of other interest-earning assets, including our liquidity portfolio, and interest-bearing liabilities;

•Changes in the interest rate environment, including the levels of interest rates and the relationships among interest rate indices, such as the prime rate, the federal funds rate, the interest rate on reserve balances, LIBOR and SOFR; and

•The effectiveness of interest rate swaps in our interest rate risk management program.

Net interest income increased for the three and six months ended June 30, 2023, as compared to the same periods in 2022, primarily driven by a higher yield on loans and a higher average level of loan receivables, partially offset by higher funding costs. Interest income increased for the three and six months ended June 30, 2023, as compared to the same periods in 2022, primarily due to higher market rates and a higher average level of loan receivables. Interest expense increased for the three and six months ended June 30, 2023, as compared to the same periods in 2022, primarily due to higher funding costs driven by higher market rates and a larger funding base.

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Average Balance Sheet Analysis

(dollars in millions)

	For the Three Months Ended June 30,
	2023						2022
	Average Balance		Yield/Rate		Interest		Average Balance		Yield/Rate		Interest
Assets
Interest-earning assets
Cash and cash equivalents	$	8,664	5.11	%	$	110	$	8,629	0.88	%	$	19
Restricted cash	75		10.27	%	2		40		0.41	%	NM
Investment securities	12,587		3.38	%	106		5,780		2.29	%	33
Loan receivables(1)
Credit card loans(2)(3)	91,825		15.14	%	3,466		75,917		12.81	%	2,424
Private student loans	10,343		9.87	%	255		10,164		7.74	%	196
Personal loans	8,744		12.72	%	278		6,981		11.84	%	206
Other	4,347		6.81	%	73		2,674		5.47	%	37
Total loan receivables	115,259		14.17	%	4,072		95,736		12.00	%	2,863
Total interest-earning assets	136,585		12.60	%	4,290		110,185		10.61	%	2,915
Allowance for credit losses	(7,691)						(6,644)
Other assets	6,668						5,874
Total assets(4)	$	135,562					$	109,415
Liabilities and Stockholders' Equity
Interest-bearing liabilities
Interest-bearing deposits
Time deposits	$	37,424	3.68	%	$	344	$	20,054	1.62	%	$	81
Money market deposits	8,282		4.08	%	84		8,326		0.89	%	19
Other interest-bearing savings deposits	49,686		3.85	%	477		43,546		0.68	%	74
Total interest-bearing deposits	95,392		3.80	%	905		71,926		0.97	%	174
Borrowings
Short-term borrowings	2		5.22	%	NM		141		0.95	%	NM
Securitized borrowings(5)(6)(7)	10,214		4.24	%	108		8,262		1.87	%	39
Other long-term borrowings(6)(7)(8)	9,068		4.44	%	100		9,184		4.02	%	92
Total borrowings	19,284		4.33	%	208		17,587		2.99	%	131
Total interest-bearing liabilities	114,676		3.89	%	1,113		89,513		1.36	%	305
Other liabilities and stockholders' equity(9)	20,886						19,902
Total liabilities and stockholders' equity	$	135,562					$	109,415
Net interest income					$	3,177					$	2,610
Net interest margin(10)			11.06	%					10.94	%
Net yield on interest-earning assets(11)			9.33	%					9.50	%
Interest rate spread(12)			8.71	%					9.25	%

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	For the Six Months Ended June 30,
	2023						2022
	Average Balance		Yield/Rate		Interest		Average Balance		Yield/Rate		Interest
Assets
Interest-earning assets
Cash and cash equivalents	$	8,007	4.90	%	$	195	$	8,574	0.54	%	$	23
Restricted cash	330		5.33	%	8		405		0.04	%	NM
Investment securities	12,412		3.37	%	207		6,142		2.26	%	69
Loan receivables(1)
Credit card loans(2)(3)	90,649		15.10	%	6,787		74,487		12.70	%	4,692
Private student loans	10,444		9.77	%	507		10,272		7.58	%	386
Personal loans	8,451		12.54	%	526		6,945		11.96	%	412
Other	4,119		6.73	%	137		2,517		5.53	%	69
Total loan receivables	113,663		14.12	%	7,957		94,221		11.90	%	5,559
Total interest-earning assets	134,412		12.55	%	8,367		109,342		10.42	%	5,651
Allowance for credit losses	(7,500)						(6,730)
Other assets	6,582						6,060
Total assets(4)	$	133,494					$	108,672
Liabilities and Stockholders’ Equity
Interest-bearing liabilities
Interest-bearing deposits
Time deposits	$	35,321	3.44	%	603		$	19,989	1.57	%	156
Money market deposits	8,524		3.92	%	166		8,267		0.74	%	30
Other interest-bearing savings deposits	49,472		3.63	%	892		43,020		0.59	%	127
Total interest-bearing deposits	93,317		3.59	%	1,661		71,276		0.89	%	313
Borrowings
Short-term borrowings	1		5.22	%	NM		402		0.58	%	1
Securitized borrowings(5)(6)(7)	9,942		3.96	%	195		8,002		1.58	%	63
Other long-term borrowings(6)(7)(8)	9,219		4.42	%	202		9,307		4.01	%	185
Total borrowings	19,162		4.18	%	397		17,711		2.83	%	249
Total interest-bearing liabilities	112,479		3.69	%	2,058		88,987		1.27	%	562
Other liabilities and stockholders’ equity(9)	21,015						19,686
Total liabilities and stockholders’ equity	$	133,494					$	108,673
Net interest income					$	6,309					$	5,089
Net interest margin(10)			11.19	%					10.89	%
Net yield on interest-earning assets(11)			9.47	%					9.39	%
Interest rate spread(12)			8.86	%					9.15	%

(1)Average balances of loan receivables and yield calculations include non-accruing loans. If the non-accruing loan balances were excluded, there would not be a material impact on the amounts reported above.

(2)Interest income on credit card loans includes $110 million and $86 million of amortization of balance transfer fees for the three months ended June 30, 2023 and 2022, respectively, and $215 million and $162 million for the six months ended June 30, 2023 and 2022, respectively.

(3)Includes the impact of interest rate swap agreements used to change a portion of floating-rate assets to fixed-rate assets for the three and six months ended June 30, 2023 and 2022.

(4)The return on average assets, based on net income, was 0.66% and 1.01% for the three months ended June 30, 2023 and 2022, respectively, and 1.40% and 2.15% for the six months ended June 30, 2023 and 2022, respectively.

(5)Includes the impact of one terminated derivative formerly designated as a cash flow hedge for the three and six months ended June 30, 2023 and 2022.

(6)Includes the impact of interest rate swap agreements used to change a portion of fixed-rate funding to floating-rate funding for the three and six months ended June 30, 2023 and 2022.

(7)Includes the impact of terminated derivatives formerly designated as fair value hedges for the three and six months ended June 30, 2023 and 2022.

(8)Includes the impact of interest rate swap agreements used to change a portion of floating-rate funding to fixed-rate funding for the three and six months ended June 30, 2023 and 2022.

(9)The return on average stockholders' equity, based on net income, was 26% and 33% for the three months ended June 30, 2023 and 2022, respectively, and 27% and 35% for the six months ended June 30, 2023 and 2022, respectively.

(10)Net interest margin represents net interest income as a percentage of average total loan receivables.

(11)Net yield on interest-earning assets represents net interest income as a percentage of average total interest-earning assets.

(12)Interest rate spread represents the difference between the rate on total interest-earning assets and the rate on total interest-bearing liabilities.

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Loan Quality

Loan receivables consist of the following (dollars in millions):

	June 30, 2023		December 31, 2022
Credit card loans	$	93,955	$	90,113
Other loans
Private student loans	10,241		10,308
Personal loans	9,106		7,998
Other loans	4,604		3,701
Total other loans	23,951		22,007
Total loan receivables	117,906		112,120
Allowance for credit losses	(8,064)		(7,374)
Net loan receivables	$	109,842	$	104,746

Provision and Allowance for Credit Losses

Provision for credit losses is the expense related to maintaining the allowance for credit losses at an appropriate level to absorb the estimate of credit losses anticipated over the remaining expected life of loan receivables at each period end date. In deriving the estimate of expected credit losses, we consider the collectability of principal, interest and fees associated with our loan receivables. We also consider expected recoveries of amounts that were either previously charged-off or are expected to be charged-off. Establishing the estimate for expected credit losses requires significant management judgment. The factors that influence the provision for credit losses include:

•Increases or decreases in outstanding loan balances, including:

•Changes in consumer spending, payment and credit utilization behaviors;

•The level of new account and loan originations and loan maturities; and

•Changes in the overall mix of accounts and products within the portfolio;

•The credit quality of the loan portfolio, which reflects our credit granting practices and the effectiveness of collection efforts, among other factors;

•The impact of general economic conditions on the consumer, including national and regional conditions, unemployment levels, bankruptcy trends and interest rate movements;

•The level and direction of historical losses; and

•Regulatory changes or new regulatory guidance.

Refer to "Management's Discussion and Analysis of Financial Condition and Results of Operations — Critical Accounting Estimates — Allowance for Credit Losses" and Note 3: Loan Receivables to our condensed consolidated financial statements for more details on how we estimate the allowance for credit losses.

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The following tables provide changes in our allowance for credit losses (dollars in millions):

	For the Three Months Ended June 30, 2023
	Credit Card Loans		Private Student Loans		Personal Loans		Other Loans		Total Loans
Balance at March 31, 2023	$	6,135	$	872	$	622	$	62	$	7,691
Additions
Provision for credit losses(1)	1,232		9		50		6		1,297
Deductions
Charge-offs	(1,051)		(38)		(64)		—		(1,153)
Recoveries	209		6		14		—		229
Net charge-offs	(842)		(32)		(50)		—		(924)
Balance at June 30, 2023	$	6,525	$	849	$	622	$	68	$	8,064
	For the Three Months Ended June 30, 2022
	Credit Card Loans		Private Student Loans		Personal Loans		Other Loans		Total Loans
Balance at March 31, 2022	$	5,120	$	870	$	613	$	44	$	6,647
Additions
Provision for credit losses(1)	568		(11)		(20)		2		539
Deductions
Charge-offs	(587)		(33)		(39)		—		(659)
Recoveries	206		6		18		—		230
Net charge-offs	(381)		(27)		(21)		—		(429)
Balance at June 30, 2022	$	5,307	$	832	$	572	$	46	$	6,757
	For the Six Months Ended June 30, 2023
	Credit Card Loans		Private Student Loans		Personal Loans		Other Loans		Total Loans
Balance at December 31, 2022	$	5,883	$	839	$	595	$	57	$	7,374
Cumulative effect of ASU No. 2022-02 adoption(2)	(66)		—		(2)		—		(68)
Balance at January 1, 2023	5,817		839		593		57		7,306
Additions
Provision for credit losses(1)	2,234		69		118		11		2,432
Deductions
Charge-offs	(1,930)		(71)		(118)		—		(2,119)
Recoveries	404		12		29		—		445
Net charge-offs	(1,526)		(59)		(89)		—		(1,674)
Balance at June 30, 2023	$	6,525	$	849	$	622	$	68	$	8,064
	For the Six Months Ended June 30, 2022
	Credit Card Loans		Private Student Loans		Personal Loans		Other Loans		Total Loans
Balance at December 31, 2021	$	5,273	$	843	$	662	$	44	$	6,822
Additions
Provision for credit losses(1)	746		34		(50)		2		732
Deductions
Charge-offs	(1,128)		(57)		(77)		—		(1,262)
Recoveries	416		12		37		—		465
Net charge-offs	(712)		(45)		(40)		—		(797)
Balance at June 30, 2022	$	5,307	$	832	$	572	$	46	$	6,757

(1)Excludes an $8 million and $10 million adjustment of the liability for expected credit losses on unfunded commitments for the three months ended June 30, 2023 and 2022, respectively, and $25 million and $29 million for the six months ended June 30, 2023 and 2022, respectively, as the liability is recorded in accrued expenses and other liabilities in our condensed consolidated statements of financial condition.

(2)Represents the adjustment to the allowance for credit losses as a result of the adoption of ASU No. 2022-02 on January 1, 2023.

The allowance for credit losses was approximately $8.1 billion at June 30, 2023, which reflects a $373 million build over March 31, 2023, and a $690 million build from December 31, 2022. The build in the allowance for credit losses for the three and six months ended June 30, 2023 was primarily driven by loan growth.

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The allowance estimation process begins with a loss forecast that uses certain macroeconomic variables and multiple macroeconomic scenarios among its inputs. In estimating the allowance at June 30, 2023, we used a macroeconomic forecast that projected the following weighted average amounts: (i) unemployment rate ending 2023 at 4.0% and peaking at 4.3% in mid 2024 and (ii) 1.56% growth rate in real gross domestic product in 2023.

In estimating expected credit losses, we considered the uncertainties associated with borrower behavior and payment trends, as well as recent and expected macroeconomic conditions, such as high consumer price inflation and the fiscal and monetary policy responses to that inflation. The Federal Reserve raised its federal funds rate target range substantially during 2022 and the first half of 2023 in an effort to slow economic growth and reduce inflation. Most economists and financial market participants expect U.S. economic growth and inflation to slow gradually during 2023 as the economy responds to the lagged effects of tighter monetary policy and credit conditions.

The forecast period we deemed to be reasonable and supportable was 18 months for all periods presented. The 18 months reasonable and supportable forecast period was deemed appropriate given the current economic conditions. For all periods presented, we determined that a reversion period of 12 months was appropriate for the same reason. We applied a weighted reversion method to provide a more reasonable transition to historical losses for all loan products for all periods presented.

The provision for credit losses is the amount of expense realized after considering the level of net charge-offs in the period and the required amount of allowance for credit losses at the balance sheet date. For the three and six months ended June 30, 2023, the provision for credit losses increased by $758 million and $1.7 billion compared to the same periods in 2022, primarily driven by loan growth and credit normalization.

Net Charge-offs

Our net charge-offs include the principal amount of losses charged off less principal recoveries and exclude charged-off and recovered interest and fees and fraud losses. Charged-off and recovered interest and fees are recorded in interest income and loan fee income, respectively, which is effectively a reclassification of the provision for credit losses, while fraud losses are recorded in other expense.

The following table presents amounts and rates of net charge-offs of key loan products (dollars in millions):

	For the Three Months Ended June 30,								For the Six Months Ended June 30,
	2023				2022				2023				2022
	$		%		$		%		$		%		$		%
Credit card loans	$	842	3.68	%	$	381	2.01	%	$	1,526	3.39	%	$	712	1.93	%
Private student loans	$	32	1.25	%	$	27	1.08	%	$	59	1.15	%	$	45	0.88	%
Personal loans	$	50	2.28	%	$	21	1.21	%	$	89	2.12	%	$	40	1.17	%

The net charge-offs and net charge-off rate for credit card loans increased for the three and six months ended June 30, 2023, when compared to the same periods in 2022, primarily due to continued credit normalization and the seasoning of vintages from the past two years. The net charge-offs and net charge-off rate for private student and personal loans increased for the three and six months ended June 30, 2023, when compared to the same periods in 2022, primarily due to continued credit normalization.

Delinquencies

Delinquencies are an indicator of credit quality at a point in time. A loan balance is considered delinquent when contractual payments on the loan become 30 days past due.

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The following table presents the amounts and delinquency rates of key loan products that are 30 and 90 days or more delinquent, and loan receivables that are not accruing interest regardless of delinquency (dollars in millions):

	June 30, 2023				December 31, 2022
	$		%		$		%
Loans 30 or more days delinquent
Credit card loans	$	2,689	2.86	%	$	2,278	2.53	%
Private student loans	$	218	2.13	%	$	212	2.05	%
Personal loans	$	91	1.00	%	$	63	0.80	%
Total loan receivables	$	3,027	2.57	%	$	2,578	2.30	%
Loans 90 or more days delinquent
Credit card loans	$	1,269	1.35	%	$	1,028	1.14	%
Private student loans	$	55	0.54	%	$	45	0.43	%
Personal loans	$	24	0.26	%	$	16	0.21	%
Total loan receivables	$	1,361	1.16	%	$	1,101	0.98	%
Loans not accruing interest	$	298	0.25	%	$	214	0.19	%

The 30-day and 90-day delinquency rates for credit card loans at June 30, 2023, increased compared to December 31, 2022, primarily driven by credit normalization and the seasoning of vintages from the past two years. The 30-day and 90-day delinquency rates for private student loans and personal loans at June 30, 2023, increased compared to December 31, 2022, primarily driven by credit normalization.

Modified and Restructured Loans

For information regarding modified and restructured loans, see Note 3: Loan Receivables to our condensed consolidated financial statements.

Other Income

The following table presents the components of other income (dollars in millions):

	For the Three Months Ended June 30,				2023 vs 2022 (Decrease) Increase				For the Six Months Ended June 30,				2023 vs. 2022 Increase
	2023		2022		$		%		2023		2022		$		%
Discount and interchange revenue, net(1)	$	370	$	379	$	(9)	(2)	%	$	700	$	688	$	12	2	%
Protection products revenue	44		42		2		5	%	87		86		1		1	%
Loan fee income	186		142		44		31	%	352		282		70		25	%
Transaction processing revenue	72		61		11		18	%	139		118		21		18	%
Gains (losses) on equity investments	1		(42)		43		(102)	%	(17)		(204)		187		(92)	%
Other income	28		21		7		33	%	50		45		5		11	%
Total other income	$	701	$	603	$	98	16	%	$	1,311	$	1,015	$	296	29	%

(1)Net of rewards, including Cashback Bonus rewards, of $788 million and $743 million for the three months ended June 30, 2023 and 2022, respectively, and $1.5 billion and $1.4 billion for the six months ended June 30, 2023 and 2022, respectively.

Total other income increased for the three and six months ended June 30, 2023, as compared to the same periods in 2022, primarily due to the losses on equity investments in the prior periods and an increase in loan fee income. The losses on equity investments in the prior periods were the result of larger mark-to-market adjustments for equity investments measured at fair value. Loan fee income increased primarily due to a higher volume of late payments.

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Other Expense

The following table represents the components of other expense (dollars in millions):

	For the Three Months Ended June 30,				2023 vs. 2022 Increase (Decrease)				For the Six Months Ended June 30,				2023 vs. 2022 Increase (Decrease)
	2023		2022		$		%		2023		2022		$		%
Employee compensation and benefits	$	588	$	515	$	73	14	%	$	1,213	$	1,015	$	198	20	%
Marketing and business development	268		254		14		6	%	509		446		63		14	%
Information processing and communications	150		121		29		24	%	289		246		43		17	%
Professional fees	216		189		27		14	%	448		366		82		22	%
Premises and equipment	20		24		(4)		(17)	%	42		48		(6)		(13)	%
Other expense	162		120		42		35	%	286		232		54		23	%
Total other expense	$	1,404	$	1,223	$	181	15	%	$	2,787	$	2,353	$	434	18	%

Total other expense increased for the three and six months ended June 30, 2023, as compared to the same periods in 2022, primarily due to increases in employee compensation and benefits, professional fees, other expense and information processing and communication. The increase in employee compensation and benefits was driven primarily by higher headcount. Professional fees increased primarily due to increased consulting supporting consumer compliance initiatives and investments in technology. Other expense increased due to higher legal reserves. The increase in information processing and communications was driven primarily from software write-downs. The total expense increase for the six months ended June 30, 2023, was also driven by an increase in marketing and business development due primarily from growth investments in consumer banking products.

Income Tax Expense

The following table presents the calculation of the effective income tax rate (dollars in millions):

	For the Three Months Ended June 30,						For the Six Months Ended June 30,
	2023			2022			2023			2022
Income before income taxes	$	1,169		$	1,441		$	2,426		$	3,048
Income tax expense	$	268		$	338		$	557		$	712
Effective income tax rate	23.0		%	23.5		%	23.0		%	23.4		%

Liquidity and Capital Resources

Funding and Liquidity

We seek to maintain stable, diversified and cost-effective funding sources and a strong liquidity profile to fund our business and repay or refinance our maturing obligations under normal operating conditions and periods of economic or financial stress. In managing our liquidity risk, we seek to maintain a prudent liability maturity profile and ready access to an ample store of primary and contingency liquidity sources. Our primary funding sources include direct-to-consumer and brokered deposits, public term asset-backed securitizations and other short-term and long-term borrowings. Our primary liquidity sources include a portfolio composed of highly liquid, unencumbered assets, including cash and cash equivalents and investment securities, as well as secured borrowing capacity through private term asset-backed securitizations and Federal Home Loan Bank ("FHLB") advances. In addition, we have unused borrowing capacity at the Federal Reserve discount window, which provides another source of contingency liquidity.

Funding Sources

Deposits

We obtain deposits from consumers directly or through affinity relationships ("direct-to-consumer deposits"). Additionally, we obtain deposits through third-party securities brokerage firms that offer our deposits to their customers ("brokered deposits"). Direct-to-consumer deposit products include savings accounts, certificates of deposit, money market accounts, IRA savings accounts, IRA certificates of deposit and checking accounts. We gather these deposits from retail customers of our bank, many of whom have more than one Discover product. These deposits originate from a large and

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diverse customer base, and therefore, the majority of these deposit account balances are insured according to the Federal Deposit Insurance Corporation's ("FDIC") insurance limits. Our cost of insuring these deposits is likely to rise as the FDIC recently stated it plans, as required by law, to charge banks a special assessment to cover the cost of losses to the Deposit Insurance Fund incurred after the failure of two domestic banks in March 2023. Brokered deposit products include certificates of deposit and sweep accounts. In accordance with the FDIC final rule on revisions to its brokered deposits regulation, we no longer categorize certain retail deposit products such as affinity deposits and deposits generated through certain sweep deposit relationships as brokered for regulatory reporting purposes. At June 30, 2023, we had $77.3 billion of direct-to-consumer deposits and $21.7 billion of brokered deposits, of which there are $79.4 billion of deposit balances due in less than one year and $19.6 billion of deposit balances due in one year or thereafter.

Credit Card Securitization Financing

We securitize credit card receivables as a source of funding. We access the asset-backed securitization market using the Discover Card Master Trust I ("DCMT") and the Discover Card Execution Note Trust ("DCENT"). In connection with our securitization transactions, credit card receivables are transferred to DCMT. DCMT has issued a certificate representing the beneficial interest in its credit card receivables to DCENT. We issue DCENT DiscoverSeries notes in public and private transactions, which are collateralized by the beneficial interest certificate held by DCENT. From time to time, we may add credit card receivables to DCMT to create sufficient funding capacity for future securitizations while managing seller's interest. We retain significant exposure to the performance of the securitized credit card receivables through holding the seller's interest and subordinated classes of DCENT DiscoverSeries notes. At June 30, 2023, we had $11.3 billion of outstanding public asset-backed securities and $3.0 billion of outstanding subordinated asset-backed securities that had been issued to our wholly-owned subsidiaries.

The securitization structures include certain features designed to protect investors. The primary feature relates to the availability and adequacy of cash flows in the securitized pool of receivables to meet contractual requirements, the insufficiency of which triggers early repayment of the securities. We refer to this as "economic early amortization," which is based on excess spread levels. Excess spread is the amount by which income received with respect to the securitized credit card receivables during a collection period including interest collections, fees and interchange, exceeds the fees and expenses of DCENT during such collection period, including interest expense, servicing fees and charged-off receivables. In the event of an economic early amortization, which would occur if the excess spread fell below 0% on a three-month rolling average basis, we would be required to repay all outstanding securitized borrowings using available collections received with respect to the securitized credit card receivables. For the three months ended June 30, 2023, the DiscoverSeries three-month rolling average excess spread was 14.45%. The period of ultimate repayment would be determined by the amount and timing of collections received.

Through our wholly-owned indirect subsidiary, Discover Funding LLC, we are required to maintain an interest in a contractual minimum level of receivables in DCMT in excess of the face value of outstanding investors' interests. This minimum interest is referred to as the minimum seller's interest. The required minimum seller's interest in the pool of trust receivables is approximately 7% in excess of the total investors' interests, which includes interests held by third parties as well as those interests held by us. If the level of receivables in DCMT were to fall below the required minimum, we would be required to add receivables from the unrestricted pool of receivables, which would increase the amount of credit card receivables restricted for securitization investors. A decline in the amount of the excess seller's interest could occur if balance repayments and charge-offs exceeded new lending on the securitized accounts or as a result of changes in total outstanding investors' interests. Seller's interest exhibits seasonality as higher receivable balance repayments tend to occur in the first calendar year quarter. If we could not add enough receivables to satisfy the minimum seller's interest requirement, an early amortization (or repayment) of investors' interests would be triggered.

An early amortization event would impair our liquidity and may require us to utilize our available non-securitization-related contingent liquidity or rely on alternative funding sources, which may or may not be available at the time. We have several strategies we can deploy to prevent an early amortization event. For instance, we could add receivables to DCMT, which would reduce our available borrowing capacity at the Federal Reserve discount window. As of June 30, 2023, there were $25.0 billion of credit card receivables in the trust and no accounts were added to those restricted for securitization investors for the three and six months ended June 30, 2023. Alternatively, we could employ structured discounting, which was used effectively in 2009 to bolster excess spread and mitigate early amortization risk.

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The following table summarizes expected contractual maturities of the investors' interests in credit card securitizations, excluding those that have been issued to our wholly-owned subsidiaries (dollars in millions):

At June 30, 2023	Total		Less Than One Year		One Year and Thereafter
Scheduled maturities of borrowings - owed to credit card securitization investors	$	11,142	$	1,626	$	9,516

The "AAA(sf)" and "Aaa(sf)" ratings of the DCENT DiscoverSeries Class A Notes issued to date have been based, in part, on an FDIC rule, which created a safe harbor that provides that the FDIC, as conservator or receiver, will not use its power to disaffirm or repudiate contracts, seek to reclaim or recover assets transferred in connection with a securitization, or recharacterize assets transferred in connection with a securitization as assets of the insured depository institution, provided such transfer satisfies the conditions for sale accounting treatment under previous GAAP. Although the implementation of Financial Accounting Standards Board ("FASB") Accounting Standards Codification Topic 860, Transfers and Servicing, no longer qualified certain transfers of assets for sale accounting treatment, the FDIC approved a final rule that preserved the safe-harbor treatment applicable to revolving trusts and master trusts, including DCMT, so long as those trusts would have satisfied the original FDIC safe harbor if evaluated under GAAP pertaining to transfers of financial assets in effect prior to December 2009. However, other legislative and regulatory developments may impact our ability or desire to issue asset-backed securities in the future.

Federal Home Loan Bank Advances

Discover Bank is a member bank of the FHLB of Chicago, one of 11 FHLBs that, along with the Office of Finance, compose the FHLB System. The FHLBs are government-sponsored enterprises of the U.S. ("U.S. GSEs") chartered to improve the availability of funds to support home ownership. As such, senior debt obligations of the FHLBs feature the same credit ratings as U.S. Treasury securities and are considered high-quality liquid assets for bank regulatory purposes. Consequently, the FHLBs benefit from consistent capital market access during nearly all macroeconomic and financial market conditions and low funding costs, which they pass on to their member banks when they borrow advances. Thus, we consider FHLB advances a stable and reliable funding source for Discover Bank for short-term contingency liquidity and long-term asset-liability management.

As a member of the FHLB of Chicago, Discover Bank has access to short- and long-term advance structures with maturities ranging from overnight to 30 years. At June 30, 2023, we had total committed borrowing capacity of $2.9 billion based on the amount and type of assets pledged, of which $525 million of long-term advances were outstanding with the FHLB of Chicago. Under certain stressed conditions, we could pledge our liquidity portfolio securities and borrow against them at a modest reduction to their value.

Other Long-Term Borrowings—Corporate and Bank Debt

The following table provides a summary of Discover Financial Services (Parent Company) and Discover Bank outstanding fixed-rate debt (dollars in millions):

At June 30, 2023	Principal Amount Outstanding
Discover Financial Services (Parent Company) fixed-rate senior notes, maturing 2024-2032	$	3,350
Discover Financial Services (Parent Company) fixed-rate retail notes, maturing 2023-2031	$	153
Discover Bank fixed-rate senior bank notes, maturing 2023-2030	$	4,550
Discover Bank fixed-rate subordinated bank notes, maturing 2028	$	500

At June 30, 2023, $649 million of interest on our fixed-rate debt is due in less than one year and $1.6 billion of interest is due in one year and thereafter. See Note 6: Long-Term Borrowings to our condensed consolidated financial statements for more information on the maturities of our long-term borrowings.

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Short-Term Borrowings

As part of our regular funding strategy, we may, from time to time, borrow short-term funds in the federal funds market or the repurchase ("repo") market through repurchase agreements. Federal funds are short-term, unsecured loans between banks or other financial entities with a Federal Reserve account. Funds borrowed in the repo market are short-term, collateralized loans, usually secured with highly rated investment securities such as U.S. Treasury bills or notes, or mortgage bonds or debentures issued by government agencies or U.S. GSEs. At June 30, 2023, there were no outstanding balances in the federal funds market or under repurchase agreements.

Additional Funding Sources

Private Asset-Backed Securitizations

We have access to committed borrowing capacity through privately placed asset-backed securitizations. While we may utilize funding from these private securitizations from time to time for normal business operations, their committed nature also makes them a reliable contingency funding source. Therefore, we reserve some undrawn capacity, informed by our liquidity stress test results, for any contingency funding needs. At June 30, 2023, we had a total committed capacity of $3.5 billion, none of which was drawn. We seek to ensure the stability and reliability of these securitizations by staggering their maturity dates, renewing them well ahead of their scheduled maturity dates and periodically drawing them for operational tests and seasonal funding needs.

Federal Reserve

Discover Bank has access to the Federal Reserve Bank of Philadelphia's discount window. As of June 30, 2023, Discover Bank had $45.9 billion of available borrowing capacity through the discount window based on the amount and type of assets pledged, primarily consumer loans. As of June 30, 2023, we have no borrowings outstanding under the discount window and reserve this capacity as a source of contingency liquidity.

Funding Uses

Our primary uses of funds include the extensions of loans and credit to customers, primarily through Discover Bank; the maintenance of sufficient working capital for routine operations; the service of our debt and capital obligations, including interest, principal and dividend payments; and the purchase of investment securities for our liquidity portfolio.

In addition to originating consumer loans to new customers, we also extend credit to existing customers, which primarily arises from agreements for unused lines of credit on certain credit cards and certain other loan products, provided there is no violation of conditions established in the related agreement. At June 30, 2023, our unused credit arrangements were approximately $229.9 billion. These arrangements, substantially all of which we can terminate at any time and which do not necessarily represent future cash requirements, are periodically reviewed based on account usage, customer creditworthiness and loan qualification.

In the normal course of business, we enter into various contracts for goods and services, such as consulting, outsourcing, data, sponsorships, software licenses, telecommunications and global merchant acceptance, among other things. These contracts are legally binding and specify all significant terms, including any applicable fixed future cash payments.

As of June 30, 2023, we have debt obligations, common stock and preferred stock outstanding. Refer to “— Funding Sources” and “— Capital” for more information related to our debt obligations and capital service, respectively, and the timing of expected payments.

We assess funding uses and liquidity needs under stressed and normal operating conditions, considering primary uses of funding, such as on-balance sheet loans and contingency uses of funding, such as the need to post additional collateral for derivatives positions. To anticipate funding needs under stress, we conduct liquidity stress tests to assess the impact of idiosyncratic, systemic and hybrid (i.e., idiosyncratic and systemic) scenarios with varying levels of liquidity risk reflecting a range of stress severity. If we determine we have excess cash and cash equivalents above what is required for daily operations, we may invest in highly liquid, unencumbered assets that we expect to be able to convert to cash quickly and with little loss of value using the repo market or other secured borrowing or outright sales.

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Guarantees

Guarantees are contracts or indemnification agreements that may require us to make payments to a guaranteed party based on changes in an underlying asset, liability, or equity security of a guaranteed party, rate or index. Also included in guarantees are contracts that may require the guarantor to make payments to a guaranteed party based on another entity’s failure to perform under an agreement. Our guarantees relate to transactions processed on the Discover Network and certain transactions processed by PULSE and Diners Club. In the ordinary course of business, we guarantee payment on behalf of subsidiaries relating to contractual obligations with external parties. The activities of the subsidiaries covered by any such guarantees are included in our consolidated financial statements. See Note 12: Commitments, Contingencies and Guarantees to our consolidated financial statements for further discussion regarding our guarantees.

Credit Ratings

Our borrowing costs and capacity in certain funding markets, including those for securitizations and unsecured senior and subordinated debt, may be affected by the credit ratings of DFS, Discover Bank and the securitization trusts. Downgrades in these credit ratings could result in higher interest expense on our unsecured debt and asset securitizations, as well as higher credit enhancement requirements for both our public and private asset securitizations. In addition to increased funding costs, deterioration in our credit ratings could reduce our borrowing capacity in the unsecured debt and asset securitization capital markets.

The table below reflects our current credit ratings and outlooks:

	Moody’s Investors Service	Standard & Poor's	Fitch Ratings
Discover Financial Services
Senior unsecured debt	Baa2	BBB-	BBB+
Outlook for Discover Financial Services senior unsecured debt	Stable	Stable	Stable
Discover Bank
Senior unsecured debt	Baa1	BBB	BBB+
Outlook for Discover Bank senior unsecured debt	Stable	Stable	Stable
Subordinated debt	Baa1	BBB-	BBB
Discover Card Execution Note Trust (DCENT)
Class A(1)	Aaa(sf)	AAA(sf)	AAA(sf)

(1)An "sf" in the rating denotes rating agency identification for structured finance product ratings.

A credit rating is not a recommendation to buy, sell or hold securities and may be subject to revision or withdrawal at any time by the assigning rating organization. Each rating should be evaluated independently of any other rating. A credit rating outlook reflects an agency's opinion regarding the likely rating direction over the medium term, often a period of about a year, and indicates the agency's belief that the issuer's credit profile is consistent with its current rating level at that point in time.

Liquidity

We seek to ensure that we have adequate liquidity to sustain business operations, fund asset growth and satisfy debt obligations under stressed and normal operating conditions. In addition to the funding sources discussed in the previous section, we also maintain highly liquid, unencumbered assets in our liquidity portfolio that we expect to be able to convert to cash quickly and with little loss of value using either the repo market or other secured borrowing or outright sales.

We maintain a liquidity risk and funding management policy, which outlines the overall framework and general principles we follow in managing liquidity risk across our business. The Board of Directors approves the policy and the Asset and Liability Management Committee (the "ALCO") is responsible for its implementation. Additionally, we maintain a liquidity management framework document that outlines the general strategies, objectives and principles we utilize to manage our liquidity position and the various liquidity risks inherent in our business model. We seek to balance the trade-offs between maintaining too much liquidity, which may be costly, with having too little liquidity, which could cause financial distress. The ALCO, chaired by our Treasurer, has cross-functional membership and manages liquidity risk centrally. The ALCO monitors the liquidity risk profiles of DFS and Discover Bank and oversees any actions Corporate Treasury may take to ensure that we maintain ready access to our funding sources and sufficient liquidity to meet current and projected needs. In

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addition, the ALCO and our Board of Directors regularly review our compliance with our liquidity limits at DFS and Discover Bank, which are established in accordance with the liquidity risk appetite set by our Board of Directors.

We employ a variety of metrics to monitor and manage liquidity. We utilize early warning indicators ("EWIs") to detect emerging liquidity stress events and a reporting and escalation process designed to be consistent with regulatory guidance. The EWIs include both idiosyncratic and systemic measures and are monitored daily and reported to the ALCO regularly. A warning from one or more of these indicators triggers prompt review and decision-making by our senior management team and, in certain instances, may lead to the convening of a senior-level response team and activation of our contingency funding plan.

In addition, we conduct liquidity stress tests regularly and ensure contingency funding is in place to address potential liquidity shortfalls. We evaluate a range of stress scenarios that are designed to follow regulatory requirements, including idiosyncratic, systemic and a combination of such events that could impact funding sources and our ability to meet liquidity needs. These scenarios measure the projected liquidity position at DFS and Discover Bank across a range of periods by comparing estimated contingency funding needs to available contingency liquidity.

Our primary contingency liquidity sources include our liquidity portfolio securities, which we could sell, repo or borrow against, and private securitizations with unused borrowing capacity. In addition, we could borrow FHLB advances by pledging securities to the FHLB of Chicago. Moreover, we have unused borrowing capacity with the Federal Reserve discount window, which provides an additional source of contingency liquidity. We seek to maintain sufficient liquidity to satisfy all maturing obligations and fund business operations for at least 12 months in a severe stress environment. In such an environment, we may also take actions to curtail the size of our balance sheet, which would reduce the need for funding and liquidity.

At June 30, 2023, our liquidity portfolio was composed of highly liquid, unencumbered assets, including cash and cash equivalents and investment securities. Cash and cash equivalents were primarily deposits with the Federal Reserve. Investment securities primarily included debt obligations of the U.S. Treasury and U.S. GSEs and residential mortgage-backed securities issued by U.S. government agencies or U.S. GSEs. These investments, nearly all of which are classified as available-for-sale, are considered highly liquid and we expect to have the ability to raise cash by selling them, utilizing repurchase agreements or pledging certain of these investments to access secured funding. The size and composition of our liquidity portfolio may fluctuate based on the size of our balance sheet as well as operational requirements, market conditions and interest rate risk management objectives.

At June 30, 2023, our liquidity portfolio and undrawn credit facilities were $72.7 billion, which was $5.4 billion higher than the balance at December 31, 2022. Our liquidity portfolio and undrawn credit facilities grew primarily as a result of the purchase of U.S. Treasury securities and additional borrowing capacity with the Federal Reserve. During the three and six months ended June 30, 2023, the average balance of our liquidity portfolio was $21.5 billion and $20.5 billion, respectively. Our liquidity portfolio and undrawn facilities consist of the following (dollars in millions):

	June 30, 2023		December 31, 2022
Liquidity portfolio
Cash and cash equivalents(1)	$	7,743	$	7,585
Investment securities(2)	13,152		12,213
Total liquidity portfolio	20,895		19,798
Private asset-backed securitizations(3)	3,500		3,500
Federal Home Loan Bank of Chicago	2,372		1,712
Primary liquidity sources	26,767		25,010
Federal Reserve discount window(3)	45,936		42,268
Total liquidity portfolio and undrawn credit facilities	$	72,703	$	67,278

(1)Cash in the process of settlement and restricted cash are excluded from cash and cash equivalents for liquidity purposes.

(2)Excludes $292 million and $97 million of U.S. Treasury securities that have been pledged as swap collateral in lieu of cash as of June 30, 2023 and December 31, 2022, respectively.

(3)See "— Additional Funding Sources" for additional information.

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Bank Holding Company Liquidity

The primary uses of funds at the unconsolidated DFS level include debt service obligations (interest payments and return of principal) and capital service and management activities, including dividend payments on capital instruments and the periodic repurchase of shares of our common stock. Our primary sources of funds at the bank holding company level include the proceeds from the issuance of unsecured debt and capital securities, as well as dividends from our subsidiaries, notably Discover Bank. Under periods of idiosyncratic or systemic stress, the bank holding company could lose or experience impaired access to the capital markets. In addition, our regulators have the discretion to restrict dividend payments from Discover Bank to the bank holding company.

We utilize a measure referred to as Number of Months of Pre-Funding to determine the length of time DFS can meet upcoming funding obligations, including common and preferred stock dividend payments and debt service obligations using existing cash resources. In managing this metric, we structure our debt maturity schedule to manage prudently the amount of debt maturing within a short period. See Note 6: Long-Term Borrowings to our condensed consolidated financial statements for further information regarding our debt.

Capital

Our primary sources of capital are the earnings generated by our businesses and the proceeds from issuances of capital securities. We seek to manage capital to a level and composition sufficient to support our businesses' growth, account for their risks, and meet regulatory requirements, rating agency targets and debt investor expectations. Within these constraints, we are focused on deploying capital in a manner that provides attractive returns to our stockholders. The level, composition and utilization of capital are influenced by changes in the economic environment, strategic initiatives and legislative and regulatory developments.

Under regulatory capital requirements adopted by the Federal Reserve and the FDIC, DFS, along with Discover Bank, must maintain minimum capital levels. Failure to meet minimum capital requirements can result in the initiation of certain mandatory and possibly additional discretionary actions by regulators that, if undertaken, could limit our business activities and have a direct material effect on our financial condition and operating results. We must meet specific capital requirements that involve quantitative measures of assets, liabilities and certain off-balance sheet items, as calculated under regulatory guidance and regulations. Current or future legislative or regulatory reforms, such as those related to the adoption of the CECL accounting model, may require us to hold more capital or adversely impact our capital level. We consider the potential impacts of these reforms in managing our capital position.

DFS and Discover Bank are subject to regulatory capital rules issued by the Federal Reserve and the FDIC, respectively, under the Basel Committee's December 2010 framework ("Basel III rules"). Under the Basel III rules, DFS and Discover Bank are classified as "standardized approach" entities as they are U.S. banking organizations with consolidated total assets over $50 billion but not exceeding $250 billion and consolidated total on-balance sheet foreign exposures less than $10 billion. The Basel III rules require DFS and Discover Bank to maintain minimum risk-based capital and leverage ratios and define what constitutes capital for purposes of calculating those ratios.

In accordance with the final rule on the impact of CECL on regulatory capital, we have elected to phase in the impact over three years, beginning in 2022. By electing this option, our Common Equity Tier 1 ("CET1") capital ratios are higher than they otherwise would have been. The phase-in of the CECL accounting model decreased CET1 by $1.1 billion as of January 1, 2023. For additional information regarding the risk-based capital and leverage ratios, see Note 11: Capital Adequacy to our condensed consolidated financial statements.

On March 4, 2020, the Federal Reserve announced the SCB final rule, which imposes limitations on DFS' capital distributions if we do not maintain our risk-based capital ratios above stated regulatory minimum ratios based on the results of supervisory stress tests. Under this rule, DFS is required to assess whether our planned capital actions are consistent with the effective capital distribution limitations that will apply on a pro-forma basis throughout the planning horizon.

The SCB requirement is institution-specific and is calculated as the greater of (i) 2.5% and (ii) the sum of (a) the difference between DFS' actual CET1 ratio at the beginning of the forecast and the projected minimum CET1 ratio based on the Federal Reserve's models in its nine-quarter Severely Adverse stress scenario, plus (b) the sum of the dollar amount of DFS' planned common stock dividend distributions for each of the fourth through seventh quarters of its nine-quarter capital planning horizon, expressed as a percentage of risk-weighted assets. For Category IV firms, including DFS, the Federal Reserve calculates each firm's SCB biennially in even-numbered calendar years, and did so in 2022. Based on the results of the 2022 CCAR exercise released by the Federal Reserve, our new SCB was set at 2.5%, the lowest possible requirement,

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effective October 1, 2022, through September 30, 2023. In odd-numbered years, each firm subject to Category IV standards that did not opt-in to such year's supervisory stress tests as part of the Federal Reserve's CCAR process receives an adjusted SCB requirement that is updated to reflect its planned common stock dividends per the firm's annual capital plan. On June 28, 2023, the Federal Reserve disclosed preliminary SCB requirements to firms subject to Category IV standards that did not opt-in to this year's stress test. While the Federal Reserve will not announce final SCB requirements until August 2023, our preliminary SCB is unchanged at 2.5%, the lowest possible requirement. See "— Regulatory Environment and Developments — Banking — Capital Standards and Stress Testing" for additional information.

At June 30, 2023, DFS and Discover Bank met the requirements for "well-capitalized" status under the Federal Reserve's Regulation Y and the prompt corrective action rules and corresponding FDIC requirements, respectively, exceeding the regulatory minimums to which they were subject under the applicable rules.

Basel III rules also require disclosures relating to market discipline. This series of disclosures is commonly referred to as "Pillar 3." The objective is to increase the transparency of capital requirements for banking organizations. We are required to make prescribed regulatory disclosures quarterly regarding our capital structure, capital adequacy, risk exposures and risk-weighted assets. We make the Pillar 3 disclosures publicly available on our website in a report called "Basel III Regulatory Capital Disclosures."

We disclose tangible common equity, which represents common equity less goodwill and intangibles. Management believes that common stockholders' equity excluding goodwill and intangibles is meaningful to investors as a measure of our true net asset value. At June 30, 2023, tangible common equity is considered to be a non-GAAP financial measure as it is not formally defined by GAAP or codified in the federal banking regulations. Other financial services companies may also disclose this measure and definitions may vary. We advise users of this information to exercise caution in comparing this measure for different companies.

The following table reconciles total common stockholders' equity (a GAAP financial measure) to tangible common equity (dollars in millions):

	June 30, 2023		December 31, 2022
Total common stockholders' equity(1)	$	12,800	$	13,288
Less: goodwill	(255)		(255)
Tangible common equity	$	12,545	$	13,033

(1)Total common stockholders' equity is calculated as total stockholders' equity less preferred stock.

Our Board of Directors declared the following common stock dividends during 2023 and 2022:

Declaration Date	Record Date	Payment Date	Dividend per Share
2023
July 17, 2023	August 24, 2023	September 07, 2023	$	0.70
April 17, 2023	May 25, 2023	June 08, 2023	0.70
January 17, 2023	February 23, 2023	March 09, 2023	0.60
Total common stock dividends			$	2.00
2022
October 18, 2022	November 23, 2022	December 08, 2022	$	0.60
July 20, 2022	August 25, 2022	September 08, 2022	0.60
April 27, 2022	May 26, 2022	June 09, 2022	0.60
January 18, 2022	February 17, 2022	March 03, 2022	0.50
Total common stock dividends			$	2.30

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Our Board of Directors declared the following Series C preferred stock dividends during 2023 and 2022:

Declaration Date	Record Date	Payment Date	Dividend per Depositary Share
2023
July 17, 2023	October 13, 2023	October 30, 2023	$	27.50
January 17, 2023	April 14, 2023	May 01, 2023	27.50
Total Series C preferred stock dividends			$	55.00
2022
July 20, 2022	October 14, 2022	October 31, 2022	$	27.50
January 18, 2022	April 15, 2022	May 02, 2022	27.50
Total Series C preferred stock dividends			$	55.00

Our Board of Directors declared the following Series D preferred stock dividends during 2023 and 2022:

Declaration Date	Record Date	Payment Date	Dividend per Depositary Share
2023
July 17, 2023	September 08, 2023	September 25, 2023	$	30.625
January 17, 2023	March 08, 2023	March 23, 2023	30.625
Total Series D preferred stock dividends			$	61.250
2022
July 20, 2022	September 08, 2022	September 23, 2022	$	30.625
January 18, 2022	March 08, 2022	March 23, 2022	30.625
Total Series D preferred stock dividends			$	61.250

Our Board of Directors approved a new share repurchase program in April 2023. The new program authorizes up to $2.7 billion of share repurchases through June 30, 2024, and replaced the prior $4.2 billion share repurchase program. If and when we repurchase our shares under the program, we may use various methods, including open market purchases, privately negotiated transactions or other purchases, including block trades, accelerated share repurchase transactions, or any combination of such methods. During the three months ended June 30, 2023, we repurchased approximately 6.8 million shares for approximately $700 million. During the six months ended June 30, 2023, we repurchased approximately 18.1 million shares for approximately $1.9 billion.

The amount and size of any future dividends and share repurchases will depend on our results of operations, financial condition, capital levels, cash requirements, future prospects, regulatory review and other factors. We have decided to pause share repurchases while an internal review of compliance, risk management and corporate governance is pending. See Note 13: Litigation and Regulatory Matters for additional information on the card product misclassification. The declaration and payment of future dividends and the amount thereof are subject to the discretion of our Board of Directors. Holders of our shares of common stock are subject to the prior dividend rights of holders of our preferred stock or the depositary shares representing such preferred stock outstanding. No dividend may be declared or paid or set aside for payment on our common stock if full dividends have not been declared and paid on all outstanding shares of preferred stock in any dividend period. In addition, as noted above, banking laws and regulations and our banking regulators may limit our ability to pay dividends and make share repurchases, including limitations on the extent our banking subsidiary (Discover Bank) can provide funds to us through dividends, loans or otherwise. Further, current or future regulatory reforms may require us to hold more capital or could adversely impact our capital level. As a result, there can be no assurance that we will declare and pay any dividends or repurchase any shares of our common stock in the future.

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Item 3.     Quantitative and Qualitative Disclosures About Market Risk

Market risk refers to the risk that a change in the level of one or more market prices, rates, indices, correlations or other market factors will result in losses for an investment position or portfolio. We are exposed to market risk primarily from changes in interest rates.

Interest Rate Risk

We borrow money from various depositors and institutions to provide loans to our customers and invest in other assets and our business. These loans to customers and other assets earn interest, which we use to pay interest on the money borrowed. Our net interest income and, therefore, earnings will be reduced if the interest rate earned on assets increases at a slower pace than the interest rate paid on our borrowings. Changes in interest rates and our competitors' responses to those changes may influence customer payment rates, loan balances or deposit account activity. As a result, we may incur higher funding costs that could decrease our earnings.

Our interest rate risk management policies are designed to measure and manage the potential volatility of earnings that may arise from changes in interest rates by having a portfolio that reflects our mix of variable- and fixed-rate assets and liabilities. To the extent that the repricing characteristics of the assets and liabilities in a particular portfolio are not sufficiently matched, we may utilize interest rate derivative contracts, such as swap agreements, to achieve our objectives. Interest rate swap agreements effectively convert the underlying asset or liability from fixed- to floating-rate or from floating- to fixed-rate. See Note 15: Derivatives and Hedging Activities to our condensed consolidated financial statements for information on our derivatives activity.

We use an interest rate sensitivity simulation to assess our interest rate risk exposure. For purposes of presenting the possible earnings effect of a hypothetical, adverse change in interest rates over the 12 months from our reporting date, we assume that all interest-rate-sensitive assets and liabilities are subject to a hypothetical, immediate 100 basis point change in interest rates relative to market consensus expectations as of the beginning of the period. The sensitivity simulation includes the hypothetical assumption that all relevant types of interest rates would change instantaneously, simultaneously and to the same degree.

Our interest-rate-sensitive assets include our variable-rate loan receivables and certain assets in our liquidity portfolio. We have limitations on our ability to mitigate interest rate risk by adjusting rates on existing balances. Further, competitive actions may limit our ability to increase the rates that we charge to customers for new loans. At June 30, 2023, the majority of our credit card and private student loans charge variable rates. Fixed-rate assets that will mature or otherwise contractually reset to a market-based indexed rate or other fixed-rate prior to the end of the 12-month measurement period are considered to be rate sensitive. The latter category includes certain revolving credit card loans that may be offered at below-market rates for an introductory period, such as balance transfers and special promotional programs, after which the loans will contractually reprice in accordance with our normal market-based pricing structure. For assets with a fixed interest rate that contractually will, or is assumed to, reset to a market-based indexed rate or other fixed rate during the next 12 months, earnings sensitivity is measured from the expected repricing date. In addition, for all interest rate sensitive assets, earnings sensitivity is calculated net of expected credit losses. For purposes of this analysis, expected credit losses are assumed to remain unchanged relative to our baseline expectations over the analysis horizon.

Interest-rate-sensitive liabilities are assumed to be those for which the stated interest rate is not contractually fixed for the next 12 months. Thus, liabilities that vary with changes in a market-based index, such as the federal funds rate or SOFR, which will reset before the end of the next 12 months, or liabilities that have fixed rates at the fiscal period end but will mature and are assumed to be replaced with a market-based indexed rate prior to the end of the next 12 months, are also considered to be rate sensitive. For these fixed-rate liabilities, earnings sensitivity is measured from the expected maturity date.

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Net interest income sensitivity simulations require assumptions regarding market conditions, consumer behavior and the growth and composition of our balance sheet. The degree by which our deposit rates change when benchmark interest rates change, our deposit “beta,” is one of the most significant of these assumptions. Assumptions about deposit beta and other matters are inherently uncertain and, as a result, actual earnings may differ from the simulated earnings presented below. Our actual earnings depend on multiple factors including, but not limited to, the direction and timing of changes in interest rates, the movement of short-term interest rates relative to long-term rates, balance sheet composition, competitor actions affecting pricing decisions in our loans and deposits, the mix of promotional balances in our card portfolio, the level of interest charge-offs and recoveries, the influence of loan repayment rates on revolving balances and strategic actions undertaken by our management.

Our current short-term interest rate risk position is modestly asset-sensitive and we have taken actions to bring our net interest income sensitivity closer to neutral as the Federal Reserve has slowed its pace of monetary policy tightening and the outlook for near-term U.S. economic growth may be weakening. The following table shows the impacts to net interest income over the following 12-month period that we estimate would result from an immediate and parallel change in interest rates affecting all interest rate sensitive assets and liabilities (dollars in millions):

	At June 30, 2023				At December 31, 2022
Basis point change	$		%		$		%
+100	$	139	1.05	%	$	183	1.40	%
-100	$	(137)	(1.03)	%	$	(190)	(1.45)	%

Item 4.     Controls and Procedures

Evaluation of Disclosure Controls and Procedures

Under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer, we conducted an evaluation of the effectiveness of our disclosure controls and procedures (as defined in Rule 13a-15(e) and 15d-15(e) of the Securities Exchange Act of 1934, as amended (the "Exchange Act")), which are designed to ensure that information required to be disclosed by us in the reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified by the SEC's rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by us in the reports that we file or submit under the Exchange Act is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosure. Based on this evaluation, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures were effective as of the end of the period covered by this report.

Changes in Internal Control over Financial Reporting

There have been no changes in our internal control over financial reporting (as such term is defined in Exchange Act Rule 13a-15(f) and 15d-15(f)) that occurred during the period covered by this report that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

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Glossary of Acronyms

•ALCO: Asset and Liability Management Committee

•AOCI: Accumulated Other Comprehensive Income (Loss)

•ARRC: Alternative Reference Rates Committee

•ASC: Accounting Standards Codification

•ASU: Accounting Standards Update

•CCAR: Comprehensive Capital Analysis and Review

•CCPA: California Consumer Privacy Act

•CECL: Current Expected Credit Loss

•CET1: Common Equity Tier 1

•CFPB: Consumer Financial Protection Bureau

•CME: Chicago Mercantile Exchange

•CPPA: California Privacy Protection Agency

•CPRA: California Privacy Rights Act

•DCENT: Discover Card Execution Note Trust

•DCMT: Discover Card Master Trust I

•DFS: Discover Financial Services

•EPS: Earnings Per Share

•ESG: Environmental, Social and Governance

•EWI: Early Warning Indicator

•FASB: Financial Accounting Standards Board

•FCA: UK Financial Conduct Authority

•FDIC: Federal Deposit Insurance Corporation

•FHLB: Federal Home Loan Bank

•GAAP: Accounting Principles Generally Accepted in the United States

•LIBOR: London Interbank Offered Rate

•OCI: Other Comprehensive Income (Loss)

•RMBS: Residential Mortgage-Backed Securities

•SCB: Stress Capital Buffer

•SEC: Securities and Exchange Commission

•SOFR: Secured Overnight Financing Rate

•TDR: Troubled Debt Restructuring

•UDAAP: Unfair, Deceptive or Abusive Acts or Practices

•U.S.: United States of America

•USD: United States Dollar

•U.S. GSE: Government-sponsored Enterprise of the U.S.

•VIE: Variable Interest Entity

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Part II.     OTHER INFORMATION

Item 1.     Legal Proceedings

See Note 13: Litigation and Regulatory Matters to our condensed consolidated financial statements for a description of legal proceedings.

Item 1A.     Risk Factors

There have been no material changes to the risk factors disclosed in our Annual Report on Form 10-K for the year ended December 31, 2022.

Item 2.     Unregistered Sales of Equity Securities and Use of Proceeds

Issuer Purchases of Equity Securities

The following table sets forth information regarding purchases of our common stock related to our share repurchase program and employee transactions made by us or on our behalf during the most recent quarter.

Period	Total Number of Shares Purchased	Average Price Paid Per Share(3)		Total Number of Shares Purchased as Part of Publicly Announced Plan or Program(1)	Maximum Dollar Value of Shares that may yet be purchased under the Plans or Programs(1)
April 1 - 30, 2023
Repurchase program(1)	3,322,300	$	100.39	3,322,300	$	2,591,568,919
Employee transactions(2)	—	$	—	N/A	N/A
May 1 - 31, 2023
Repurchase program(1)	1,898,752	$	98.15	1,898,752	$	2,405,197,363
Employee transactions(2)	9,314	$	99.48	N/A	N/A
June 1 - 30, 2023
Repurchase program(1)	1,595,280	$	112.90	1,595,280	$	2,225,091,655
Employee transactions(2)	695	$	113.41	N/A	N/A
Total
Repurchase program(1)	6,816,332	$	102.69	6,816,332	$	2,225,091,655
Employee transactions(2)	10,009	$	100.45	N/A	N/A

(1)In April 2023, our Board of Directors approved a new share repurchase program authorizing the purchase of up to $2.7 billion of our outstanding shares of common stock through June 30, 2024. This share repurchase authorization replaced our prior $4.2 billion share repurchase program.

(2)Reflects shares withheld (under the terms of grants under employee stock compensation plans) to offset tax withholding obligations that occur upon the delivery of outstanding shares underlying restricted stock units or upon the exercise of stock options.

(3)Average price paid per share excludes any excise tax.

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Item 3.     Defaults Upon Senior Securities

None.

Item 4.     Mine Safety Disclosures

None.

Item 5.    Other Information

During the period covered by this report, none of the Company’s directors or executive officers has adopted or terminated a Rule 10b5-1 trading arrangement or a non-Rule 10b5-1 trading arrangement (each as defined in Item 408 of Regulation S-K under the Securities Exchange Act of 1934, as amended).

Item 6.    Exhibits

See "Exhibit Index" for documents filed herewith and incorporated herein by reference.

Exhibit Index

Exhibit Number	Description
10.1	Discover Financial Services 2023 Omnibus Incentive Plan (filed as Annex B to Discover Financial Services' Definitive Proxy Statement on Schedule 14A filed on March 17, 2023 and incorporated herein by reference thereto).
10.2	Form 2023 Special Award Certificate for Restricted Stock Units under Discover Financial Services 2023 Omnibus Incentive Plan.
10.3	Discover Financial Services Severance Plan.
31.1	Certification of Chief Executive Officer pursuant to Rule 13a-14(a) under the Securities Exchange Act of 1934.
31.2	Certification of Chief Financial Officer pursuant to Rule 13a-14(a) under the Securities Exchange Act of 1934.
32.1	Certification of Chief Executive Officer and Chief Financial Officer pursuant to Section 1350 of Chapter 63 of Title 18 of the United States Code.
101	Interactive Data File — the following financial statements from Discover Financial Services Quarterly Report on Form 10-Q formatted in inline XBRL: (1) Condensed Consolidated Statements of Financial Condition, (2) Condensed Consolidated Statements of Income, (3) Condensed Consolidated Statements of Comprehensive Income, (4) Condensed Consolidated Statements of Changes in Stockholders' Equity, (5) Condensed Consolidated Statements of Cash Flows and (6) Notes to the Condensed Consolidated Financial Statements.
104	Cover Page Interactive Data File — the cover page from Discover Financial Services Quarterly Report on Form 10-Q formatted in inline XBRL and contained in Exhibit 101.

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Signature

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

Discover Financial Services (Registrant)
By:	/s/ JOHN T. GREENE
	John T. Greene Executive Vice President, Chief Financial Officer

Date: July 28, 2023

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EX-10.2

Exhibit 10.2

Discover Financial Services

2023 Omnibus Incentive Plan

2023 Special Award Certificate for Restricted Stock Units

This Award Certificate describes the terms and conditions under which you are being granted an Award of Restricted Stock Units (“RSUs”) under the Discover Financial Services 2023 Omnibus Incentive Plan (the “Plan”), which constitutes part of your discretionary long-term incentive compensation.This Award Certificate applies only to Awards granted hereunder and other Awards are governed by terms of the applicable Award Certificate.

A copy of the Plan can be found on the E*TRADE website at www.etrade.com, or such other vendor as the Company may choose to administer the Plan. Capitalized terms under in this Award Certificate have the meanings ascribed in the Plan unless otherwise stated herein.

The full terms of your Award are set out in this Award Certificate, the Plan and any applicable policy adopted by the Committee or its delegate in respect of the Plan and Awards thereunder that is applicable to this Award. In the event of a conflict between the Plan and this Award Certificate, the terms of the Plan control.

Award Recipient	%%FIRST_NAME%-% %%LAST_NAME%-%
Employee / Participant ID	%%EMPLOYEE_IDENTIFIER%-%
Issuer	Discover Financial Services
Award Type	Restricted Stock Units (RSUs)
Date of the Award	%%OPTION_DATE,'Month DD, YYYY'%-%
Number of Awarded Units	%%TOTAL_SHARES_GRANTED,'999,999,999'%-% RSUs
Vesting	Your RSUs will vest as follows provided you remain continuously employed by the Company through the applicable below Scheduled Vesting Date: Number of Shares Vesting Date %%SHARES_PERIOD1,'999,999,999'%-% %%VEST_DATE_PERIOD1,'Month DD, YYYY'%-% %%SHARES_PERIOD2,'999,999,999'%-% %%VEST_DATE_PERIOD2,'Month DD, YYYY'%-% %%SHARES_PERIOD3,'999,999,999'%-% %%VEST_DATE_PERIOD3,'Month DD, YYYY'%-% %%SHARES_PERIOD4,'999,999,999'%-% %%VEST_DATE_PERIOD4,'Month DD, YYYY'%-% %%SHARES_PERIOD5,'999,999,999'%-% %%VEST_DATE_PERIOD5,'Month DD, YYYY'%-%
Settlement	Your awards will be converted and settled in shares of Company stock pursuant to Section 8 of the Plan and Section 1(b) of this Award Certificate unless your primary place of employment is located outside the United States in which case your shares may be settled in cash in accordance with the requirements for your local jurisdiction. See Appendix AInternational Supplement, for additional information.
Restrictive Covenants & Clawbacks	You may be subject to repayment provisions triggered in the event of your violation of a restrictive covenant, including non-solicitation and non-competition requirements, more fully described in this Award Certificate. You are also subject to a clawback provision in the event of restatement of the Company’s financial performance and any clawback or recoupment policy in effect as of the Date of the Award or which the Company may adopt from time to time to comply with applicable law, including without limitation any such policy which the Company may be required to adopt under the Dodd-Frank Wall Street Reform and Consumer Protection Act and implementing rules and regulations thereunder, or as otherwise required by law.
Non-U.S. Employees	If you are employed outside the United States, please reference the “International Supplement” included herein as Appendix A, which contains supplemental terms and conditions for your RSU Award.

You will earn RSUs included in your RSU Award only if you (1) remain in continuous Employment through the applicable Scheduled Vesting Dates (subject to limited exceptions set forth herein), (2) are not found to be subject to the forfeiture, cancellation, or clawback provisions set forth in Section 8 below, and (3) satisfy obligations you owe to the Company as set forth in Section 10 below. If the Company deems appropriate and in its sole discretion, the Company may require you to provide a written certification or other evidence, from time to time, to confirm that none of the circumstances described in Section 8 below exist or have occurred, including upon a termination of Employment and/or during a specified period of time prior to the applicable Scheduled Vesting Dates. If you fail to timely provide any required certification or other evidence, the Company may cancel your RSU Award. It is your responsibility to provide the Human Resources Department with your up-to-date contact information.

1.Vesting Schedule; Conversion.

(a)Vesting Schedule. Your RSUs will vest according to the Scheduled Vesting Dates set forth in this Award Certificate, provided you remain continuously Employed through such dates, unless earlier vesting is required pursuant to Section 4, 5 or 6 of this Award Certificate or Section 12 of the Plan.

(b)Conversion.

(1)Except as otherwise provided in this Award Certificate, each of your vested RSUs will convert to one share of Stock on or as soon as possible following the applicable Scheduled Vesting Date (but in any event no later than 60 days following the Scheduled Vesting Date).

(2)Subject to the provisions of the Plan and this Award Certificate, as well as any transfer restrictions imposed by the Company or applicable pursuant to securities laws, shares of Stock to which you are entitled following conversion of RSUs under any provision of this Award Certificate shall be delivered to you (or your beneficiary or estate, as applicable) as soon as administratively practicable after the Scheduled Vesting Date (but in any event no later than 60 days following the Scheduled Vesting Date).

(c)Accelerated Conversion. The Committee, in its sole discretion, may determine that any RSUs may be converted to shares of Stock prior to the Scheduled Vesting Date subject to compliance with all Legal Requirements, including Section 409A.

(d)Rule of Construction for Timing of Conversion. Whenever this Award Certificate provides for RSUs to convert to shares of Stock on the Scheduled Vesting Date or upon an accelerated or different specified event or date, such conversion will be considered to have been timely made, and neither you nor any of your beneficiaries nor your estate shall have any claim against the Company for damages based on a delay in conversion of your RSUs (or delivery of shares of Stock following conversion), and the Company shall have no liability to you (or to any of your beneficiaries or your estate) in respect of any such delay, as long as conversion is made by December 31 of the year in which occurs the Scheduled Vesting Date or such other specified event or date or, if later, by the 15th day of the third calendar month following such specified event or date.

2.Special Provisions for Certain “Specified Employees”.

If Discover reasonably considers you to be one of its “specified employees” as defined in Section 409A at the time of the termination of your Employment, any RSUs that constitute deferred compensation under Section 409A that are payable upon termination of Employment

will not convert to shares of Stock or be delivered to you until the date that is six months after the termination of your Employment (or the date of your death, if such event occurs earlier).

3.Dividend Equivalent Payments.

Until your RSUs convert to shares of Stock and subject to your continued Employment through the applicable payment date, if Discover pays a regular or ordinary cash dividend on its common stock, you will be paid a dividend equivalent for your vested and unvested RSUs. No dividend equivalents will be paid to you on any canceled RSUs. Discover, in its discretion, will decide on the form of payment and may pay dividend equivalents in shares of Stock, in cash or in a combination thereof. Discover will pay the dividend equivalents as soon as administratively practicable (and in any event within thirty (30) days) after Discover pays the corresponding dividend on its Stock.

4.Death; Disability.

The following special vesting and payment terms apply to your RSUs:

(a)Death. If your Employment terminates due to your death, all RSUs subject to this Award Certificate will vest, convert to shares of Stock and be delivered to your beneficiary or your estate on or as soon as administratively practicable after your date of death (but in any event no later than 60 days following such termination).

(b)Disability. If your Employment terminates due to Disability, all RSUs subject to this Award Certificate will vest, convert to shares of Stock, and be delivered to you on or as soon as administratively practicable after your termination due to Disability (but in any event no later than 60 days following such termination).

5.Termination Due to Reduction in Force; Position Elimination; or Increase/Addition of Skills Required for Current Position.

If the Company terminates your Employment due to a reduction in force, an elimination of your position, or as a result of an increase or addition of skills required of your current position, each as determined by the Company in its sole discretion, you shall vest in a pro-rata portion of the RSUs, with the number of RSUs that will be prorated on the date your Employment terminates determined by multiplying the RSUs subject to this Award Certificate by the Pro Ration Fraction. These RSUs will vest and convert to shares of Stock as soon as administratively practicable following your termination of Employment, subject to Section 2 above, provided that you sign (and do not revoke) an agreement and release of claims satisfactory to the Company and be delivered to you on or as soon as administratively practicable after your termination pursuant to this section (but in any event no later than 60 days following such termination).

6.Change in Control.

(a)Termination in Connection with Change in Control. If the Company terminates your Employment other than for Cause, or if you terminate your Employment for Good Reason, within six months prior to or within 24 months after a Change in Control, your RSUs will immediately vest and convert to shares of Stock on the later of the date of a Change in Control or the date of your termination following a Change in Control, as applicable and be delivered as soon as administratively practicable thereafter (but in any event no later than 60 days following the later to occur of such termination or the date of the Change in Control).

(b)Stock Consideration. In the event of a Change in Control which results from a transaction pursuant to which the shareholders of Discover receive shares of common stock of an acquiring entity that are registered under Section 12 of the Exchange Act, unless otherwise determined by the Committee, in its sole discretion prior to such Change in Control, there shall be substituted for each share of Stock subject to this Award Certificate the number and class of shares of common stock of the acquiring entity into which each outstanding share of Stock shall be converted pursuant to such Change in Control transactions, and this Award Certificate shall otherwise continue in effect.

(c)Non-stock Consideration. In the event of a Change in Control which results from a transaction pursuant to which the shareholders of Discover receive consideration other than shares of common stock of the acquiring entity that are registered under Section 12 of the Exchange Act, the value of the RSUs hereunder shall, unless otherwise determined by the Committee, in its sole discretion prior to such Change in Control, be converted into a right to receive the cash or other consideration received by the shareholders of Discover in such transaction, and this Award Certificate shall otherwise continue in effect.

7.Termination of Employment.

Your unvested RSUs will be canceled if your Employment terminates for any reason other than under the circumstances set forth in Section 4, 5 or 6 of this Award Certificate.

8.Forfeiture/Cancellation/Clawback of RSU Awards Under Certain Circumstances.

(a)Breach of Restrictive Covenants. RSUs are not earned until the applicable Scheduled Vesting Date and will be canceled prior to the applicable Scheduled Vesting Date under any of the circumstances set forth below. Although you will become the beneficial owner of shares of Stock following conversion of your RSUs, the Company may, upon notice, issue a transfer restriction with respect to your shares of Stock following conversion of your RSUs pending any investigation or other review that impacts the determination as to whether the RSUs are or may be cancellable under the circumstances set forth below. The Stock underlying such RSUs shall be forfeited and recoverable in the event the Company determines that the RSUs were cancellable under the circumstances set forth below. Notwithstanding any provision of this Award Certificate to the contrary, in the event that at any time prior to one year after the termination of your Employment or service with the Company, you (i) engage in Wrongful Solicitation, (ii) breach your obligations to the Company under a confidentiality, intellectual property or other restrictive covenant, or (iii) for those participants classified by the Company as an officer of Discover Financial Services or one of its Subsidiaries on the date of grant, engage in Competitive Activity, with respect to each such incidence of violation you shall be required to:

(1)pay to the Company an amount in cash equal to the value of the shares of Stock that vested and converted on or after, or within one year prior to, your termination of Employment, which value shall be determined by the Company, in its sole discretion, and shall include an amount for tax adjustments appropriate to reflect your obligation to repay such amounts due to your breach of the restrictive covenants; or

(2)transfer to the Company the number of shares that vested and converted on or after, or within one year prior to, your termination of Employment, plus an amount calculated by the Company, in its sole discretion, for tax adjustments appropriate to reflect your obligation to transfer such common stock due to your breach of the restrictive covenants.

In the event of multiple incidences of breach of this provision of the Award Certificate (e.g., in the event of violation of the non-solicitation provision following engaging in Competitive Activity), the repayment amount will be additive for each incidence of violation, not to exceed two times the amount calculated under paragraph 8(a)(1) and (2) above. If you engage in Wrongful Solicitation or engage in a Competing Activity, in addition to the remedies described in Section 8(a), the Company may also take such action at equity or in law as it deems appropriate to enforce the provisions of the applicable restrictive covenant, including pursuing injunctive relief.

The Company recommends that before accepting this Award Certificate, you consult with an attorney of your choice regarding the restrictive covenants described herein. You acknowledge that you have been provided at least fourteen (14) calendar days to review the applicable restrictive covenants prior to having the accept the award.

(b)Clawback. The Award and any cash payment or shares of Stock delivered pursuant to the Award are subject to forfeiture, recovery by the Company or other action pursuant to any clawback or recoupment policy in effect as of the Date of the Award or which the Company may adopt from time to time to comply with applicable law, including without limitation any such policy which the Company may be required to adopt under the Dodd-Frank Wall Street Reform and Consumer Protection Act and implementing rules and regulations thereunder, or as otherwise required by law. In addition, in the event and to the extent the Committee reasonably determines that the performance considered by the Committee, and on the basis of which the amount of RSUs were granted or converted to shares of Stock, was based on Discover’s material noncompliance with any financial reporting requirement under the securities laws or Company policy which requires Discover to file a restatement of its financial statements within three years of the Date of the Award, you will be required to comply with paragraphs (1) and (2) (as applicable) below to repay to the Company an amount equal to the number of RSUs which were granted or the shares of Stock converted hereunder less the number of RSUs that would have been granted or shares of Stock converted had your RSUs been granted or converted based on compliance with any such financial reporting requirement under the securities laws or Company policy (such number of RSUs, the “Clawback RSUs,” to be determined in each case by the Committee in its sole discretion and before satisfaction of tax or other withholding obligations pursuant to Section 9):

(1) You shall forfeit a number of RSUs hereunder equal to the Clawback RSUs. In the event such forfeited RSUs are less than the Clawback RSUs, then you shall comply with the following paragraph 2.

(2) You shall be required

(A)    to pay to the Company an amount in cash equal to the value of the shares of Stock that vested and converted hereunder, which value shall be determined using a valuation method established by the Company, in its sole discretion, and shall include an amount for tax adjustments appropriate to reflect your obligation to repay such amounts due to the restatement of the Company’s financial statements; or

(B)    transfer to the Company the number of shares of Stock that vested and converted hereunder, plus such amount calculated by the Company, in its sole discretion, for tax adjustments appropriate to reflect your obligation to repay such amounts due to the restatement of the Company’s financial statements.

By accepting the RSUs you hereby agree and acknowledge that you are obligated to cooperate with and provide all assistance necessary to the Company to recover or recoup the RSUs or amounts paid under the Plan that are subject to the clawback pursuant to applicable securities laws or Company policy. Such cooperation and assistance shall include, but is not limited to, executing, completing and submitting and documentation necessary to recover or recoup any RSUs or amounts paid pursuant to RSUs.

(c)Risk Review. For select Covered Employees, as defined and identified by the Company, no RSUs will convert to shares of Stock until the Chief Human Resources & Administrative Officer receives confirmation from the Chief Risk Officer, or their delegate, that a review has been completed by the Chief Risk Officer, or their delegate, to determine whether you engaged in any willful or reckless violation of the Company’s risk policies. If the Chief Risk Officer, or their delegate, finds any such violation or breach, then the Company may determine that all or a portion of your RSUs will be forfeited. Based on this assessment, the Company may determine that all or a portion of your RSUs will be forfeited.

(d)Investigative Holds. In the event that the Company has either commenced an investigation of a matter that you oversaw or were involved in or has evidence that may require investigation of a matter that you oversaw or were involved in, in either case concerning a breach of one of the obligations hereunder or a serious violation of Company policy, the Company may freeze your account and effectuate a transfer restriction such that your converted and delivered RSUs and any shares associated therewith may not be sold or transferred until such time as the Company reasonably believes the matter to be resolved.

(e)Authorization. You authorize the Company to deduct any amount or amounts owed by you pursuant to this Section 8 from any amounts payable by or on behalf of the Company to you, including, without limitation, any amount payable to you as salary, wages, paid time off, bonus, severance, change in control severance or the conversion of any equity-based award. This right of offset shall not be an exclusive remedy and the Company’s election not to exercise this right of offset with respect to any amount payable to you shall not constitute a waiver of this right of offset with respect to any other amount payable to you or any other remedy. You further acknowledge and authorize the Company to take the actions described in this Section 8, including those describe in Section 8(d).

(f)Non-Contravention. Nothing in this Award Certificate (including with respect to confidential information, trade secrets, and other obligations) is intended to be or will be construed to prevent, impede, or interfere with your right to respond accurately and fully to any question, inquiry, or request for information regarding your employment with the Company when required by legal process by a Federal, State or other legal authority, or from initiating communications directly with, or responding to any inquiry from, or providing truthful testimony and information to, any Federal, State or other regulatory authority in the course of an investigation or proceeding authorized by law and carried out by such agency. You are not required to contact the Company regarding the subject matter of any such communications before you engage in such communications. In addition, nothing in this Award Certificate is intended to restrict your legally protected right to discuss wages, hours or other working conditions with coworkers or in any way limit your rights under the National Labor Relations Act or any whistleblower law.

9.Tax and Other Withholding Obligations.

Subject to rules and procedures established by Discover, you shall be eligible to elect to satisfy the tax or other withholding obligations arising upon conversion of your RSUs or upon any taxable event by paying cash or by having Discover withhold shares or by tendering shares, in each case in an amount sufficient to satisfy the tax or other withholding obligations. Shares

withheld or tendered will be valued using the Fair Market Value of Stock on the date the Shares become taxable, using a valuation methodology established by Discover.

10.Satisfaction of Obligations.

Notwithstanding any other provision of this Award Certificate, the Company may, in its sole discretion, take various actions affecting your RSUs in order to collect amounts sufficient to satisfy any obligation that you owe to the Company and any tax or other withholding obligations. The Company’s determination of the amount that you owe the Company shall be conclusive. The Fair Market Value of Stock for purposes of the following provisions shall be determined using a valuation methodology established by Company. The actions that may be taken by Discover pursuant to this Section 10 include, but are not limited to, the following:

(a)Withholding of Shares. Upon conversion of RSUs, including any accelerated conversion pursuant to Sections 4, 5, or 6 above, or, if later, upon delivery of the shares of Stock, the Company may withhold a number of shares of Stock sufficient to satisfy any obligation that you owe to the Company and any tax or other withholding obligations whether national, federal, state or local tax withholding obligations including any social insurance contributions or employment tax obligation. The Company shall determine the number of shares of Stock to be withheld by dividing the dollar value of your obligation to the Company and any tax or other withholding obligations by the Fair Market Value of Stock on the date the shares become taxable. To the extent that the Company retains any shares or reduces the number of RSUs to cover the withholding obligations, it will do so at the applicable minimum statutory rate (or such other rate as will not cause adverse accounting consequences under the accounting rules then in effect, and is permitted by the Company). Should the Company withhold in excess of the actual tax withholding obligation, the Company will apply the excess withholding to another compensation tax liability.

(b)Netting of Accelerated RSUs. In order to satisfy any taxes due upon an event which is earlier than delivery, Discover, in its sole discretion, may accelerate the vesting and conversion of all or a portion of your unvested RSUs. The Company shall determine the number of RSUs to be accelerated and converted by dividing the dollar value of your tax obligations upon such event by the Fair Market Value of Stock on the date the shares become taxable. Accelerated and converted RSUs shall not exceed the value of taxes due upon such event and the resulting shares will be withheld by the Company.

(c)Withholding of Other Compensation. Discover may withhold the payment of dividend equivalents on your RSUs or any other compensation or payments due from Discover to ensure satisfaction of any obligation that you owe the Company or any tax or other withholding obligations or Discover may permit you to satisfy such tax or other withholding obligation by paying such obligation in immediately available funds.

(d)Mobile Employees. You are liable and responsible for all taxes and social insurance contributions owed in connection with the Award, regardless of any action the Company takes with respect to any tax withholding obligations that arise in connection with the Award. The Company does not make any representation or undertaking regarding the tax treatment or the treatment of any tax withholding in connection with the grant, vesting or payment of the Award. The Company does not commit and is under no obligation to structure the Award to reduce or eliminate your tax liability. Further, you may be subject to individual income taxation (and possibly social security or other applicable personal or payroll taxes) in each jurisdiction where you have performed services for the Company between the Award Date and the Vesting Date. Taxes for which you are liable, if applicable, may be withheld and deposited by the Company in each jurisdiction in which you have performed services regardless of your status as a resident or non-resident in one or more of the jurisdictions that

have a right to impose taxation. You agree that you will comply with all United States and foreign individual income tax return filing obligations that may be imposed with respect to the Award.

11.Transfer Restrictions and Investment Representation.

(a)Nontransferability of Award. You may not sell, pledge, hypothecate, assign or otherwise transfer your RSUs, other than as provided in Section 12 (which allows you to designate a beneficiary or beneficiaries in the event of your death) or by will or the laws of descent and distribution.

(b)Investment Representation. You hereby covenant that (a) any sale of any share acquired upon the vesting of the Award shall be made either pursuant to an effective registration statement under the Securities Act of 1933, as amended (the "Securities Act"), and any applicable state securities laws, or pursuant to an exemption from registration under the Securities Act and such state securities laws and (b) you shall comply with all regulations and requirements of any regulatory authority having control of or supervision over the issuance of the shares of Stock and, in connection therewith, shall execute any documents which the Committee shall in its sole discretion deem necessary or advisable.

12.Designation of a Beneficiary.

You may make a revocable designation of beneficiary or beneficiaries to receive all or part of the shares of Stock and any dividend equivalents credited to you pursuant to Section 3 hereof to be paid under this Award Certificate in the event of your death. Absent a designation on file, distributions pursuant to Section 4 will be made to your estate. To make a beneficiary designation, you must complete and file the online form provided by E*TRADE, or such other vendor as the Company may choose to administer the Plan. If you previously filed a designation of beneficiary form for your equity awards with the Human Resources Department, such form will also apply to the RSUs granted pursuant to this RSU Award. You may replace or revoke your beneficiary designation at any time, and the Company will rely on your most recent designation on file for purposes of beneficiary designation.

13.Ownership and Possession.

(a)Generally. Except as specified in Section 3 with respect to dividend equivalents, you will not have any rights as a shareholder with respect to your RSU Awards or in the Stock corresponding to your RSUs prior to conversion of your RSUs.

(b)Following Conversion. Subject to the terms and conditions of this Award Certificate, following conversion of your RSUs and issuance of the shares of Stock underlying such RSUs in your name, you will be the beneficial owner of the shares issued to you net of taxes, and you will be entitled to all rights of ownership, including voting rights and the right to receive cash or stock dividends or other distributions paid on such shares.

14.Securities Law Matters.

Shares issued upon conversion of your RSUs may be subject to restrictions on transfer by virtue of the Securities Act.  Discover may advise the transfer agent to place a stop order against such shares if it determines that such an order is necessary or advisable.  Because Stock will only be maintained in book-entry form, you will not receive a stock certificate representing your interest in such shares.

15.Compliance with Laws and Regulations.

Any sale, assignment, transfer, pledge, mortgage, encumbrance or other disposition of the Stock issued upon conversion of your RSUs (whether directly or indirectly, whether or not for value, and whether or not voluntary) must be made in compliance with any applicable constitution, rule, regulation, or policy of any of the exchanges or associations or other institutions with which the Company or a Related Employer has membership or other privileges, and any applicable law, or applicable rule or regulation of any governmental agency, self-regulatory organization or state or federal regulatory body.

16.No Entitlements.

(a)No Right to Continued Employment. This RSU Award is not an employment agreement, and nothing in this Award Certificate, the International Supplement, if applicable, or the Plan shall alter your status as an “at-will” employee of the Company or your Employment status at a Related Employer, nor does anything herein constitute a promise of continued employment or re-employment.

(b)No Right to Future Awards. This RSU Award is discretionary and does not confer on you any right or entitlement to receive another award of RSUs, any other equity-based award or any other award at any time in the future or in respect of any future period.

(c)No Effect on Future Employment Compensation. This RSU Award is discretionary and does not confer on you any right or entitlement to receive compensation in any specific amount for any future fiscal year, and does not diminish in any way the Company’s discretion to determine the amount, if any, of your compensation. In addition, this RSU Award is not part of your base salary or wages and will not be taken into account in determining any other Employment-related rights you may have, such as rights to pension or severance pay, end of service payments, bonuses, long-service awards or similar payments and in no event shall be considered as compensation for, or relating in any way to, past services for the Company.

(d)Termination of Employment. In consideration of the grant of the Award, no claim or entitlement to compensation or damages shall arise from termination of the Award or diminution in value of the Award or shares acquired through vesting of the Award resulting from termination of your Employment (for any reason whatsoever and whether or not in breach of local labor laws) andyou irrevocably release the Company and the Related Employer from any such claim that may arise; if, notwithstanding the foregoing, any such claim is found by a court of competent jurisdiction to have arisen, then, by signing this Award Certificate, you will be deemed irrevocably to have waived your entitlement to pursue such claim; and in the event of termination of your Employment (whether or not in breach of local labor laws), your right to receive the Award and vest in the Award under the Plan, if any, will terminate effective as of the date that you are no longer actively Employed and will not be extended by any notice period mandated under local law (e.g., active Employment would not include a period of “garden leave” or similar period pursuant to local law). Discover shall have the exclusive discretion to determine when you are no longer actively Employed for purposes of your Award.

(e)Language. If you have received this Award Certificate or any other document related to the Plan translated into a language other than English and if the translated version is different that the English version, the English version will control.

(f)Award Terms Control. In the event of any conflict between any terms applicable to equity awards in any employment agreement, offer letter or other arrangement that you have entered into with the Company and the terms set forth in this Award Certificate, the latter shall control.

17.Consents.

Your RSU Award is conditioned upon the Company making of all filings and the receipt of all consents or authorizations required to comply with, or required to be obtained under, applicable local law.

In accepting this RSU Award, you consent to the collection, use and transfer, in electronic or other form, of your personal data by and among, as applicable, the Company and any other possible recipients for the purpose of implementing, administering and managing your participation in the Plan, as well as for the purpose of the Company’s compliance with applicable law, including, without limitation, Section 953(b) of the Dodd-Frank Wall Street Reform and Consumer Protection Act. You understand that the recipients of your personal data may be located in the U.S. or elsewhere, and the recipients’ country may have different data privacy laws and protections than your country. You understand that you may request a list with the names and addresses of any potential recipients of your personal data, view the personal data, request additional information about the storage of your personal data, require any necessary amendments to your personal data or refuse or withdraw your consent by contacting your local human resources representative, in any case without cost. You understand, however, that refusing or withdrawing your consent may affect your ability to participate in the Plan.

18.Electronic Delivery and Consent to Electronic Participation.

The Company may, in its sole discretion, decide to deliver any documents related to the RSU Award and participation in the Plan or future RSU Awards by electronic means. You hereby consent to receive such documents by electronic delivery and to participate in the Plan through an online or electronic system established and maintained by the Company or another third party designated by the Company, including the acceptance of RSU Awards and the execution of the RSU agreements through electronic signature. Electronic acceptance of this Award Certificate through the E*TRADE website, or such other vendor as the Company may choose to administer the Plan, shall be required and binding on you.  Where electronic acceptance may not be permitted under applicable law, the Company may also request and require your physical signature.  Your acceptance affirms your agreement to all the terms and conditions set forth in this Award Certificate and acceptance of the Award subject thereto. Not providing this acceptance within the timeframe stipulated may result in the Company forfeiting all or a portion of this Award.

19.Award Modification.

The Committee reserves the right to modify or amend unilaterally the terms and conditions of your RSUs, without first asking your consent, or to waive any terms and conditions that operate in favor of Discover. These amendments may include (but are not limited to) changes that the Committee considers necessary or advisable as a result of changes in any, or the adoption of any new, Legal Requirement. The Committee may not modify your RSUs in a manner that would materially impair your rights in your RSUs without your consent; provided, however, that the Committee may, without your consent, amend or modify your RSUs in any manner that the Committee considers necessary or advisable to comply with or reflect the application of any Legal Requirement or to ensure that your RSUs are not subject to United States federal, state or local income tax or any equivalent taxes in territories outside the United States prior to payment. Notwithstanding any provisions of this Award Certificate to the contrary, to the extent you transfer employment outside of the United States, the Award shall be subject to any special terms and conditions as Discover may need to establish to comply with local laws, rules, and regulations or to facilitate the operation and administration of the Award and the Plan in the country to which you transfer employment (or Discover may establish alternative terms and conditions as may be necessary or advisable to accommodate your

transfer). Discover will notify you of any amendment of your RSUs that affects your rights. Any amendment or waiver of a provision of this Award Certificate (other than any amendment or waiver applicable to all recipients generally), which amendment or waiver operates in your favor or confers a benefit on you, must be in writing and signed by the Chief Human Resources & Administrative Officer to be effective.

20.Severability.

In the event the Committee determines that any provision of this Award Certificate would cause you to be in constructive receipt for United States federal or state income tax purposes of any portion of your RSU Award, then such provision will be considered null and void and this Award Certificate will be construed and enforced as if the provision had not been included in this Award Certificate as of the date such provision was determined to cause you to be in constructive receipt of any portion of your RSU Award.

21.Successors.

This Award Certificate shall be binding upon and inure to the benefit of any successor or successors of Discover and any person or persons who shall, upon your death, acquire any rights hereunder in accordance with this Award Certificate or the Plan.

22.Governing Law.

This Award Certificate and the related legal relations between you and Discover will be governed by and construed in accordance with the laws of the State of Delaware, without regard to any conflicts or choice of law, rule or principle that might otherwise refer the interpretation of the RSU Award to the substantive law of another jurisdiction. The Company and you agree that the jurisdiction and venue for any disputes arising under, or any action brought to enforce (or otherwise relating to), the Plan or this Award Certificate shall be exclusively in the courts in the State of Illinois, Counties of Cook or Lake, including the federal courts located therein (should federal jurisdiction exist), and the Company and you hereby submit and consent to said jurisdiction and venue.

23.Section 409A.

This Award is intended to be exempt from or comply with Section 409A, and shall be interpreted and construed accordingly, and each payment hereunder shall be considered a separate payment for purposes of Section 409A. Subject to Section 2, to the extent this Award Certificate provides for the Award to become vested and be settled upon your termination of employment, the applicable shares shall be transferred to you or your beneficiary upon your "separation from service," within the meaning of Section 409A. To the extent necessary or advisable to comply with Section 409A, with respect to any provision of this Award Certificate that provides for vested RSUs to convert to Stock on or as soon as administratively practicable after a specified event or date, such conversion and settlement will be made by the later of the end of the calendar year in which the specified event or date occurs or the 15th day of the third calendar month following the specified event or date. If any RSUs constitute deferred compensation under Section 409A and are payable subject to your execution and non-revocation of a release and the period to consider the release spans two separate taxable years, then the distribution of the RSUs that are conditioned upon such execution and non-revocation of the release shall be made in the later taxable year.

24.Defined Terms.

For purposes of this Award Certificate, the following terms shall have the meanings set forth below:

(a)“Cause” means:

(1)any act or omission which constitutes a material breach of your obligations to the Company or your failure or refusal to perform satisfactorily any duties reasonably required of you, which breach, failure or refusal (if susceptible to cure) is not corrected (other than failure to correct by reason of your incapacity due to Disability) within ten (10) business days after written notification thereof to you by the Company;

(2)any act or omission by you that constitutes (i) fraud or intentional misrepresentation, (ii) embezzlement, misappropriation or conversion of assets of, or business opportunities considered by, the Company or (iii) any other act which has caused or may reasonably be expected to cause material injury to the interest or business reputation of the Company; or

(3)your violation of any securities, commodities or banking laws, any rules or regulations issued pursuant to such laws, or rules or regulations of any securities or commodities exchange or association of which the Company is a member or of any policy of the Company relating to compliance with any of the foregoing.

(b)“Chief Human Resources & Administrative Officer” means the chief human resources & administrative officer of Discover, any successor chief human resources & administrative officer, or any other individual or committee appointed by the chief executive officer of Discover with the power and authority of the chief human resources & administrative officer.

(c)“Chief Risk Officer” means the chief risk officer of Discover, any successor chief risk officer, or any other individual or committee appointed by the chief executive officer of Discover with the power and authority of the chief risk officer.

(d)“Competitive Activity” means:

(1)becoming, or entering into any arrangement as, an employee, officer, partner, member, proprietor, director, independent contractor, consultant, advisor, representative or agent of, or serving in any similar position or capacity with, a Competitor, where you will be responsible for providing, or managing or supervising others who are providing, services (i) that are similar or substantially related to the services that you provided to the Company, or (ii) that you had direct or indirect managerial or supervisory responsibility for at the Company, or (iii) that call for the application of the same or similar specialized knowledge or skills as those utilized by you in your services for the Company, in each such case, at any time during the year preceding the termination of your employment with the Company; or

(2)either alone or in concert with others, forming, or acquiring a five percent (5%) or greater equity ownership, voting interest or profit participation in, a Competitor.

(f)“Competitor” means any corporation, partnership or other entity that engages in (or that owns a significant interest in any corporation, partnership or other entity that engages in) (1) the business of consumer lending, including, without limitation, credit card issuance or electronic payment services, or (2) any other business in which you have been involved in or had significant knowledge of, which has been conducted by the Company at any

time during your employment with the Company. For the avoidance of doubt, a competitor of any entity which results from a corporate transaction involving the Company that constitutes a Change in Control shall be considered a Competitor for purposes of this Award Certificate.

(g) “Covered Employee” means an employee who, as of the Date of the Award, has been identified as a covered employee by Human Resources.

(h)“Date of the Award” means the date set forth in this Award Certificate.

(i)“Disability” means a “permanent and total disability,” as defined in Section 22(e)(3) of the Internal Revenue Code.

(j)“Employed” and “Employment” refer to employment with the Company and/or Related Employment.    

(k)“Good Reason” means the occurrence of any of the following upon, or within six (6) months prior to or twenty-four (24) months after the occurrence of a Change in Control of Discover without your prior written consent:

(1) Any material diminution in your assigned duties, responsibilities and/or authority, including the assignment to you of any duties, responsibilities or authority inconsistent with the duties, responsibilities and authority assigned to you, immediately prior to such assignment;

(2)A material diminution in the authority, duties, or responsibilities of the supervisor to whom you are required to report;

(3)Any material reduction in your base compensation; provided, however, that Company-initiated across-the-board reductions in compensation affecting substantially all eligible Company employees shall alone not be considered “Good Reason,” unless the compensation reductions exceed twenty percent (20%) of your base compensation;

(4)A material diminution of the budget over which you have authority;

(5)The Company’s requiring you to be based at a location that (i) is in excess of thirty-five (35) miles from the location of your principal job location or office immediately prior to the Change in Control, or (ii) results in an increase in your normal daily commuting time by more than ninety (90) minutes, except for required travel on Company’s business to an extent substantially consistent with your then present business travel obligations; or

(6)Any other action or inaction that constitutes a material breach by the Company of any agreement pursuant to which you provide services to the Company.

For purposes of paragraphs (1) through (6) above, the duties, responsibilities and/or authority assigned to you shall be deemed to be the greatest of those in effect prior to or after the Change in Control. Unless you become Disabled, your right to terminate your Employment for Good Reason shall not be affected by your incapacity due to physical or mental illness. Your continued Employment shall not constitute consent to, or a waiver of rights with respect to, any circumstance constituting Good Reason. Notwithstanding the foregoing, Good Reason shall not exist unless you give the Company written notice thereof within thirty (30) days after its

occurrence and the Company shall not have remedied the action within thirty (30) days after such written notice.

(l)“Internal Revenue Code” means the United States Internal Revenue Code of 1986, as amended, and the rules, regulations and guidance thereunder.

(m)“Legal Requirement” means any law, regulation, ruling, judicial decision, accounting standard, regulatory guidance or other legal requirement (including any foreign legal requirements).

(n) “Pro Ration Fraction” means a fraction, not to exceed 1.0, the numerator of which is the number of completed months commencing on the first day of the calendar year, or the first day of the month in which your employment commences, if later, of the Date of the Award and ending on the effective date of your termination of Employment, and the denominator of which is 12.

(o)“Related Employment” means your employment with an employer other than the Company (such employer, herein referred to as a “Related Employer”), provided: (1) you undertake such employment at the written request or with the written consent of the Chief Human Resources & Administrative Officer; (2) immediately prior to undertaking such employment you were an employee of the Company or were engaged in Related Employment (as defined herein); and (3) such employment is recognized by the Company in its discretion as Related Employment; and, provided further that the Company may (i) determine at any time in its sole discretion that employment that was recognized by the Company as Related Employment no longer qualifies as Related Employment, and (ii) condition the designation and benefits of Related Employment on such terms and conditions as the Company may determine in its sole discretion. The designation of employment as Related Employment does not give rise to an employment relationship between you and the Company, or otherwise modify your and the Company’s respective rights and obligations.

(p) “Scheduled Vesting Date” means the Scheduled Vesting Dates set forth in Award Certificate as the context requires.

(q)“Wrongful Solicitation” occurs upon either of the following events:

(1)while Employed, including during any notice period applicable to you in connection with the termination of your Employment, or within one year after the termination of your Employment, directly or indirectly in any capacity (including through any person, corporation, partnership or other business entity of any kind), you hire or solicit, recruit, induce, entice, influence or encourage any Company employee to leave the Company or become hired or engaged by another firm; provided, however, that this clause shall apply only to employees with whom you worked or had professional or business contact, or who worked in or with your business unit, during any notice period applicable to you in connection with the termination of your Employment or during the one year preceding notice of the termination of your Employment; or

(2)while Employed, including during any notice period applicable to you in connection with the termination of your Employment, or within one year after the termination of your Employment, directly or indirectly in any capacity (including through any person, corporation, partnership or other business entity of any kind), you solicit or entice away or in any manner attempt to persuade any client or customer, or prospective client or customer, of the Company (i) to discontinue or diminish his, her or its relationship or prospective relationship with the Company or (ii) to otherwise provide his, her or its business to any person, corporation, partnership or other business entity which

engages in any line of business in which the Company is engaged (other than the Company); provided, however, that this clause shall apply only to clients or customers, or prospective clients or customers, that you worked for on an actual or prospective project or assignment during any notice period applicable to you in connection with the termination of your Employment or during the one year preceding notice of the termination of your Employment.

IN WITNESS WHEREOF, Discover has duly executed and delivered this Award Certificate as of the Date of the Award.

DISCOVER FINANCIAL SERVICES

By:

R. Andy Eichfeld

EVP, Chief Human Resources & Administrative Officer

APPENDIX A

Discover Financial Services

International Supplement

This International Supplement to the Award Certificate (”International Supplement”) contains supplemental terms and conditions for the RSU Award (“Equity Award”) to employees of Discover Financial Services (or the relevant affiliated company) located in certain jurisdictions outside of the United States. The terms included in this International Supplement are intended to ensure compliance with the laws of the country in which you are Employed or, in certain instances, to make the awards more tax efficient in your country.

You have also received an Award Certificate applicable to your award. The Award Certificate, together with this International Supplement, collectively set forth the terms and conditions of your Equity Award. To the extent that this International Supplement amends, deletes or supplements any terms of the Award Certificate, this International Supplement shall control.

Capitalized terms that are used without definition in this International Supplement have the meanings assigned in the Plan or the Award Certificate.

All Employees Located Outside the United States.

If you are Employed outside of the United States, please note that your Equity Award is offered, issued and administered by Discover Financial Services, a Delaware corporation, and your local employer is not involved in the grant of awards under such equity incentive program. All documents related to your Equity Award, including the Award Certificate, this International Supplement and the link by which you access these documents, originate and are maintained in the United States.

Your Equity Award is made in virtue of your Employment with, and your services performed for, the appropriate entities within the Company. However, your award does not form part of your entitlement to remuneration or benefits, whether pursuant to any contract of Employment to which you may be a party or otherwise. Similarly, the existence of a contract of Employment between you and any entity within the Company shall not confer on you any right or entitlement to participate in the Equity Award or to receive awards thereunder, or any expectation that you might participate in such equity incentive program or receive additional equity awards in the future.Your Equity Award, the Award Certificate, and/or this International Supplement does not constitutean employment contract and does not create an employment relationship or a promise of continued Employment for any period of time.

In addition, your Equity Award is not part of your base salary or wages and will not be taken into account (except to the extent otherwise required by local law) in determining any other employment-related rights you may have, such as rights to pension or severance pay.

Whether or not you have a contract of Employment with any entity within the Company, your rights and obligations under the terms of your office or Employment shall not be affected by your receipt of the Equity Award. By accepting your receipt of the Equity Award, you waive any and all rights to compensation or damages for any loss of the Equity Award in the event of your termination of your office or Employment for any reason whatsoever. This waiver applies whether or not such termination amounts to a wrongful or unfair dismissal.

You may be subject to applicable exchange control, currency control or similar financial laws that may affect your transactions with respect to your equity award, including without limitation, your ability to bring shares of Discover Financial Services common stock into your jurisdiction or to receive the proceeds of a sale of Discover Financial Services common stock in your jurisdiction. Moreover, you may be subject to certain notification, approval and/or repatriation obligations with respect to securities and funds you receive in connection with your awards. In addition the Company is not responsible for any foreign exchange fluctuations that change the value of your RSU Award. You are encouraged to consult your advisors to ascertain whether any restrictions or obligations apply to you.

Your Equity Award has not been authorized or approved by any applicable securities authorities and may have been offered pursuant to an exemption from registration in your local jurisdiction. Similarly, no prospectus or similar offering or registration document has been prepared, authorized or approved by any applicable securities authorities in your jurisdiction. The grant of awards is being made only to employees of the Company and does not constitute and is not intended to be an offering to the public. For this reason, you must keep all award documents you receive, including but not limited to this International Supplement and the Award Certificate, confidential and you may not distribute or otherwise make public any award documents without the prior written consent of the Company. Moreover, you may not reproduce (in whole or in part) any award documents you receive. In addition, the shares of Company common stock you acquire upon vesting and conversion of your Equity Award may be subject to applicable restrictions on resale in your local jurisdiction. You are encouraged to consult your advisors to ascertain whether any restrictions or obligations apply to you.

Employees in China.

If you are employed in China or are a Chinese national on international assignment outside of China for the Company, but your Equity Award was made in China and/or you will be taxed there, your Equity Award will be settled in cash. Rather than convert awards to shares pursuant to Section 1 of the Award Certificate and Sections 4 through 6 of the Award Certificate, the Company will convert your Equity Award to cash and the Company or your local employer will deliver the cash payment to you. You consent to this cash conversion in exchange for the Equity Award. All other terms and conditions of the Plan and the Award Certificate will otherwise apply to your Equity Award.

Employees in the United Kingdom or European Union.

If you are employed in the United Kingdom (or the European Union), the Company will act in accordance with the Data Protection Act of 2018 as amended from time to time and the General Data Protection Regulation as amended from time to time as applicable regarding any personal information which you provide to it in connection with your Equity Award (including the amount of the award) and you acknowledge the need for the processing of such personal information in order to facilitate your participation in such equity incentive program, for any purposes required by law or regulation, or for any other legitimate business purpose. By accepting your Equity Award, you acknowledge that from time to time, for the purposes described above, your personal information may be stored and processed by and disclosed and transferred to other offices and companies within the Company and to third parties, some of which are situated outside of the European Union and may not offer as high a level of protection for personal information as countries within the European Union.

        The following provisions apply in lieu of those contained in the Award Certificate for employees in the United Kingdom.

Section 8(a)

The forfeiture, cancellation and/or clawback circumstances and events set forth in this Section 8 are designed, among other things, to incentivize compliance with the Company’s policies (including, without limitation, the Company’s risk policies and Code of Conduct), to protect the Company’s interests in non-public, confidential and/or proprietary information, products, trade secrets, customer relationships, workforce stability, and other legitimate business interests, and to ensure an orderly transition of responsibilities. This Section 8 shall apply notwithstanding any other terms of this Award Certificate (except where sections in this Award Certificate specifically provide that the circumstances set forth in this Section 8 no longer apply).

(a)Conditions. Notwithstanding your satisfaction of the vesting conditions of this Award Certificate, RSUs are not earned: (1) until the applicable Scheduled Vesting Date; and (2) unless the conditions set forth in this section 8(a) below are met. Although you will become the beneficial owner of Stock following conversion of your RSUs, the Company may, upon notice, issue a transfer restriction with respect to your shares of Stock following conversion of your RSUs pending any investigation or other review that impacts the determination as to whether the RSUs meet the conditions set forth below. The shares underlying such RSUs shall not legally vest in you and shall be forfeited and recoverable in the event the Company determines that the conditions set forth in this section 8(a) below are not met. Notwithstanding any provision of this Award Certificate to the contrary, in order for legal ownership of the shares to fully vest in you it is a strict condition that you must not at any time prior to one year after the termination of your Employment or service with the Company (i) engage, in Wrongful Solicitation, (ii) misuse the Company’s confidential, proprietary information and/or intellectual property, as defined in your employment contract, the Company Code of Conduct, and/or any other relevant agreements or policies issued to you, or (iii) for those Participants classified by the Company as an officer of Discover Financial Services or one of its Subsidiaries on the date of grant, engage in Competitive Activity. If the conditions above are not met, you will:

(1)pay to the Company an amount in cash equal to the value of the shares that vested and converted on or after, or within one year prior to, your termination of Employment, which value shall be determined by the Company, in its sole discretion, and shall include an amount for tax adjustments appropriate to reflect your obligation to repay such amounts due to you not meeting the conditions above; or

(2)transfer to the Company the number of shares that vested and converted on or after, or within one year prior to, your termination of Employment, plus an amount calculated by the Company, in its sole discretion, for tax adjustments appropriate to reflect your obligation to transfer such common stock due to you not meeting the conditions above.

Section 24(e), (f) and (r)

(e)“Competitive Activity” means:

(1)becoming, or entering into any arrangement as, an employee, officer, partner, member, proprietor, director, independent contractor, consultant, advisor, representative or agent of, a Competitor, where you will be responsible for providing, or managing or supervising others who are providing, services (i) that are similar or substantially related to the services that you provided to the Company, or (ii) that you had direct or indirect managerial or supervisory responsibility for at the Company, or (iii) that call for the application of the same or similar specialized knowledge or skills as those

utilized by you in your services for the Company, in each such case, at any time during the year preceding the earlier of the start of your notice period and the Employment; or

(2)either alone or in concert with others, forming, or acquiring a five percent (5%) or greater equity ownership, voting interest or profit participation in, a Competitor.

(f)“Competitor” means any corporation, partnership or other entity that engages in (or that owns a significant interest in any corporation, partnership or other entity that engages in) (1) the business of consumer lending, including, without limitation, credit card issuance or electronic payment services, or (2) any other business which you have been materially involved in or had significant knowledge of, which has been conducted by the Company at any time during the two years preceding the termination of your Employment. For the avoidance of doubt, a competitor of any entity which results from a corporate transaction involving the Company that constitutes a Change in Control shall be considered a Competitor for purposes of this Award Certificate.

(r)    “Wrongful Solicitation” occurs upon either of the following events:

(1)while Employed, including during any notice period applicable to you in connection with the termination of your Employment, and within one year after the termination of your Employment, directly or indirectly in any capacity (including through any person, corporation, partnership or other business entity of any kind), you hire or solicit, recruit, induce, entice, influence or encourage any Company employee to leave the Company or become hired or engaged by another firm; provided, however, that this clause shall apply only to employees of the Company who had access to confidential information of the Company and (i) were employed at the level of officer or above, or (ii) who worked in or with your business unit or (iii) for whom you had direct or indirect responsibility, and in each case with whom you had material contact in the course of your Employment, at any time during the year preceding the earlier of the start of your notice period and the termination of your Employment; or

(2)while Employed, including during any notice period applicable to you in connection with the termination of your Employment, or within one year after the termination of your Employment, directly or indirectly in any capacity (including through any person, corporation, partnership or other business entity of any kind), you solicit or entice away or in any manner attempt to persuade any client or customer, or prospective client or customer, of the Company (i) to discontinue or diminish his, her or its relationship or prospective relationship with the Company or (ii) to otherwise provide his, her or its business to any person, corporation, partnership or other business entity which engages in any line of business in which the Company is engaged (other than the Company); provided, however, that this clause shall apply only to clients or customers, or prospective clients or customers, that you worked for on an actual or prospective project or assignment during any notice period applicable to you in connection with the termination of your Employment or during the one year preceding notice of the termination of your Employment.

*    *    *

The Company recommends that you seek advice of your tax advisors regarding the tax treatment of your awards.

EX-10.3

Exhibit 10.3

Discover Financial Services

Severance Plan

Summary Plan Description

2019

The Discover Financial Services Welfare Benefits Plan (Plan) includes a variety of welfare benefits, including the plan of Discover Financial Services and its domestic affiliates (Discover), regarding severance pay and pay in lieu of notice of termination (Severance Plan).

The Plan is a “welfare plan” within the meaning of Section 3(1) of the Employee Retirement Income Security Act of 1974, as amended (ERISA) and shall be construed in a manner consistent with such intent. Severance payments made under the Severance Plan are funded entirely from general corporate assets.

This booklet is the Summary Plan Description (SPD) for the Severance Plan as in effect on November 1, 2019, and is the Program Document, as defined under the Plan and describes the severance benefits offered under the Plan. This SPD explains the applicable terms of the Severance Plan in easy-to-understand language. Additional SPDs are available for other benefits offered under the Plan, including medical, dental, vision, life, disability, etc. This booklet and certain other documents, including such other SPDs, any applicable insurance contracts, and any other applicable plan documents together make up the official Plan documents. If there is any conflict between the information in the Plan documents and any other materials, including any verbal representation, the Plan documents control. Any prior severance plan, policy, guidelines, SPDs or informal practice with respect to the payment of severance, separation or termination pay are superseded by this document. Discover Financial Services is the Plan sponsor and reserves the right to amend or discontinue the Plan and/or the Severance Plan at any time in its sole discretion.

You should read the SPD carefully and keep it with your other important papers for future reference.

Table of Contents

Covered Employees............................................................................................................................................................................4

Eligibility for Severance Pay.............................................................................................................................................................4

Amount of Severance Pay.................................................................................................................................................................5

Reduction of Severance Pay..............................................................................................................................................................6

When Payments are Made................................................................................................................................................................7

Re-employment following Notice of Termination...........................................................................................................................7

Outplacement Assistance and Other Benefits.................................................................................................................................7

Pay.......................................................................................................................................................................................................8

Administration of the Severance Plan..............................................................................................................................................8

Other Important Information...........................................................................................................................................................9

Your Erisa Rights............................................................................................................................................................................11

Claiming Benefits.............................................................................................................................................................................12

Covered Employees

The following U.S. employees may become eligible to receive severance pay under the Severance Plan:

•Full-time employees

•Flex part-time employees

•Regular part-time employees

•Part-time employees

(collectively known as "Employee(s)")

An Employee must be in active employment as shown on the Discover® payroll, on a paid leave of absence or, solely to the extent required by law, on an unpaid leave of absence in order to be an Employee. Individuals who are: (a) classified by Discover and its affiliates as non-U.S. benefits-eligible workers, including, but not limited to, interns, summer associates, temporary workers, contingent workers, as well as individuals classified by Discover and its affiliates as leased workers, independent contractors or consultants, regardless of whether or not such classification is subsequently upheld for any purpose by a court or Federal, state or local administrative authority; (b) covered by a collective bargaining agreement with respect to which Discover or an affiliate is a party, unless such agreement provides for participation in the Severance Plan; or (c) hired in connection with an acquisition agreement entered into on or after January 1, 2008, unless such agreement provides for participation in the Severance Plan, are not eligible to participate in the Severance Plan.

Any individual who is employed as a fixed-term employee is not an Employee and is not eligible to participate in the Severance Plan. Discover classifies Employees under the Discover Financial Services Employee Classification and Type Policy.

The determination of whether an individual is an Employee shall be made by the Plan Administrator in its sole discretion.

Eligibility for Severance Pay

An Employee is eligible to receive severance pay if the Employee is involuntarily terminated by notice with a termination date on or after November 1, 2019 by Discover, as detailed below:

•Due to an economic release, which is defined as the permanent closing of an office or facility, elimination of a job or position or a permanent reduction in staff. Whether a release is an economic release shall be conclusively determined by the Plan Administrator in his/her sole discretion.

•Due to an increase and/or addition of skills required of an Employee’s current position, as determined by the Plan Administrator.

An Employee shall be ineligible for any benefits under the Severance Plan unless he or she signs a waiver and release agreement in such form, and within such time, as is acceptable to Discover in its sole discretion. Discover may require more than one waiver and release in accordance with this paragraph.

An Employee shall be ineligible for any severance pay benefits under the Severance Plan if any of the following apply, each of which shall be conclusively determined by the Plan Administrator in his/her sole discretion:

•The Employee applies for an open position with Discover and is offered the job (regardless of grade level or responsibility).

•The Employee is offered an alternative position, in writing, with Discover prior to the Employee’s planned termination date with Discover that is:

1.of comparable responsibility, authority and job duties

2.at or above the pay grade, and in all material respects provides the same incentive opportunity other than any Discover-initiated across-the-board reductions in compensation, including incentive opportunities, affecting substantially all eligible Discover Employees; and

3.not more than thirty-five (35) miles from the location of the Employee’s job with Discover immediately prior to the involuntary termination.

•The Employee’s termination results from a merger, acquisition or other form of corporate reorganization, such as a sale or spin-off of a business unit, and the Employee has been offered a position, in writing, with the acquiring or successor entity or any affiliate prior to the Employee’s planned termination date that is:

1.of comparable responsibility, authority and job duties

2. at or above the pay grade, and in all material respects provides the same incentive opportunity (other than any Discover-initiated, across-the-board reductions in compensation, including incentive opportunities, affecting substantially all eligible Discover Employees) of, and

3. not more than thirty-five (35) miles from the location of the Employee’s job with Discover immediately prior to the involuntary termination.

•The Employee has been laid off, and there is a reasonable expectation, in the opinion of Discover, that the Employee’s layoff will be temporary and that he or she will be recalled to work by Discover within 60 days of the date the Employee is laid off.

•The Employee is terminated for performance or conduct.

•The Employee acts to the detriment of Discover after being notified that he/she will be terminated.

•The Employee voluntarily terminates employment with Discover by quitting, resigning, abandoning his/her job, or has provoked such termination.

•The Employee is covered by an individual employment agreement or other contractual arrangement providing for severance benefits, separation pay, or any other form of termination pay, payments or post termination benefits, or which contains a provision requiring the individual to be given notice prior to termination.

•The Employee fails to return all Discover property within seven days following termination of employment (or any shorter period that may be established by Employee’s

business unit), including, but not limited to, files, records, keys, product samples, credit cards, building access card, computer equipment, fax, answering machines, cell phones and wireless email devices.

•The Plan Administrator requests that the Employee remain an active Employee for a period of time following notice of termination during which the Employee continues to perform his/her job duties as required by Discover (working notice period) and the Employee fails to complete such period.

Amount of Severance Pay

Employees eligible for severance pay shall receive an amount based upon the length of the Employee’s service as an Employee (Service) and employment status at termination.

Employees	Weeks per Year of Service	Minimum Weeks of Severance
Nonexempt	2	4
Exempt Grades 1-7	2	4
Exempt Grades 8-9	2	8
Directors	3	26
Vice President and Above	3	52

Partial years of Service shall be considered for purposes of calculating severance pay. If an employee is rehired, or otherwise has gaps in service, only the most current period of service is used for purposes of calculating severance pay.

The maximum severance pay payable under the Severance Plan is 52 weeks.

In addition, Employees eligible for the Corporate Bonus Program will also receive an amount equal to the Employee’s target annual cash bonus, adjusted on a pro-rata basis by multiplying the target annual cash bonus by a fraction where the numerator is the number of days of the applicable calendar year through which the Employee was employed by Discover, and the denominator is the number of days of the applicable calendar year (either 365 or 366 as applicable). This calculation applies to the target annual cash bonus for the year that includes the date of the Employee’s termination, and for the prior year unless the annual cash bonus for the prior year has been paid by the date of the Employee’s termination.

Reduction of Severance Pay

Unless Discover®, in its sole discretion, determines otherwise, severance pay shall be reduced by the amount of any severance or termination pay, or pay in lieu of notice, paid or required to be paid to the Employee under any applicable law, including the Worker Adjustment and Retraining Notification Act (WARN) and any similar state laws.

Any severance paid under this Severance Plan may be further reduced to the extent necessary to take into account any outstanding financial obligations the Employee has to Discover. Any reduction determinations will be made by Discover in its sole discretion.

When Payments are Made

Upon the acceptance by Discover of the Employee’s fully executed waiver and release agreement in a form acceptable to Discover in its sole discretion, Discover will pay the severance benefits in a lump sum cash payment to the former Employee within the time frame as specified in the waiver and release agreement.

Discover shall cause to be withheld from severance payments such Federal and state income taxes, payroll and other applicable taxes, and deductions as Discover deems appropriate. Taxes on severance amounts will be withheld using the supplemental rates, which are fixed rates during the applicable year. Exemptions do not apply to adjust the amount of tax withholdings taken from these payments. In addition, benefit deductions (i.e. 401(k) Plan deferrals) may not be withheld from your severance pay.

No benefits payable under the Severance Plan can be assigned, pledged, alienated or subject to any lien. As a result, your benefit is not subject to garnishment, attachment or other creditor’s process.

Re-employment Following Notice of Termination

If an Employee is re-employed by Discover or successor within one year of the Employee’s offer of severance and termination, he/she will be required to repay to Discover, as a condition to such re-employment the amount of the severance payment received that is in excess of what would have been received as base salary (as determined by Discover), if the Employee had remained employed by Discover from the Termination Date through the rehire date. Any re-employment or repayment under this provision will not affect the validity of any previously executed waiver and release agreement.

Outplacement Assistance and Other Benefits

Employees who receive severance pay will have access to the services of an outplacement agency to assist the employee in finding suitable employment based upon employment status. The outplacement agency will be determined by Discover in its sole discretion.

Employees	Outplacement Services
Nonexempt	3 months
Exempt Grades 1-7	4 months
Exempt Grades 8-9	6 months
Directors	9 months
Vice President and Above	12 months

Benefits coverage for Employees and their covered family members will terminate as a result of termination of employment, in accordance with the terms of each respective employee benefit plan. However, Employees and their covered family members will be provided with the opportunity to continue as participants at their own expense in Discover® group health plans, pursuant to the terms of those plans to the extent required by applicable law, including COBRA.

Employees who receive severance benefits will receive an additional severance payment, payable at the same time as severance pay equal to the applicable premiums for group health plan coverage in place prior to their termination of employment, plus an additional payment for income taxes multiplied by a continuation period as provided below:

Employees	Months of Cobra Payment
Nonexempt	3 months
Exempt Grades 1-7	4 months
Exempt Grades 8-9	6 months
Directors	9 months
Vice President and Above	12 months

Pay

For purposes of this Severance Plan, pay used to calculate benefits generally shall be the Employee's annual base or regular pay, and for Corporate Bonus Program eligible Employees ("bonus-eligible Employees") will also include the applicable target annual cash bonus.

For Employees who work less than full-time, pay will be calculated using base or regular pay averaged over the most recent six full biweekly pay periods, then annualized, plus for bonus-eligible Employees, will also include the applicable target annual cash bonus.

In the case of Employees compensated on a draw plus commissions-only basis, pay shall mean the Employee’s annual draw or another amount determined by the Plan Administrator in its sole discretion to reflect a regular pay rate plus, for bonus-eligible Employees, will also include the applicable target annual cash bonus.

For all Employees, pay shall exclude such items as taxable fringe benefits, equity compensation, incentive pay, bonuses other than under the Corporate Bonus Program, overtime or other premium pay. The amount of pay considered under the Severance Plan shall be conclusively determined by the Plan Administrator.

Administration of the Severance Plan

The Discover Financial Services Employee Benefits Committee (or its delegate) is the Plan Administrator.

The Plan Administrator has authority to control and manage the operation and administration of the Severance Plan and make such rules and regulations and take such actions to administer the Severance Plan as she/he may deem appropriate, including paying severance benefits under this Severance Plan, in its sole discretion. The Plan Administrator’s duties are carried out on its behalf by its delegates (who act in their own capacity as such and not as individual fiduciaries). The Plan Administrator has delegated administrative authority to carry out its duties to the Director of Employee Relations at Discover. The Plan Administrator may also engage the services of other persons or organizations, such as actuaries, attorneys, accountants and consultants to render advice and perform services. The Plan Administrator, in its capacity as “named fiduciary” as defined under Section 402(a)(2) of ERISA, shall have the sole discretionary authority to find facts, to interpret and construe the terms of the Severance Plan and

to determine eligibility for benefits in accordance with the terms of the Severance Plan. Any construction or interpretation of the Severance Plan’s terms or determination made by the Plan Administrator as to facts or eligibility for benefits shall be final and binding upon Discover, Employees and their spouses/domestic partners, dependents, heirs, successors and assigns, unless such construction, interpretation or determination is finally determined by a court of competent jurisdiction to be arbitrary or capricious.

Other Important Information

Administrative Information

The Discover Financial Services Welfare Benefits Plan (the “Plan”) includes a variety of welfare benefits, including the Severance Plan. The Plan is an unfunded welfare benefit plan, subject to ERISA, providing among other benefits, severance pay benefits. The Plan is sponsored and maintained by Discover Financial Services.

The Employer Identification Number for Discover Financial Services is 36-2517428. The Severance Plan is part of the Plan. The Plan Identification Number is 501.

Plan Sponsor

Discover Financial Services

c/o myHR Service Center

P.O. Box 563906, Charlotte, NC 28256

844-DFS-myHR (844-337-6947)

Plan Administrator and Named Fiduciary

Discover Financial Services Employee Benefits Committee

c/o myHR Service Center

P.O. Box 563906, Charlotte, NC 28256

844-DFS-myHR (844-337-6947)

Agent for Service of Legal Process

The designated agent for the service of legal process is:

Law and Compliance Department

Attn: General Counsel

Discover Financial Services

2500 Lake Cook Road, Riverwoods, IL 60015

Service of legal process also may be made on the plan administrator.

Participating Employers

All majority-owned U.S. subsidiaries and affiliates of Discover® with U.S. employees are employers participating in the Plan except for certain affiliates acquired after January 1, 2008, which do not participate in the Plan.

As of November 1, 2019, the list of participating employers includes:

•Discover Financial Services

•Discover Bank

•Discover Products Inc.

•Pulse Network LLC

•DFS Services LLC

•DFS International Inc.

•Diners Club International Ltd.

•The Student Loan Corporation

•DFS Corporate Services LLC

•Discover Home Loans, Inc.

An updated list of employers participating in the Plan may be obtained by written request to the Plan Administrator at the address shown. Plan participants and beneficiaries may also receive, upon written request to the Plan Administrator, information as to whether a particular employer participates in the Plan and, if the employer does participate, the employer’s address.

Severance Plan Funding

The Severance Plan is an unfunded Plan. All severance payments are made from Discover® general assets.

Plan Year

The Plan Year runs from January 1 through December 31.

If the Plan and/or the Severance Plan Is Terminated or Modified

Although Discover and its affiliates expect to continue the Plan and the Severance Plan indefinitely, Discover by action of its Head of Human Resources, necessarily reserves the right to amend, modify or discontinue the Plan or any benefits under the Plan, including severance benefits, at any time for any reason or from time to time.

Plan Documents Govern

To the extent there is any inconsistency between the terms of this document or any other document or verbal representation, the terms of this Plan document govern.

No Guarantee of Employment

Neither this booklet nor participation in the Plan is a guarantee of continued employment.

Discretionary Authority of Plan Administrator and Other Plan Fiduciaries

In carrying out their respective responsibilities under the Plan, the Plan Administrator and other Plan fiduciaries shall have the exclusive right and discretionary authority to make any findings necessary or appropriate for any purpose under the Plan, including to interpret the terms of the Plan and to determine eligibility for and entitlement to Plan benefits, including severance

benefits under the Severance Plan. Any interpretation or determination made pursuant to such discretionary authority shall be given full force and effect, unless it can be shown that the interpretation or determination was arbitrary and capricious.

Indemnification

To the fullest extent permitted by law, Discover and its affiliates will indemnify and hold harmless the Plan Administrator, each member of the Employee Benefits Committee, the Claims Committee, the Hearing Panel and each other employee, officer and director of Discover or of any member of the company’s affiliates, to whom fiduciary responsibilities are delegated under the Plan against any cost or expense (including attorneys’ fees) or liability (including any sum paid in settlement of a claim with the approval of Discover) arising out of any act or omission to act, except in the case of willful misconduct or lack of good faith. This paragraph shall not supersede any separate agreement or contract between Discover or an affiliate, the Plan Administrator, the Employee Benefits Committee, the Claims Committee or the Hearing Panel and any other person to whom fiduciary responsibilities are delegated.

Governing Law

The Plan shall be governed by Federal law, and, to the extent not pre-empted by Federal law, including the Employee Retirement Income Security Act of 1974, as amended (ERISA), the laws of the State of Illinois.

Your Erisa Rights

As a participant in the Plan, you are entitled to certain rights and protections under ERISA. ERISA provides that all Plan participants shall be entitled to:

Receive Information About Your Plan and Benefits

•Examine, without charge, at the Plan Administrator’s office and at other specified locations such as work sites, all documents governing the Plan, and a copy of the latest annual report (Form 5500 Series) filed by the Plan with the U.S. Department of Labor and available at the Public Disclosure Room of the Employee Benefits Security Administration.

•Obtain, upon written request to the Plan Administrator, copies of documents governing the operation of the Plan, and copies of the latest annual report (Form 5500 Series) and a copy of the most recent Summary Plan Description. The Plan Administrator may make a reasonable charge for the copies.

•Receive a summary of the Plan’s annual financial report. The Plan Administrator is required by law to furnish each participant with a copy of this summary annual report.

Prudent Action by Plan Fiduciaries

In addition to creating rights for Plan participants, ERISA imposes duties upon the people who are responsible for the operation of the Plan. The people who operate the Plan, called “fiduciaries” of the Plan, have a duty to do so prudently and in the interest of you and other Plan participants and beneficiaries. No one, including your employer or any other person, may fire

you or otherwise discriminate against you in any way to prevent you from obtaining benefits to which you are entitled under the Plan or exercising your rights under ERISA.

Enforce Your Rights

If your claim for a Plan benefit is denied or ignored, in whole or in part, you have a right to know why this was done, to obtain copies of documents relating to the decision without charge, and to appeal any denial, all within certain time schedules.

Under ERISA, there are steps you can take to enforce the above rights. For instance, if you request materials from the Plan or the latest annual report from the Plan and do not receive them within 30 days, you may file suit in a Federal court. In such a case, the court may require the Plan Administrator to provide the materials and pay you up to $110 a day until you receive the materials, unless the materials were not sent because of reasons beyond the control of the Plan Administrator. If you have a claim for benefits that is denied or ignored, in whole or in part, you may file suit in a state or Federal court.

If it should happen that Plan fiduciaries misuse the Plan’s money, or you are discriminated against for asserting your rights, you may seek assistance from the U.S. Department of Labor, or you may file suit in a Federal court. The court will decide who should pay court costs and legal fees. If you are successful, the court may order the person you have sued to pay these costs and fees. If you lose, the court may order you to pay these costs and fees, for example, if it finds your claim is frivolous.

Assistance With Your Questions

If you have any questions about the Plan, you should contact your HR Representative. For more information about your rights under ERISA and other laws affecting benefit plans, contact the nearest office of Employee Benefits Security Administration (EBSA); U.S. Department of Labor, listed in your telephone directory or the Division of Technical Assistance and Inquiries, EBSA, U.S. Department of Labor, 200 Constitution Avenue NW, Washington DC 20210. You may also obtain certain publications about your rights and responsibilities under ERISA by calling the publications hotline of the EBSA or by visiting the EBSA website at www.dol.gov/ebsa.

Claiming Benefits

Claims and Appeals Process Under the Plan

The following is a general summary of the claims and appeals process for the Plan. All claims for benefits under the Plan, including all alleged administrative or other errors, must be filed in accordance with the claims procedures. In most cases, benefits to which you are entitled are paid upon your eligibility for benefits under the Plan without a request.

If you believe you are entitled to benefits under the Plan, you may contact your HR Representative. If your HR Representative advises you that you are not eligible for severance benefits under the Plan and you disagree, you may file a claim for benefits. A “claim” is your first request for a review of the denial, and an “appeal” is your second request for review of the denial.

If My Initial Request for Payment Is Denied, How Do I File a Claim for Benefits?

You or an authorized representative (your spouse or adult child, or a person authorized, in writing or by a court on your behalf) have the right to file a claim for benefits under the Plan. Your claim must be in writing. Send all documentation that you consider relevant, and a statement of why you believe your claim should be granted, to the Claims Committee c/o Discover myHR. If you are not satisfied with the Claim Reviewer’s decision, you have the right to file an appeal (a second request for a review of your denial).

Who Reviews My Claim or Appeal?

The Claims Committee is the Reviewer responsible for reviewing claims for benefits under the Plan. If the amount involved is $20,000 or less, your claim may instead be decided by Discover Financial Services’ Director of Benefits (or delegate). The Director of Benefits, in his or her sole discretion, determines whether the amount involved exceeds $20,000.

When Must I File a Claim?

Your claim must be filed in a timely manner. You must file your claim within 180 days following the date your initial request for benefits is denied. If you want to file an appeal (the second level review) after your claim (the first level review) is denied, you must do so within 180 days following the denial of your claim.

You may not bring a lawsuit to recover benefits under this Plan until you have exhausted the Plan’s administrative process described in this booklet. If your appeal is denied, you have the right to file a lawsuit under ERISA, provided you do so before the earliest of:

•Six months following the date of your appeal has been denied;

•Three years following the date benefits under the Plan commenced or services related to the amount you are appealing were performed, as applicable or;

•The end of the otherwise applicable statutory limitation period.

When Will I Receive a Decision on My Claim or Appeal?

Claims will be decided within 90 days of receipt, but a 90-day extension is allowed if the Reviewer needs additional time due to special circumstances, and appeals will be decided within 60 days of receipt, but a 60-day extension is allowed if the Reviewer needs additional time due to special circumstances.

What Happens If My Claim Is Denied?

If your claim is denied, in whole or in part, you will receive a written or electronic notice containing the following information:

•The specific reason for the denial;

•Reference to the specific plan provisions on which the denial is based;

•A description of any additional material or information which you must provide in order to complete your claim and an explanation of why such material or information is necessary;

•Incomplete claims will be treated as part of the request for information and extension process and not as a denial unless you do not respond to the request for information within the required time period; and

•Instruction and deadlines for making an appeal, including a statement of your right to file a lawsuit under ERISA, if your appeal is denied.

How Do I Make an Appeal If My Claim Is Denied?

Your appeal must be in writing. Send a statement of why you believe your appeal should be granted, along with all documentation that you consider relevant, to the Hearing Panel, c/o Discover myHR. You will be provided, upon request and without charge, reasonable access to, and copies of all documents, records and other information relevant to your claim under applicable legal standards.

What Happens If My Appeal Is Denied?

If your appeal is denied, in whole or in part, you will receive a written or electronic notice containing the following information:

•The specific reasons for the denial;

•Reference to the specific plan provisions on which the denial is based;

•A statement that you are entitled to receive, upon request and without charge, reasonable access to and copies of all documents, records and other information relevant to your claim under applicable legal standards; and

•A statement of your right to file a lawsuit under ERISA.

May I Have My Appeal Reheard?

No. All decisions of the Hearing Panel are final, conclusive and binding. If, however, you believe that the Reviewer did not follow the terms of the plan or has violated law, you may bring a legal action under ERISA. See the “Your ERISA Rights” section above.

How Do I Contact The Persons And Entities Named In These Procedures?

Send all correspondence and documents to the Claims Committee, Hearing Panel, Director of Benefits or Discover myHR to:

Discover Benefit Determination Review Team

P.O. Box 7105

Rantoul, IL 61866-7105

Fax: 847-554-1295

What Else Should I Know About How The Reviewers Make Decisions?

The Plan Administrator and fiduciaries, including the reviewers, have discretionary authority to interpret the Plan and make determinations under the Plan. Any decision made pursuant to this authority is given full force and effect unless arbitrary or capricious. You may contact Discover myHR by phone, on the Web or by fax as follows:

Benefits Representatives:

844-DFS-myHR (844-337-6947)

8:00am – 6:00pm, Central time, Monday through Friday, except certain holidays

Web site:

digital.alight.com/discover

24 hours a day, seven days a week

Fax:

847-554-1295

EX-31.1

Exhibit 31.1

CERTIFICATION

I, Roger C. Hochschild, certify that:

1.I have reviewed this Quarterly Report on Form 10-Q of Discover Financial Services (the "registrant");

2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a)Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b)Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c)Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d)Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and

5.The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):

a)All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

b)Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

Date: July 28, 2023

/s/ ROGER C. HOCHSCHILD

Roger C. Hochschild

Chief Executive Officer and President

EX-31.2

Exhibit 31.2

CERTIFICATION

I, John T. Greene, certify that:

1.I have reviewed this Quarterly Report on Form 10-Q of Discover Financial Services (the "registrant");

2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a)Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b)Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c)Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d)Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and

5.The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):

a)All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

b)Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

Date: July 28, 2023

/s/ JOHN T. GREENE

John T. Greene

Executive Vice President, Chief Financial Officer

EX-32.1

Exhibit 32.1

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of Discover Financial Services (the "Company") on Form 10-Q for the period ended June 30, 2023, as filed with the Securities and Exchange Commission (the "Report"), each of Roger C. Hochschild, Chief Executive Officer and President of the Company, and John T. Greene, Executive Vice President and Chief Financial Officer of the Company, certifies, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

1.The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

2.The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Date: July 28, 2023

/s/ ROGER C. HOCHSCHILD

Roger C. Hochschild

Chief Executive Officer and President

Date:July 28, 2023

/s/ JOHN T. GREENE

John T. Greene

Executive Vice President, Chief Financial Officer

XML

Document and Entity Information - shares	6 Months Ended
	Jun. 30, 2023	Jul. 21, 2023
Cover [Abstract]
Document type	10-Q
Document quarterly report	true
Document period end date	Jun. 30, 2023
Document transition report	false
Entity file number	001-33378
Entity registrant name	DISCOVER FINANCIAL SERVICES
Entity incorporation, state	DE
Entity tax identification number	36-2517428
Entity address, address line one	2500 Lake Cook Road
Entity address, city or town	Riverwoods
Entity address, state or province	IL
Entity address, postal zip code	60015
Entity phone number, city area code	224
Entity phone number, local phone number	405-0900
Title of 12(b) security	Common Stock, par value $0.01 per share
Trading symbol	DFS
Security exchange name	NYSE
Entity current reporting status	Yes
Entity interactive data current	Yes
Entity filer category	Large Accelerated Filer
Smaller reporting company	false
Emerging growth company	false
Entity shell company	false
Entity common stock, shares outstanding		249,947,996
Entity central index key	0001393612
Current fiscal year end date	--12-31
Document fiscal year focus	2023
Document fiscal period focus	Q2
Amendment flag	false

XML

Condensed Consolidated Statements of Financial Condition - USD ($) $ in Millions	Jun. 30, 2023	Dec. 31, 2022
Assets
Cash and cash equivalents	$ 8,605	$ 8,856
Restricted cash	39	41
Investment securities (includes available-for-sale securities of $13,221 and $11,987 reported at fair value with associated amortized cost of $13,478 and $12,167 at June 30, 2023 and December 31, 2022, respectively)	13,466	12,208
Loan receivables
Loan receivables	117,906	112,120
Allowance for credit losses	(8,064)	(7,374)
Net loan receivables	109,842	104,746
Premises and equipment, net	1,053	1,003
Goodwill	255	255
Other assets	4,822	4,597
Total assets	138,082	131,706
Deposits
Interest-bearing deposit accounts	97,630	90,151
Non-interest bearing deposit accounts	1,357	1,485
Total deposits	98,987	91,636
Long-term borrowings	20,276	20,108
Accrued expenses and other liabilities	4,963	5,618
Total liabilities	124,226	117,362
Commitments, contingencies and guarantees (Notes 9, 12 and 13)
Stockholders' Equity
Common stock, par value $0.01 per share; 2,000,000,000 shares authorized; 570,627,982 and 569,689,007 shares issued at June 30, 2023 and December 31, 2022, respectively	6	6
Preferred stock, par value $0.01 per share; 200,000,000 shares authorized; 10,700 shares issued and outstanding at June 30, 2023 and December 31, 2022, respectively	1,056	1,056
Additional paid-in capital	4,508	4,468
Retained earnings	29,761	28,207
Accumulated other comprehensive loss	(470)	(339)
Treasury stock, at cost; 320,683,942 and 302,305,216 shares at June 30, 2023 and December 31, 2022, respectively	(21,005)	(19,054)
Total stockholders' equity	13,856	14,344
Total liabilities and stockholders' equity	138,082	131,706
Variable Interest Entity, Primary Beneficiary [Member]
Assets
Restricted cash	39	41
Loan receivables
Loan receivables	25,165	25,937
Allowance for credit losses	(1,109)	(1,152)
Other assets	3	3
Deposits
Long-term borrowings	11,216	10,259
Accrued expenses and other liabilities	$ 16	$ 14

XML

Condensed Consolidated Statements of Financial Condition (Parenthetical) - USD ($) $ in Millions		Jun. 30, 2023	Dec. 31, 2022
Statement of Financial Position [Abstract]
Available-for-sale investment securities, fair value	[1]	$ 13,221	$ 11,987
Available-for-sale investment securities, amortized cost	[1]	$ 13,478	$ 12,167
Common Stock, Par or Stated Value Per Share		$ 0.01	$ 0.01
Common Stock, Shares Authorized		2,000,000,000	2,000,000,000
Common Stock, Shares, Issued		570,627,982	569,689,007
Preferred stock, par or stated value per Share		$ 0.01	$ 0.01
Preferred Stock, Shares Authorized		200,000,000	200,000,000
Preferred Stock, Shares Issued		10,700	10,700
Preferred Stock, Shares Outstanding		10,700	10,700
Treasury Stock, Common, Shares		320,683,942	302,305,216

[1] Available-for-sale investment securities are reported at fair value.

XML

Condensed Consolidated Statements of Income - USD ($) $ in Millions	3 Months Ended		6 Months Ended
	Jun. 30, 2023	Jun. 30, 2022	Jun. 30, 2023	Jun. 30, 2022
Interest income
Credit card loans	$ 3,466		$ 6,787	$ 4,692
Other loans	606	$ 439	1,170	867
Investment securities	106	33	207	69
Other interest income	112	19	203	23
Total interest income	4,290	2,915	8,367	5,651
Interest expense
Deposits	905	174	1,661	313
Short-term borrowings	0	0	0	1
Long-term borrowings	208	131	397	248
Total interest expense	1,113	305	2,058	562
Net interest income	3,177	2,610	6,309	5,089
Provision for credit losses	1,305	549	2,407	703
Net interest income after provision for credit losses	1,872	2,061	3,902	4,386
Other income
Discount and interchange revenue, net	370	379	700	688
Protection products revenue	44	42	87	86
Loan fee income	186	142	352	282
Transaction processing revenue	72	61	139	118
Gains (losses) on equity investments	1	(42)	(17)	(204)
Other income	28	21	50	45
Total other income	701	603	1,311	1,015
Other expense
Employee compensation and benefits	588	515	1,213	1,015
Marketing and business development	268	254	509	446
Information processing and communications	150	121	289	246
Professional fees	216	189	448	366
Premises and equipment	20	24	42	48
Other expense	162	120	286	232
Total other expense	1,404	1,223	2,787	2,353
Income before income taxes	1,169	1,441	2,426	3,048
Income tax expense	268	338	557	712
Net income	901	1,103	1,869	2,336
Net income allocated to common stockholders	$ 895	$ 1,097	$ 1,826	$ 2,293
Basic earnings per common share	$ 3.54	$ 3.93	$ 7.09	$ 8.13
Diluted earnings per common share	$ 3.54	$ 3.93	$ 7.09	$ 8.12

XML

Condensed Consolidated Statements of Comprehensive Income - USD ($) $ in Millions	3 Months Ended		6 Months Ended
	Jun. 30, 2023	Jun. 30, 2022	Jun. 30, 2023	Jun. 30, 2022
Statement of Comprehensive Income [Abstract]
Net income	$ 901	$ 1,103	$ 1,869	$ 2,336
Other comprehensive loss, net of tax
Unrealized losses on available-for-sale investment securities, net of tax	(151)	(41)	(59)	(162)
Unrealized (losses) gains on cash flow hedges, net of tax	(84)	3	(72)	5
Other comprehensive loss	(235)	(38)	(131)	(157)
Comprehensive income	$ 666	$ 1,065	$ 1,738	$ 2,179

XML

Condensed Consolidated Statements of Changes in Stockholders' Equity - USD ($) $ in Millions	Total	Cumulative Effect, Period of Adoption, Adjustment	Preferred Stock [Member]	Common Stock [Member]	Additional Paid-in Capital [Member]	Retained Earnings [Member]	Retained Earnings [Member] Cumulative Effect, Period of Adoption, Adjustment	Accumulated Other Comprehensive (Loss) Income [Member]	Treasury Stock, Common	Series C Preferred Stock [Member]	Series C Preferred Stock [Member] Retained Earnings [Member]	Series D Preferred Stock	Series D Preferred Stock Retained Earnings [Member]
Preferred stock, shares outstanding, balance at beginning of period (in shares) at Dec. 31, 2021			11,000
Common stock, shares outstanding, balance at beginning of period (in shares) at Dec. 31, 2021				568,831,000
Stockholders' equity, balance at beginning of period at Dec. 31, 2021	$ 13,180		$ 1,056	$ 6	$ 4,369	$ 24,538		$ (94)	$ (16,695)
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Net income	2,336					2,336
Other comprehensive loss	(157)							(157)
Purchases of treasury stock	(1,545)								(1,545)
Common stock issued under employee benefit plans (in shares)				49,000
Common stock issued under employee benefit plans	5			$ 0	5
Shares Issued, Shares, Share-based Payment Arrangement, after Forfeiture				684,000
Common stock issued and stock-based compensation expense	43			$ 0	43
Dividends — common stock	(312)					(312)
Dividends — preferred stock										$ (16)	$ (16)	$ (15)	$ (15)
Preferred stock, shares outstanding, balance at end of period (in shares) at Jun. 30, 2022			11,000
Common stock, shares outstanding, balance at end of period (in shares) at Jun. 30, 2022				569,564,000
Stockholders' equity, balance at end of period at Jun. 30, 2022	13,519		$ 1,056	$ 6	4,417	26,531		(251)	(18,240)
Preferred stock, shares outstanding, balance at beginning of period (in shares) at Mar. 31, 2022			11,000
Common stock, shares outstanding, balance at beginning of period (in shares) at Mar. 31, 2022				569,504,000
Stockholders' equity, balance at beginning of period at Mar. 31, 2022	13,196		$ 1,056	$ 6	4,390	25,596		(213)	(17,639)
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Net income	1,103					1,103
Other comprehensive loss	(38)							(38)
Purchases of treasury stock	(601)								(601)
Common stock issued under employee benefit plans (in shares)				27,000
Common stock issued under employee benefit plans	3			$ 0	3
Shares Issued, Shares, Share-based Payment Arrangement, after Forfeiture				33,000
Common stock issued and stock-based compensation expense	24			$ 0	24
Dividends — common stock	(168)					(168)
Preferred stock, shares outstanding, balance at end of period (in shares) at Jun. 30, 2022			11,000
Common stock, shares outstanding, balance at end of period (in shares) at Jun. 30, 2022				569,564,000
Stockholders' equity, balance at end of period at Jun. 30, 2022	$ 13,519		$ 1,056	$ 6	4,417	26,531		(251)	(18,240)
Preferred stock, shares outstanding, balance at beginning of period (in shares) at Dec. 31, 2022	10,700		11,000
Common stock, shares outstanding, balance at beginning of period (in shares) at Dec. 31, 2022				569,689,000
Stockholders' equity, balance at beginning of period at Dec. 31, 2022	$ 14,344		$ 1,056	$ 6	4,468	28,207		(339)	(19,054)
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Net income	968
Preferred stock, shares outstanding, balance at end of period (in shares) at Mar. 31, 2023			11,000
Common stock, shares outstanding, balance at end of period (in shares) at Mar. 31, 2023				570,460,000
Stockholders' equity, balance at end of period at Mar. 31, 2023	$ 14,060		$ 1,056	$ 6	4,493	29,037		(235)	(20,297)
Preferred stock, shares outstanding, balance at beginning of period (in shares) at Dec. 31, 2022	10,700		11,000
Common stock, shares outstanding, balance at beginning of period (in shares) at Dec. 31, 2022				569,689,000
Stockholders' equity, balance at beginning of period at Dec. 31, 2022	$ 14,344		$ 1,056	$ 6	4,468	28,207		(339)	(19,054)
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Net income	1,869					1,869
Other comprehensive loss	(131)							(131)
Purchases of treasury stock	(1,951)								(1,951)
Common stock issued under employee benefit plans (in shares)				58,000
Common stock issued under employee benefit plans	6			$ 0	6
Shares Issued, Shares, Share-based Payment Arrangement, after Forfeiture				881,000
Common stock issued and stock-based compensation expense	34			$ 0	34
Dividends — common stock	$ (336)					(336)
Dividends — preferred stock										$ (16)	$ (16)	$ (15)	$ (15)
Preferred stock, shares outstanding, balance at end of period (in shares) at Jun. 30, 2023	10,700		11,000
Common stock, shares outstanding, balance at end of period (in shares) at Jun. 30, 2023				570,628,000
Stockholders' equity, balance at end of period at Jun. 30, 2023	$ 13,856		$ 1,056	$ 6	4,508	29,761		(470)	(21,005)
Stockholders' equity, balance at end of period (Accounting Standards Update 2022-02) at Jun. 30, 2023		$ 52					$ 52
Preferred stock, shares outstanding, balance at beginning of period (in shares) at Mar. 31, 2023			11,000
Common stock, shares outstanding, balance at beginning of period (in shares) at Mar. 31, 2023				570,460,000
Stockholders' equity, balance at beginning of period at Mar. 31, 2023	14,060		$ 1,056	$ 6	4,493	29,037		(235)	(20,297)
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Net income	901					901
Other comprehensive loss	(235)							(235)
Purchases of treasury stock	(708)								(708)
Common stock issued under employee benefit plans (in shares)				29,000
Common stock issued under employee benefit plans	3			$ 0	3
Shares Issued, Shares, Share-based Payment Arrangement, after Forfeiture				139,000
Common stock issued and stock-based compensation expense	12			$ 0	12
Dividends — common stock	$ (177)					(177)
Preferred stock, shares outstanding, balance at end of period (in shares) at Jun. 30, 2023	10,700		11,000
Common stock, shares outstanding, balance at end of period (in shares) at Jun. 30, 2023				570,628,000
Stockholders' equity, balance at end of period at Jun. 30, 2023	$ 13,856		$ 1,056	$ 6	$ 4,508	$ 29,761		$ (470)	$ (21,005)
Stockholders' equity, balance at end of period (Accounting Standards Update 2022-02) at Jun. 30, 2023		$ 52					$ 52

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Condensed Consolidated Statements of Changes in Stockholders' Equity (Parenthetical) - $ / shares	3 Months Ended		6 Months Ended
	Jun. 30, 2023	Jun. 30, 2022	Jun. 30, 2023	Jun. 30, 2022
Dividends declared, common stock (dollars per share)	$ 0.70	$ 0.60	$ 1.30	$ 1.10
Series C Preferred Stock [Member]
Dividends declared, preferred stock (dollars per share)			2,750	2,750
Series D Preferred Stock
Dividends declared, preferred stock (dollars per share)			$ 3,062.5	$ 3,062.5

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Condensed Consolidated Statements of Cash Flows - USD ($) $ in Millions	6 Months Ended
	Jun. 30, 2023	Jun. 30, 2022
Cash flows provided by operating activities
Net income	$ 1,869	$ 2,336
Adjustments to reconcile net income to net cash provided by operating activities:
Provision for credit losses	2,407	703
Deferred income taxes	(269)	(145)
Depreciation and amortization	248	279
Amortization of deferred revenues	(215)	(162)
Gain (Loss) on Disposition of Assets	37	226
Other, net	51	48
Changes in assets and liabilities:
Increase in other assets	(18)	(262)
(Decrease) increase in accrued expenses and other liabilities	(812)	323
Net cash provided by operating activities	3,298	3,346
Cash flows provided by (used for) investing activities
Maturities of available-for-sale investment securities	905	1,160
Purchases of available-for-sale investment securities	(2,163)	0
Maturities of held-to-maturity investment securities	8	22
Purchases of held-to-maturity investment securities	(33)	(27)
Net change in principal on loans originated for investment	(7,362)	(6,290)
Proceeds from the sale of other investments	4	216
Purchases of other investments	(34)	(115)
Purchases of premises and equipment	(158)	(99)
Net cash used for investing activities	(8,833)	(5,133)
Cash flows provided by (used for) financing activities
Net change in short-term borrowings	0	50
Net change in deposits	7,327	4,007
Proceeds from issuance of securitized debt	2,237	2,635
Maturities and repayment of securitized debt	(1,185)	(2,561)
Maturities and repayments of other long-term borrowings	(803)	(322)
Proceeds from issuance of common stock	6	5
Purchases of treasury stock	(1,933)	(1,545)
Dividends paid on common and preferred stock	(367)	(343)
Net cash provided by financing activities	5,282	1,926
Net (decrease) increase in cash, cash equivalents and restricted cash	(253)	139
Cash, cash equivalents and restricted cash, at the beginning of the period	8,897	11,332
Cash, cash equivalents and restricted cash, at the end of the period	8,644	11,471
Reconciliation of cash, cash equivalents and restricted cash
Cash and cash equivalents	8,605	11,439
Restricted cash	$ 39	$ 32

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Background and Basis of Presentation

6 Months Ended

Jun. 30, 2023

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Background and Basis of Presentation

Background and Basis of Presentation

Description of Business

Discover Financial Services ("DFS" or the "Company") is a digital banking and payment services company. The Company is a bank holding company under the Bank Holding Company Act of 1956 and a financial holding company under the Gramm-Leach-Bliley Act. Therefore, the Company is subject to oversight, regulation and examination by the Board of Governors of the Federal Reserve System (the "Federal Reserve"). The Company provides digital banking products and services and payment services through its subsidiaries. The Company offers its customers credit card loans, private student loans, personal loans, home loans and deposit products. The Company also operates the Discover Network, the PULSE network ("PULSE") and Diners Club International ("Diners Club"), collectively known as the Discover Global Network. The Discover Network processes transactions for Discover-branded credit and debit cards and provides payment transaction processing and settlement services. PULSE operates an electronic funds transfer network, providing financial institutions issuing debit cards on the PULSE network with access to ATMs domestically and internationally, as well as merchant acceptance throughout the United States of America ("U.S.") for debit card transactions. Diners Club is a global payments network of licensees, which are generally financial institutions, that issue Diners Club branded credit and charge cards and/or provide card acceptance services.

The Company manages its business activities in two segments, Digital Banking and Payment Services, based on the products and services provided. See Note 16: Segment Disclosures for a detailed description of each segment's operations and the allocation conventions used in business segment reporting.

Basis of Presentation

The accompanying condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the U.S. ("GAAP") for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by GAAP for complete consolidated financial statements. In the opinion of management, the financial statements reflect all adjustments necessary for the fair presentation of results for the interim period. All such adjustments are of a normal, recurring nature. The preparation of financial statements in conformity with GAAP requires the Company to make estimates and assumptions that affect the amounts reported in the condensed consolidated financial statements and related disclosures. These estimates are based on information available as of the date of the condensed consolidated financial statements. The Company believes that the estimates used in the preparation of the condensed consolidated financial statements are reasonable. Actual results could differ from these estimates. These interim condensed consolidated financial statements should be read in conjunction with the Company's 2022 audited consolidated financial statements filed with the Company's annual report on Form 10-K for the year ended December 31, 2022.

Immaterial Restatement of Prior Period Financial Statements

Beginning around mid-2007, the Company incorrectly classified certain credit card accounts into its highest merchant and merchant acquirer pricing tier. The Company determined the revenue impact of the incorrect card product classification was immaterial to the consolidated financial statements for all impacted prior periods. For comparative purposes, the Company has made these corrections to the consolidated financial statements for the prior periods presented in this Form 10-Q. Additionally, prior period amounts in the applicable notes to the consolidated financial statements have been corrected. The impacts of the misclassification and subsequent corrections are contained entirely within the Digital Banking segment. See Note 18: Immaterial Restatement of Prior Period Financial Statements for additional information and quantification of the prior period restatement impacts.

Recently Issued Accounting Pronouncement (Not Yet Adopted)

In March 2023, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2023-02, Investments—Equity Method and Joint Ventures (Topic 323): Accounting for Investments in Tax Credit Structures Using the Proportional Amortization Method. The ASU expands the use of the proportional amortization method of accounting for tax credit investments. Currently, the method is limited to Low Income Housing Tax Credit investments. Under the amended guidance, use of proportional amortization will be available to any qualifying tax credit investments, including but not limited to investments in New Markets Tax Credit and Renewable Energy Tax Credit programs. The

amendments in the ASU are to be applied on a retrospective or modified retrospective basis. The ASU is effective for the Company on January 1, 2024. Management does not expect the amendments to have a material impact on the Company’s consolidated financial statements.

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Investments

6 Months Ended

Jun. 30, 2023

Investments, Debt and Equity Securities [Abstract]

Investments

Investments

The Company's investment securities consist of the following (dollars in millions):

	June 30, 2023		December 31, 2022
U.S. Treasury(1) and U.S. GSE(2) securities	$	12,714	$	11,423
Residential mortgage-backed securities - Agency(3)	752		785
Total investment securities	$	13,466	$	12,208

(1)Includes $292 million and $97 million of U.S. Treasury securities pledged as swap collateral as of June 30, 2023 and December 31, 2022, respectively.

(2)Consists of a security issued by the Federal Home Loan Bank.

(3)Consists of securities issued by Fannie Mae, Freddie Mac, or Ginnie Mae.

The amortized cost, gross unrealized gains and losses and fair value of available-for-sale and held-to-maturity investment securities are as follows (dollars in millions):

	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value
At June 30, 2023
Available-for-Sale Investment Securities(1)
U.S. Treasury and U.S. GSE securities	$	12,947	$	5	$	(238)	$	12,714
Residential mortgage-backed securities - Agency	531		—		(24)		507
Total available-for-sale investment securities	$	13,478	$	5	$	(262)	$	13,221
Held-to-Maturity Investment Securities(2)
Residential mortgage-backed securities - Agency(3)	$	245	$	—	$	(21)	$	224
Total held-to-maturity investment securities	$	245	$	—	$	(21)	$	224
At December 31, 2022
Available-for-Sale Investment Securities(1)
U.S. Treasury and U.S. GSE securities	$	11,580	$	21	$	(178)	$	11,423
Residential mortgage-backed securities - Agency	587		—		(23)		564
Total available-for-sale investment securities	$	12,167	$	21	$	(201)	$	11,987
Held-to-Maturity Investment Securities(2)
Residential mortgage-backed securities - Agency(3)	$	221	$	—	$	(22)	$	199
Total held-to-maturity investment securities	$	221	$	—	$	(22)	$	199

(1)Available-for-sale investment securities are reported at fair value.

(2)Held-to-maturity investment securities are reported at amortized cost.

(3)Amounts represent residential mortgage-backed securities ("RMBS") that were classified as held-to-maturity as they were entered into as a part of the Company's community reinvestment initiatives.

The Company invests in U.S. Treasury obligations and securities issued by government agencies and government-sponsored enterprises of the U.S. ("U.S. GSEs"), which have long histories with no credit losses and are explicitly or implicitly guaranteed by the U.S. federal government. Therefore, management has concluded that there is no expectation of non-payment on its investment securities and does not record an allowance for credit losses on these investments. In addition, the Company does not have the intent to sell any available-for-sale securities in an unrealized loss position and does not believe it is more likely than not that it will be required to sell any such security before recovery of its amortized cost basis.

The following table provides information about available-for-sale investment securities with aggregate gross unrealized losses and the length of time that individual investment securities have been in a continuous unrealized loss position (dollars in millions):

	Number of Securities in a Loss Position	Less than 12 months				More than 12 months
		Fair Value		Unrealized Losses		Fair Value		Unrealized Losses
At June 30, 2023
Available-for-Sale Investment Securities
U.S. Treasury and U.S. GSE securities	183	$	8,357	$	(133)	$	3,288	$	(105)
Residential mortgage-backed securities - Agency	32	$	415	$	(19)	$	92	$	(5)
At December 31, 2022
Available-for-Sale Investment Securities
U.S. Treasury and U.S. GSE securities	123	$	9,060	$	(175)	$	106	$	(3)
Residential mortgage-backed securities - Agency	34	$	559	$	(22)	$	5	$	(1)

There were no proceeds from sales or recognized gains or losses on available-for-sale securities during the three and six months ended June 30, 2023 and 2022. See Note 8: Accumulated Other Comprehensive Income for unrealized gains and losses on available-for-sale securities during the three and six months ended June 30, 2023 and 2022.

Maturities of available-for-sale debt securities and held-to-maturity debt securities are provided in the following table (dollars in millions):

At June 30, 2023	One Year or Less		After One Year Through Five Years		After Five Years Through Ten Years		After Ten Years		Total
Available-for-Sale Investment Securities — Amortized Cost
U.S. Treasury and U.S. GSE securities	$	1,875	$	10,737	$	335	$	—	$	12,947
Residential mortgage-backed securities - Agency(1)	2		78		41		410		531
Total available-for-sale investment securities	$	1,877	$	10,815	$	376	$	410	$	13,478
Held-to-Maturity Investment Securities — Amortized Cost
Residential mortgage-backed securities - Agency(1)	$	—	$	—	$	—	$	245	$	245
Total held-to-maturity investment securities	$	—	$	—	$	—	$	245	$	245
Available-for-Sale Investment Securities — Fair Values
U.S. Treasury and U.S. GSE securities	$	1,844	$	10,539	$	331	$	—	$	12,714
Residential mortgage-backed securities - Agency(1)	2		74		39		392		507
Total available-for-sale investment securities	$	1,846	$	10,613	$	370	$	392	$	13,221
Held-to-Maturity Investment Securities — Fair Values
Residential mortgage-backed securities - Agency(1)	$	—	$	—	$	—	$	224	$	224
Total held-to-maturity investment securities	$	—	$	—	$	—	$	224	$	224

(1)Maturities of RMBS are reflective of the contractual maturities of the investment.

Other Investments

As a part of the Company's community reinvestment initiatives, the Company has made equity investments in certain limited partnerships and limited liability companies that finance the construction and rehabilitation of affordable rental housing and stimulate economic development in low- to moderate-income communities. These investments are accounted for using the equity method of accounting and are recorded within other assets. The related commitment for future investments is recorded in accrued expenses and other liabilities within the condensed consolidated statements of financial condition. The portion of each investment's operating results allocable to the Company reduces the carrying value of the investments and is recorded in other expense within the condensed consolidated statements of income. The Company further reduces the carrying value of the investments by recognizing any amounts that are in excess of future net tax benefits in other expense. The Company earns a return primarily through tax credits allocated to the affordable housing projects and the community revitalization projects. The Company does not consolidate these investments as the Company does not have a controlling financial interest in the investee entities. As of June 30, 2023 and December 31, 2022, the Company had outstanding

investments in these entities of $411 million and $416 million, respectively, and related contingent liabilities for unconditional and legally binding delayed equity contributions of $103 million and $111 million, respectively. Of the above outstanding equity investments, the Company had $377 million and $375 million of investments related to affordable housing projects as of June 30, 2023 and December 31, 2022, respectively, which had $96 million and $100 million of related contingent liabilities for unconditional and legally binding delayed equity contributions, respectively.

The Company holds non-controlling equity positions in several payment services entities and third-party venture capital funds which invest in such entities. Most of these investments are not subject to equity method accounting because the Company does not have significant influence over the investee. The common or preferred equity securities that the Company holds typically do not have readily determinable fair values. As a result, the majority of these investments are carried at cost minus impairment, if any. As of June 30, 2023 and December 31, 2022, the carrying value of these investments, which are recorded within other assets on the Company's condensed consolidated statements of financial condition, was $34 million and $39 million, respectively.

The Company also holds non-controlling equity positions in payment services entities that have publicly traded stock and therefore have readily determinable fair values. As a result, these investments are carried at fair value based on the quoted share prices. As of June 30, 2023 and December 31, 2022, the carrying value of these investments, which are recorded within other assets on the Company's condensed consolidated statements of financial condition, was $33 million and $41 million, respectively. During the three and six months ended June 30, 2023, the Company recognized an immaterial net gain and an immaterial net loss, respectively, on the condensed consolidated statements of income related to these investments. The Company recognized net losses of $42 million and $207 million during the three and six months ended June 30, 2022, respectively.

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Loan Receivables

6 Months Ended

Jun. 30, 2023

Receivables [Abstract]

Financing Receivables [Text Block]

Loan Receivables

The Company has two loan portfolio segments: credit card loans and other loans.

The Company's classes of receivables within the two portfolio segments are depicted in the following table (dollars in millions):

	June 30, 2023		December 31, 2022
Credit card loans(1)(2)	$	93,955	$	90,113
Other loans(3)
Private student loans(4)	10,241		10,308
Personal loans	9,106		7,998
Other loans	4,604		3,701
Total other loans	23,951		22,007
Total loan receivables	117,906		112,120
Allowance for credit losses	(8,064)		(7,374)
Net loan receivables	$	109,842	$	104,746

(1)Amounts include carrying values of $14.3 billion and $13.5 billion underlying investors' interest in trust debt at June 30, 2023 and December 31, 2022, respectively, and $10.7 billion and $12.2 billion in seller's interest at June 30, 2023 and December 31, 2022, respectively. See Note 4: Credit Card and Private Student Loan Securitization Activities for additional information.

(2)Unbilled accrued interest receivable on credit card loans, which is presented as part of other assets in the Company's condensed consolidated statements of financial condition, was $622 million and $611 million at June 30, 2023 and December 31, 2022, respectively.

(3)Accrued interest receivable on private student, personal and other loans, which is presented as part of other assets in the Company's condensed consolidated statements of financial condition, was $515 million, $56 million and $15 million, respectively, at June 30, 2023 and $468 million, $49 million and $11 million, respectively, at December 31, 2022.

(4)At June 30, 2023 and December 31, 2022, there were $6.0 billion of private student loans in repayment.

Credit Quality Indicators

As part of credit risk management activities, on an ongoing basis, the Company reviews information related to the performance of a customer's account with the Company and information from credit bureaus, such as FICO or other credit scores, relating to the customer's broader credit performance. The Company actively monitors key credit quality indicators, including FICO scores and delinquency status, for credit card, private student and personal loans. These indicators are important to understand the overall credit performance of the Company's customers and their ability to repay.

FICO scores are generally obtained at the origination of the account and are refreshed monthly or quarterly thereafter to assist in predicting customer behavior. Historically, the Company has noted that accounts with FICO scores below 660 have larger delinquencies and credit losses than those with higher credit scores.

The following table provides the distribution of the amortized cost basis (excluding accrued interest receivable presented in other assets) by the most recent FICO scores available for the Company's customers for credit card, private student and personal loan receivables (dollars in millions):

	Credit Risk Profile by FICO Score
	June 30, 2023								December 31, 2022
	660 and Above				Less than 660 or No Score				660 and Above				Less than 660 or No Score
	$		%		$		%		$		%		$		%
Credit card loans	$	76,591	82	%	$	17,364	18	%	$	73,827	82	%	$	16,286	18	%
Private student loans by origination year(1)(2)
2023	$	259	96	%	$	12	4	%
2022	1,563		95	%	87		5	%	$	1,172	94	%	$	77	6	%
2021	1,573		95	%	83		5	%	1,668		95	%	81		5	%
2020	1,266		95	%	66		5	%	1,365		95	%	65		5	%
2019	1,121		94	%	68		6	%	1,221		95	%	67		5	%
Prior	3,880		94	%	263		6	%	4,306		94	%	286		6	%
Total private student loans	$	9,662	94	%	$	579	6	%	$	9,732	94	%	$	576	6	%
Personal loans by origination year
2023	$	2,927	99	%	$	20	1	%
2022	3,408		96	%	143		4	%	$	4,270	98	%	$	77	2	%
2021	1,464		94	%	93		6	%	1,958		96	%	91		4	%
2020	537		94	%	34		6	%	790		95	%	40		5	%
2019	281		91	%	28		9	%	444		92	%	38		8	%
Prior	141		82	%	30		18	%	249		86	%	41		14	%
Total personal loans	$	8,758	96	%	$	348	4	%	$	7,711	96	%	$	287	4	%

(1)A majority of private student loan originations occur in the third quarter and disbursements can span multiple calendar years.

(2)FICO score represents the higher credit score of the cosigner or borrower.

Delinquencies are an indicator of credit quality at a point in time. A loan balance is considered delinquent when contractual payments on the loan become 30 days past due.

The amortized cost basis (excluding accrued interest receivable presented in other assets) of delinquent loans in the Company's loan portfolio is shown below for credit card, private student and personal loan receivables (dollars in millions):

	June 30, 2023						December 31, 2022
	30-89 Days Delinquent		90 or More Days Delinquent		Total Past Due		30-89 Days Delinquent		90 or More Days Delinquent		Total Past Due
Credit card loans	$	1,420	$	1,269	$	2,689	$	1,250	$	1,028	$	2,278
Private student loans by origination year(1)
2023	$	—	$	—	$	—
2022	2		1		3		$	—	$	—	$	—
2021	11		4		15		6		1		7
2020	16		5		21		14		3		17
2019	19		6		25		19		5		24
Prior	115		39		154		128		36		164
Total private student loans	$	163	$	55	$	218	$	167	$	45	$	212
Personal loans by origination year
2023	$	4	$	1	$	5
2022	30		10		40		$	12	$	3	$	15
2021	17		6		23		15		6		21
2020	7		2		9		8		2		10
2019	5		2		7		6		2		8
Prior	4		3		7		6		3		9
Total personal loans	$	67	$	24	$	91	$	47	$	16	$	63

(1)Private student loans may include a deferment period, during which borrowers are not required to make payments while enrolled in school at least half time as determined by the school. During a deferment period, these loans do not advance into delinquency.

Allowance for Credit Losses

The following tables provide changes in the Company's allowance for credit losses (dollars in millions):

	For the Three Months Ended June 30, 2023
	Credit Card Loans		Private Student Loans		Personal Loans		Other Loans		Total Loans
Balance at March 31, 2023	$	6,135	$	872	$	622	$	62	$	7,691
Additions
Provision for credit losses(1)	1,232		9		50		6		1,297
Deductions
Charge-offs	(1,051)		(38)		(64)		—		(1,153)
Recoveries	209		6		14		—		229
Net charge-offs	(842)		(32)		(50)		—		(924)
Balance at June 30, 2023	$	6,525	$	849	$	622	$	68	$	8,064
	For the Three Months Ended June 30, 2022
	Credit Card Loans		Private Student Loans		Personal Loans		Other Loans		Total Loans
Balance at March 31, 2022	$	5,120	$	870	$	613	$	44	$	6,647
Additions
Provision for credit losses(1)	568		(11)		(20)		2		539
Deductions
Charge-offs	(587)		(33)		(39)		—		(659)
Recoveries	206		6		18		—		230
Net charge-offs	(381)		(27)		(21)		—		(429)
Balance at June 30, 2022	$	5,307	$	832	$	572	$	46	$	6,757
	For the Six Months Ended June 30, 2023
	Credit Card Loans		Private Student Loans		Personal Loans		Other Loans		Total Loans
Balance at December 31, 2022	$	5,883	$	839	$	595	$	57	$	7,374
Cumulative effect of ASU No. 2022-02 adoption(2)	(66)		—		(2)		—		(68)
Balance at January 1, 2023	5,817		839		593		57		7,306
Additions
Provision for credit losses(1)	2,234		69		118		11		2,432
Deductions
Charge-offs	(1,930)		(71)		(118)		—		(2,119)
Recoveries	404		12		29		—		445
Net charge-offs	(1,526)		(59)		(89)		—		(1,674)
Balance at June 30, 2023	$	6,525	$	849	$	622	$	68	$	8,064
	For the Six Months Ended June 30, 2022
	Credit Card Loans		Private Student Loans		Personal Loans		Other Loans		Total Loans
Balance at December 31, 2021	5,273		843		662		44		6,822
Additions
Provision for credit losses(1)	746		34		(50)		2		732
Deductions
Charge-offs	(1,128)		(57)		(77)		—		(1,262)
Recoveries	416		12		37		—		465
Net charge-offs	(712)		(45)		(40)		—		(797)
Balance at June 30, 2022	$	5,307	$	832	$	572	$	46	$	6,757

(1)Excludes an $8 million and $10 million adjustment of the liability for expected credit losses on unfunded commitments for the three months ended June 30, 2023 and 2022, respectively, and $25 million and $29 million for the six months ended June 30, 2023 and 2022, respectively, as the liability is recorded in accrued expenses and other liabilities in the Company's condensed consolidated statements of financial condition.

(2)Represents the adjustment to the allowance for credit losses as a result of the adoption of ASU No. 2022-02 on January 1, 2023, which eliminated the requirement to apply discounted cash flow measurements for certain troubled debt restructurings.

The allowance for credit losses was approximately $8.1 billion at June 30, 2023, which reflects a $373 million build over March 31, 2023 and a $690 million build from December 31, 2022. The build in the allowance for credit losses for the three and six months ended June 30, 2023 was primarily driven by loan growth.

The allowance estimation process begins with a loss forecast that uses certain macroeconomic variables and multiple macroeconomic scenarios among its inputs. In estimating the allowance at June 30, 2023, the Company used a macroeconomic forecast that projected the following weighted average amounts: (i) unemployment rate ending 2023 at 4.0% and peaking at 4.3% in mid 2024 and (ii) 1.56% growth rate in real gross domestic product in 2023.

In estimating expected credit losses, the Company considered the uncertainties associated with borrower behavior and payment trends, as well as recent and expected macroeconomic conditions, such as high consumer price inflation and the fiscal and monetary policy responses to that inflation. The Federal Reserve raised its federal funds rate target range substantially during 2022 and the first half of 2023 in an effort to slow economic growth and reduce inflation. Most economists and financial market participants expect U.S. economic growth and inflation to slow gradually during 2023 as the economy responds to the lagged effects of tighter monetary policy and credit conditions.

The forecast period the Company deemed to be reasonable and supportable was 18 months for all periods presented. The 18 months reasonable and supportable forecast period was deemed appropriate given the current economic conditions. For all periods presented, the Company determined that a reversion period of 12 months was appropriate for the same reason. The Company applied a weighted reversion method to provide a more reasonable transition to historical losses for all loan products for all periods presented.

The net charge-offs for credit card loans increased for the three and six months ended June 30, 2023, when compared to the same periods in 2022, primarily due to continued credit normalization and the seasoning of vintages from the past two years. The net charge-offs for private student and personal loans increased for the three and six months ended June 30, 2023, when compared to the same periods in 2022, primarily due to continued credit normalization.

Net charge-offs of principal are recorded against the allowance for credit losses, as shown in the preceding table. Information regarding net charge-offs of interest and fee revenues on credit card and other loans is as follows (dollars in millions):

	For the Three Months Ended June 30,				For the Six Months Ended June 30,
	2023		2022		2023		2022
Interest and fees accrued subsequently charged-off, net of recoveries (recorded as a reduction of interest income)	$	156	$	69	$	284	$	135
Fees accrued subsequently charged-off, net of recoveries (recorded as a reduction to other income)	$	46	$	23	$	87	$	44

Gross principal charge-offs of the Company's loan portfolio are presented in the table below, on a year-to-date basis, for credit card, private student and personal loan receivables (dollars in millions):

	For the Six Months Ended June 30, 2023
Credit card loans	$	1,930
Private student loans by origination year
2023	$	—
2022	1
2021	6
2020	9
2019	11
Prior	44
Total private student loans	$	71
Personal loans by origination year
2023	$	1
2022	41
2021	39
2020	17
2019	13
Prior	7
Total personal loans	$	118

Delinquent and Non-Accruing Loans

The amortized cost basis (excluding accrued interest receivable presented in other assets) of delinquent and non-accruing loans in the Company's loan portfolio is shown below for each class of loan receivables (dollars in millions):(1)

	30-89 Days Delinquent		90 or More Days Delinquent		Total Past Due		90 or More Days Delinquent and Accruing		Total Non-accruing(2)
At June 30, 2023
Credit card loans	$	1,420	$	1,269	$	2,689	$	1,192	$	255
Other loans
Private student loans	163		55		218		55		8
Personal loans	67		24		91		23		8
Other loans	16		13		29		2		27
Total other loans	246		92		338		80		43
Total loan receivables	$	1,666	$	1,361	$	3,027	$	1,272	$	298
At December 31, 2022
Credit card loans	$	1,250	$	1,028	$	2,278	$	1,003	$	176
Other loans
Private student loans	167		45		212		45		8
Personal loans	47		16		63		16		7
Other loans	13		12		25		1		23
Total other loans	227		73		300		62		38
Total loan receivables	$	1,477	$	1,101	$	2,578	$	1,065	$	214

(1)The payment status of both modified and unmodified loans is included in this table.

(2)The Company estimates that the gross interest income that would have been recorded under the original terms of non-accruing credit card loans was $10 million and $5 million for the three months ended June 30, 2023 and 2022, respectively, and $18 million and $11 million for the six months ended June 30, 2023 and 2022, respectively. The Company does not separately track the amount of gross interest income that would have been recorded under the original terms of loans. Instead, the Company estimated this amount based on customers' current balances and most recent interest rates.

Loan Modifications to Borrowers Experiencing Financial Difficulty

The Company has internal loan modification programs that provide relief to credit card, private student and personal loan borrowers who are experiencing financial hardship. The internal loan modification programs include both temporary and permanent programs, which vary by product. External loan modification programs, through third party consumer credit counseling agencies, are also available for credit card and personal loans. Those programs feature interest rate reductions, payment delays, term extensions, or a combination thereof.

For credit card customers, the Company offers both temporary and permanent hardship programs. The temporary hardship programs consist of an interest rate reduction lasting for a period no longer than 12 months. Charging privileges on these accounts are generally suspended while in the program. However, if the customer meets certain criteria, charging privileges may be reinstated following completion of the program.

The permanent modification program involves closing the account, changing the structure of the loan to a fixed payment loan with a maturity no longer than 72 months and reducing the interest rate on the loan. The permanent modification program does not typically provide for the forgiveness of unpaid principal, but may allow for the reversal of certain unpaid interest or fee assessments. The Company also makes permanent loan modifications for customers who request financial assistance through external sources, such as a consumer credit counseling agency program. These loans typically receive a reduced interest rate, typically continue to be subject to the original minimum payment terms and do not normally include waiver of unpaid principal, interest or fees.

To assist private student loan borrowers who are experiencing temporary financial difficulties but are willing to resume making payments, the Company may offer a payment delay (in the form of hardship forbearance or a temporary payment reduction), or a temporary interest rate reduction. Typically programs are offered up to six consecutive months at one time with a lifetime usage cap, most commonly, of 12 months.

For personal loan customers, the Company offers various payment programs, including temporary and permanent programs, in certain situations. The temporary programs normally consist of reducing the minimum payment for no longer than 12 months and, in certain circumstances, the interest rate on the loan is reduced. The permanent programs involve extending the loan term and, in certain circumstances, reducing the interest rate on the loan. The total term of the loan, including modification, may not exceed nine years. The Company also allows permanent loan modifications for customers who request financial assistance through external sources, similar to the credit card customers discussed above. Payments are modified based on the new terms agreed upon with the credit counseling agency.

In addition to the programs described above, the Company will in certain cases accept partial payment in full satisfaction of the outstanding receivable. This is a form of principal forgiveness also known as a settlement. The difference between the loan balance and the amount received in settlement is recorded as a charge-off.

The Company monitors borrower performance after using payment programs or forbearance. The Company believes the programs are useful in assisting customers experiencing financial difficulties and allowing them to make timely payments. In addition to helping customers with their credit needs, these programs are designed to maximize collections and ultimately the Company’s profitability. The Company plans to continue to use payment programs to provide relief to customers experiencing financial difficulties.

ASU No. 2022-02, Financial Instruments—Credit Losses (Topic 326): Troubled Debt Restructurings and Vintage Disclosures, became effective for the Company on January 1, 2023. The new guidance eliminated Subtopic 310-40, Troubled Debt Restructurings, and implemented enhanced disclosure requirements regarding loan modifications to borrowers experiencing financial difficulty. The new disclosures are required to be applied on a prospective basis. There will be no comparative disclosures to prior periods until such time as both periods disclosed are subject to the new guidance.

The following table provides the period-end amortized cost basis, by modification category, of loans to borrowers experiencing financial difficulty that entered a modification program during the period (dollars in millions). Some of the loans presented in the table below may no longer be enrolled in a program at period-end:

	For the Three Months Ended June 30,			For the Six Months Ended June 30,(1)
	2023			2023
Credit card loans(2)(3)
Interest rate reduction	$	560		$	1,158
Total credit card loans(4)	$	560		$	1,158
% of total class of financing receivables	0.60		%	1.23		%
Private student loans(2)
Payment delay(5)	$	20		$	22
Interest rate reduction and payment delay(5)	21			50
Total private student loans(4)	$	41		$	72
% of total class of financing receivables	0.40		%	0.70		%
Personal loans(2)
Payment delay(5)	$	3		$	4
Term extension(6)	8			16
Interest rate reduction and payment delay(5)	16			29
Interest rate reduction and term extension(6)	8			14
Total personal loans(2)	$	35		$	63
% of total class of financing receivables	0.38		%	0.69		%

(1)    The current quarter-to-date enrollment figures, when aggregated with previously disclosed quarter-to-date amounts, will not equal the year-to-date amounts in this table because all year-to-date enrollments are presented using the current period-end amortized cost basis.

(2)    Accrued interest receivable (including unbilled accrued interest receivable for credit card loans) on modified loans to borrowers experiencing financial difficulty, which is presented as part of other assets in the Company's condensed consolidated statements of financial condition, was immaterial at June 30, 2023.

(3)    Accounts that entered a credit card loan modification program include $113 million and $231 million that were converted from revolving line-of-credit arrangements to term loans during the three and six months ended June 30, 2023, respectively.

(4)    For settlements, the amortized cost basis is zero at period-end and therefore there is no amount reported for principal forgiveness in the table above. See financial effects table below for principal forgiveness to borrowers experiencing financial difficulty.

(5)    The Company defines a payment delay as a temporary reduction in payments below the original contractually required payment amounts (e.g., interest only payments). The Company's credit card loan modification programs do not result in an other than insignificant delay in payment.

(6)    The Company defines term extensions as only those modifications for which the maturity date is extended beyond the original contractual maturity date by virtue of a change in terms other than a payment delay as defined above. Modifications to credit card loans are not considered term extensions because credit card loans do not have a fixed repayment term.

The only non-cancellable commitments the Company has to lend additional funds to borrowers experiencing financial difficulty relate to certain private student loans. As of June 30, 2023, the amount of such commitments associated with loans modified during the periods presented was immaterial.

The following table provides information on the financial effects of loan modifications to borrowers experiencing financial difficulty, by modification type, made during the period (dollars in millions):

	For the Three Months Ended June 30,			For the Six Months Ended June 30,
	2023			2023
Credit card loans
Weighted-average interest rate reduction	13.80		%	13.58		%
Principal forgiven	$	46		$	46
Interest and fees forgiven(1)	$	35		$	47
Private student loans
Weighted-average interest rate reduction	8.55		%	8.26		%
Payment delay duration (in months)(2)	6 to 12			6 to 12
Principal forgiven	$	—		$	—
Personal loans
Weighted-average interest rate reduction	12.01		%	11.80		%
Weighted-average term extension (in months)	39			38
Payment delay duration (in months)(2)	6 to 12			6 to 12
Principal forgiven	$	—		$	—

(1)     Represents the amount of interest and fees forgiven resulting from accounts entering into a credit card loan modification program and pre-charge off settlements. Interest and fees forgiven are reversed against the respective line items in the consolidated statements of income.

(2)    For private student loan payment delays, the Company offers up to six consecutive months of delay and most commonly limits assistance to a life of loan maximum of 12 months. For personal loan payment delays, the Company limits this assistance to a life of loan maximum of 12 months.

Loan receivables that have been modified are subject to the same requirements for the accrual of expected credit loss over their expected remaining lives as for unmodified loans. The allowance for credit losses incorporates modeling of historical loss data and thereby captures the higher risk associated with modified loans to borrowers experiencing financial difficulty based on their account attributes.

The following table presents the payment status and period-end amortized cost basis, by class of loan receivable, of loans that were modified on or after January 1, 2023 to borrowers experiencing financial difficulty (dollars in millions):(1)

	Current		30-89 Days Delinquent		90 or More Days Delinquent
At June 30, 2023
Credit card loans	$	931	$	115	$	112
Private student loans	66		5		1
Personal loans	53		7		3
Total	$	1,050	$	127	$	116

(1)    This table includes any loan that entered a modification program during the period without regard to whether it remained in a modification program as of the reporting date.

The period-end amortized cost basis of credit cards loans modified, on or after January 1, 2023 to borrowers experiencing financial difficulty which subsequently defaulted was $73 million and $84 million for the three and six months ended June 30, 2023, respectively. The period-end amortized cost basis of private student loans and personal loans modified on or after January 1, 2023 to borrowers experiencing financial difficulty which subsequently defaulted was immaterial for the three and six months ended June 30, 2023. For purposes of this disclosure, a loan is considered to be defaulted when it is 60 days or more delinquent at month end and has advanced two stages of delinquency subsequent to modification. Loans that entered a modification program in any stage of delinquency but did not experience a further payment default are included in the aging table above but are not counted as defaulted for purposes of this disclosure.

Troubled Debt Restructurings (Prior to 2023)

Prior to the adoption of ASU 2022-02, the Company considered a modified loan in which a concession had been granted to the borrower to be a TDR based generally on the cumulative length of the concession period and credit quality of the borrower. Due to differences between the legacy TDR requirements and current loan modification disclosure requirements, information presented in the disclosures below is not directly comparable to the disclosures under the current guidance.

To evaluate the primary financial effects that resulted from credit card loans entering into a TDR program during the three and six months ended June 30, 2022, the Company quantified the amount by which interest and fees were reduced during the periods. During the three and six months ended June 30, 2022, the Company forgave approximately $6 million and $13 million of interest and fees resulting from accounts entering into a credit card loan TDR program.

The following table provides information on loans that entered a TDR program during the period (dollars in millions):

	For the Three Months Ended June 30, 2022			For the Six Months Ended June 30, 2022
	Number of Accounts	Balances		Number of Accounts	Balances
Accounts that entered a TDR program during the period
Credit card loans(1)	49,341	$	313	103,852	$	657
Private student loans	1,523	$	29	3,278	$	60
Personal loans	1,603	$	22	2,762	$	37

(1)Accounts that entered a credit card TDR program include $71 million and $146 million that were converted from revolving line-of-credit arrangements to term loans during the three and six months ended June 30, 2022, respectively.

The following table presents the carrying value of loans that experienced a default during the period that had been modified in a TDR during the 15 months preceding the end of each period (dollars in millions):

	For the Three Months Ended June 30, 2022			For the Six Months Ended June 30, 2022
	Number of Accounts	Aggregated Outstanding Balances Upon Default		Number of Accounts	Aggregated Outstanding Balances Upon Default
TDRs that subsequently defaulted
Credit card loans(1)(2)	5,703	$	28	10,238	$	51
Private student loans(3)	161	$	3	267	$	5
Personal loans(2)	275	$	4	536	$	7

(1)For credit card loans that default from a temporary loan modification program, accounts revert back to the pre-modification terms and charging privileges remain suspended in most cases.

(2)For credit card loans and personal loans, a customer defaults from a loan modification program after either two consecutive missed payments or at charge-off, depending on the program. The outstanding balance upon default is generally the loan balance at the end of the month prior to default.

(3)For student loans, a customer defaults from a loan modification after they are 60 or more days delinquent. The outstanding balance upon default is generally the loan balance at the end of the month prior to default.

Of the account balances that defaulted as shown above for the three months ended June 30, 2022, approximately 62%, and for the six months ended June 30, 2022, approximately 63%, of the total balances were charged off at the end of the month in which they defaulted from a TDR program. For the three and six months ended June 30, 2022, for accounts that had defaulted from a TDR program and had not been subsequently charged off, the balances were included in the allowance for credit loss analysis.

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Credit Card and Private Student Loan Securitization Activities

6 Months Ended

Jun. 30, 2023

Variable Interest Entities Disclosure [Abstract]

Credit Card and Private Student Loan Securitization Activities

Credit Card and Private Student Loan Securitization ActivitiesThe Company's securitizations are accounted for as secured borrowings and the related trusts are treated as consolidated subsidiaries of the Company. For a description of the Company's principles of consolidation with respect to VIEs, see Note 1: Background and Basis of Presentation to the consolidated financial statements in the Company's annual report on Form 10-K for the year ended December 31, 2022.

Credit Card Securitization Activities

The Company accesses the term asset securitization market through Discover Card Master Trust I ("DCMT") and Discover Card Execution Note Trust ("DCENT"). Credit card loan receivables are transferred into DCMT and beneficial interests in DCMT are transferred into DCENT. DCENT issues debt securities to investors that are reported primarily in long-term borrowings.

The DCENT debt structure consists of four classes of securities (DiscoverSeries Class A, B, C and D notes), with the most senior class generally receiving a triple-A rating. To issue senior, higher-rated classes of notes, it is necessary to obtain the appropriate amount of credit enhancement, generally through the issuance of junior, lower-rated or more highly subordinated classes of notes. Wholly-owned subsidiaries of Discover Bank hold the subordinated classes of notes. The Company is exposed to credit risk associated with trust receivables as of the balance sheet date through the retention of these subordinated interests. The estimate of expected credit losses on trust receivables is included in the allowance for credit losses estimate.

The Company's retained interests in the trust's assets, consisting of investments in DCENT notes held by subsidiaries of Discover Bank, constitute intercompany positions that are eliminated in the preparation of the Company's condensed consolidated statements of financial condition.

Upon transfer of credit card loan receivables to the trust, the receivables and certain cash flows derived from them become restricted for use in meeting obligations to the trust's creditors. Further, the transferred credit card loan receivables are owned by the trust and are not available to the Company's third-party creditors. The trusts have ownership of cash balances, the amounts of which are reported in restricted cash within the Company's condensed consolidated statements of financial condition. Except for the seller's interest in trust receivables, the Company's interests in trust assets are generally subordinate to the interests of third-party investors in trust debt and, as such, may not be realized by the Company if needed to absorb deficiencies in cash flows that are allocated to those investors. Apart from the restricted assets related to securitization activities, the investors and the securitization trusts have no recourse to the Company's other assets or the Company's general credit for a shortage in cash flows.

The carrying values of these restricted assets, which are presented on the Company's condensed consolidated statements of financial condition as relating to securitization activities, are shown in the following table (dollars in millions):

	June 30, 2023		December 31, 2022
Restricted cash	$	31	$	33
Investors' interests held by third-party investors	11,275		10,200
Investors' interests held by wholly-owned subsidiaries of Discover Bank	2,997		3,341
Seller's interest	10,732		12,220
Loan receivables(1)	25,004		25,761
Allowance for credit losses allocated to securitized loan receivables(1)	(1,109)		(1,152)
Net loan receivables	23,895		24,609
Other assets	2		2
Carrying value of assets of consolidated variable interest entities	$	23,928	$	24,644

(1)The Company maintains its allowance for credit losses at an amount equal to lifetime expected credit losses associated with all loan receivables, which includes all loan receivables in the trusts. Therefore, the credit risk associated with the transferred receivables is fully reflected on the Company's statements of financial condition in accordance with GAAP.

The debt securities issued by the consolidated trusts are subject to credit, payment and interest rate risks on the transferred credit card loan receivables. To protect investors in the securities, there are certain features or triggering events that will cause an early amortization of the debt securities, including triggers related to the impact of the performance of the trust receivables on the availability and adequacy of cash flows to meet contractual requirements. As of June 30, 2023, no economic or other early amortization events have occurred.

The Company continues to own and service the accounts that generate the loan receivables held by the trusts. Discover Bank receives servicing fees from the trusts based on a percentage of the monthly investor principal balance outstanding. Although the fee income to Discover Bank offsets the fee expense to the trusts and thus is eliminated in consolidation, failure to service the transferred loan receivables in accordance with contractual requirements could lead to a termination of the servicing rights and the loss of future servicing income, net of related expenses.

Private Student Loan Securitization Activities

The Company's private student loan trust receivables reported in loan receivables and the related debt issued by the trust reported in long-term borrowings were immaterial as of June 30, 2023 and December 31, 2022. The amounts are included, together with amounts related to the Company's credit card securitizations, in the supplemental information about assets and liabilities of consolidated variable interest entities, which is presented with the Company's condensed consolidated statements of financial condition.

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Deposits

6 Months Ended

Jun. 30, 2023

Deposits [Abstract]

Deposits

Deposits

The Company obtains deposits from consumers directly or through affinity relationships ("direct-to-consumer deposits"). Additionally, the Company obtains deposits through third-party securities brokerage firms that offer the Company's deposits to their customers ("brokered deposits"). Direct-to-consumer deposit products include savings accounts, certificates of deposit, money market accounts, IRA savings accounts, IRA certificates of deposit and checking accounts. Brokered deposit products include certificates of deposit and sweep accounts.

Customer deposits held with Discover Bank are currently insured for up to $250,000 per account holder through the Federal Deposit Insurance Corporation (“FDIC”). At June 30, 2023 and December 31, 2022, the Company had approximately $5.3 billion and $8.9 billion of uninsured deposits, respectively. The decrease in uninsured deposits reported was primarily driven by leveraging technological capabilities, beginning in the first quarter of 2023, enabling improved application of deposit account ownership attributes in deriving this amount. The amounts of uninsured deposits above were estimated based on the same methodologies and assumptions used for Discover Bank’s regulatory reporting at each respective balance sheet date.

The following table summarizes certificates of deposits maturing over the remainder of this year, over each of the next four years and thereafter (dollars in millions):

	At June 30, 2023
2023	$	10,661
2024	15,578
2025	4,097
2026	2,951
2027	3,871
Thereafter	2,174
Total	$	39,332

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Long-Term Borrowings

6 Months Ended

Jun. 30, 2023

Debt Disclosure [Abstract]

Schedule of Long-Term Borrowings and Weighted Average Interest Rates

Long-Term Borrowings

Long-term borrowings consist of borrowings having original maturities of one year or more. The following table provides a summary of the Company's long-term borrowings and weighted-average interest rates on outstanding balances (dollars in millions):

	June 30, 2023					December 31, 2022
	Maturity	Interest Rate	Weighted-Average Interest Rate	Outstanding Amount		Outstanding Amount
Securitized Debt
Fixed-rate asset-backed securities(1)	2024-2026	0.58% - 5.03%	3.17%	$	9,917	$	8,401
Floating-rate asset-backed securities(2)	2023-2024	5.58% - 5.79%	5.74%	1,225		1,774
Total Discover Card Master Trust I and Discover Card Execution Note Trust				11,142		10,175
Floating-rate asset-backed security(3)(4)	2031	9.25%	9.25%	74		84
Total private student loan securitization trust				74		84
Total long-term borrowings - owed to securitization investors				11,216		10,259
Discover Financial Services (Parent Company)
Fixed-rate senior notes	2024-2032	3.75% - 6.70%	4.68%	3,334		3,333
Fixed-rate retail notes	2023-2031	2.85% - 4.40%	3.77%	152		154
Discover Bank
Fixed-rate senior bank notes(1)	2023-2030	2.45% - 4.65%	3.68%	4,552		5,348
Fixed-rate subordinated bank notes(1)(5)	2028	4.68%	4.68%	497		489
Floating-rate Federal Home Loan Bank advance(6)	2023	5.29%	5.29%	525		525
Total long-term borrowings				$	20,276	$	20,108

(1)The Company uses interest rate swaps to hedge portions of these long-term borrowings against changes in fair value attributable to changes in the applicable benchmark interest rates. The use of these interest rate swaps impacts the carrying value of the debt. See Note 15: Derivatives and Hedging Activities.

(2)DCENT floating-rate asset-backed securities include issuances with the following interest rate terms: 1-month LIBOR + 39 to 60 basis points as of June 30, 2023.

(3)The private student loan securitization trust floating-rate asset-backed security includes an issuance with the following interest rate term: Prime rate + 100 basis points as of June 30, 2023.

(4)Repayment of this debt is dependent upon the timing of principal and interest payments on the underlying private student loans. The date shown represents the final maturity date.

(5)The fixed-rate subordinated bank notes include a rate reset on August 9, 2023, to the 5-year SOFR spread-adjusted swap rate + 173 basis points.

(6)The floating-rate Federal Home Loan Bank (“FHLB”) advance includes the following interest rate term: SOFR + 23 basis points as of June 30, 2023.

The following table summarizes long-term borrowings maturing over the remainder of this year, over each of the next four years and thereafter (dollars in millions):

	June 30, 2023
2023	$	1,837
2024	3,727
2025	6,098
2026	4,867
2027	1,000
Thereafter	2,747
Total	$	20,276

As a member of the FHLB of Chicago, the Company has access to both short- and long-term advance structures with maturities ranging from overnight to 30 years. As of June 30, 2023, the Company had total committed borrowing capacity of $2.9 billion based on the amount and type of assets pledged, of which the outstanding balance was comprised solely of a $525 million long-term advance. As of December 31, 2022, the Company had total committed borrowing capacity of $2.2 billion based on the amount and type of assets pledged, of which the outstanding balance was comprised solely of a $525

million long-term advance. These advances are presented as short- or long-term borrowings on the condensed consolidated statements of financial condition as appropriate.

Additionally, the Company has access to committed borrowing capacity through private securitizations to support the funding of its credit card loan receivables. As of June 30, 2023 and December 31, 2022, the total commitment of secured credit facilities through private providers was $3.5 billion, none of which was drawn. Access to the unused portions of the secured credit facilities is subject to the terms of the agreements with each of the providers. The secured credit facilities have various expirations in 2024 and 2025. Borrowings outstanding under each facility bear interest at a margin above the Term Secured Overnight Financing Rate ("SOFR") or the asset-backed commercial paper costs of each provider. The terms of each agreement provide for a commitment fee to be paid on the unused capacity and include various affirmative and negative covenants, including performance metrics and legal requirements similar to those required to issue any term securitization transaction.

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Preferred Stock (Notes)

6 Months Ended

Jun. 30, 2023

Equity [Abstract]

Preferred Stock

Preferred Stock

The table below presents a summary of the Company's non-cumulative perpetual preferred stock that is outstanding at June 30, 2023 (dollars in millions, except per depositary share amounts):

Series	Description	Initial Issuance Date	Liquidation Preference and Redemption Price per Depositary Share(1)		Per Annum Dividend Rate in effect at June 30, 2023		Total Depositary Shares Authorized, Issued and Outstanding		Carrying Value
							June 30, 2023	December 31, 2022	June 30, 2023		December 31, 2022
C(2)(3)(4)	Fixed-to-Floating Rate	10/31/2017	$	1,000	5.500	%	570,000	570,000	$	563	$	563
D(2)(5)(6)	Fixed-Rate Reset	6/22/2020	$	1,000	6.125	%	500,000	500,000	493		493
Total Preferred Stock							1,070,000	1,070,000	$	1,056	$	1,056

(1)Redeemable at the redemption price plus declared and unpaid dividends.

(2)Issued as depositary shares, each representing 1/100th interest in a share of the corresponding series of preferred stock. Each preferred share has a par value of $0.01.

(3)Redeemable at the Company’s option, subject to regulatory approval, either (i) in whole or in part on any dividend payment date on or after October 30, 2027, or (ii) in whole but not in part, at any time within 90 days following a regulatory capital treatment event (as defined in the certificate of designations for the Series C preferred stock).

(4)Any dividends declared are payable semi-annually in arrears at a rate of 5.500% per annum until October 30, 2027. Thereafter, dividends declared will be payable quarterly in arrears at a floating rate equal to 3-month LIBOR plus a spread of 3.076% per annum.

(5)Redeemable at the Company’s option, subject to regulatory approval, either (i) in whole or in part during the three-month period prior to, and including, each reset date (as defined in the certificate of designations for the Series D preferred stock) or (ii) in whole but not in part, at any time within 90 days following a regulatory capital treatment event (as defined in the certificate of designations for the Series D Preferred Stock).

(6)Any dividends declared are payable semi-annually in arrears at a rate of 6.125% per annum until September 23, 2025, after which the dividend rate will reset every 5 years to a fixed annual rate equal to the 5-year Treasury plus a spread of 5.783%.

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Accumulated Other Comprehensive Income

6 Months Ended

Jun. 30, 2023

Accumulated Other Comprehensive Income (Loss), Net of Tax [Abstract]

Accumulated Other Comprehensive Income

Accumulated Other Comprehensive IncomeChanges in each component of accumulated other comprehensive income ("AOCI") were as follows (dollars in millions):

	Unrealized (Losses) Gains on Available-for-Sale Investment Securities, Net of Tax		Losses on Cash Flow Hedges, Net of Tax		Losses on Pension Plan, Net of Tax		AOCI
For the Three Months Ended June 30, 2023
Balance at March 31, 2023	$	(44)	$	(2)	$	(189)	$	(235)
Net change	(151)		(84)		—		(235)
Balance at June 30, 2023	$	(195)	$	(86)	$	(189)	$	(470)
For the Three Months Ended June 30, 2022
Balance at March 31, 2022	$	(7)	$	(7)	$	(199)	$	(213)
Net change	(41)		3		—		(38)
Balance at June 30, 2022	$	(48)	$	(4)	$	(199)	$	(251)
For the Six Months Ended June 30, 2023
Balance at December 31, 2022	$	(136)	$	(14)	$	(189)	$	(339)
Net change	(59)		(72)		—		(131)
Balance at June 30, 2023	$	(195)	$	(86)	$	(189)	$	(470)
For the Six Months Ended June 30, 2022
Balance at December 31, 2021	$	114	$	(9)	$	(199)	$	(94)
Net change	(162)		5		—		(157)
Balance at June 30, 2022	$	(48)	$	(4)	$	(199)	$	(251)

The following table presents each component of other comprehensive income ("OCI") before reclassifications and amounts reclassified from AOCI for each component of OCI before- and after-tax (dollars in millions):

	Before Tax		Tax Benefit (Expense)		Net of Tax
For the Three Months Ended June 30, 2023
Available-for-Sale Investment Securities
Net unrealized holding losses arising during the period	$	(199)	$	48	$	(151)
Net change	$	(199)	$	48	$	(151)
Cash Flow Hedges
Net unrealized losses arising during the period	$	(127)	$	31	$	(96)
Amounts reclassified from AOCI	16		(4)		12
Net change	$	(111)	$	27	$	(84)
For the Three Months Ended June 30, 2022
Available-for-Sale Investment Securities
Net unrealized holding losses arising during the period	$	(53)	$	12	$	(41)
Net change	$	(53)	$	12	$	(41)
Cash Flow Hedges
Net unrealized gains arising during the period	$	3	$	(1)	$	2
Amounts reclassified from AOCI	1		—		1
Net change	$	4	$	(1)	$	3
For the Six Months Ended June 30, 2023
Available-for-Sale Investment Securities
Net unrealized holding losses arising during the period	$	(77)	$	18	$	(59)
Net change	$	(77)	$	18	$	(59)
Cash Flow Hedges
Net unrealized losses arising during the period	$	(117)	$	29	$	(88)
Amounts reclassified from AOCI	21		(5)		16
Net change	$	(96)	$	24	$	(72)
For the Six Months Ended June 30, 2022
Available-for-Sale Investment Securities
Net unrealized holding losses arising during the period	$	(213)	$	51	$	(162)
Net change	$	(213)	$	51	$	(162)
Cash Flow Hedges
Net unrealized gains arising during the period	$	2	$	(1)	$	1
Amounts reclassified from AOCI	2		2		4
Net change	$	4	$	1	$	5

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Income Taxes

6 Months Ended

Jun. 30, 2023

Income Tax Disclosure [Abstract]

Income Taxes

Income Taxes

The following table presents the calculation of the Company's effective income tax rate (dollars in millions):

	For the Three Months Ended June 30,						For the Six Months Ended June 30,
	2023			2022			2023			2022
Income before income taxes	$	1,169		$	1,441		$	2,426		$	3,048
Income tax expense	$	268		$	338		$	557		$	712
Effective income tax rate	23.0		%	23.5		%	23.0		%	23.4		%

The Company is subject to examination by the Internal Revenue Service and tax authorities in various state, local and foreign tax jurisdictions. The Company's federal income tax filings are open to examinations for the tax years ended December 31, 2019 and forward. The Company regularly assesses the likelihood of additional assessments or settlements in each of the taxing jurisdictions. At this time, the potential change in unrecognized tax benefits is expected to be immaterial over the next 12 months. The Company believes that its reserves are sufficient to cover any tax, penalties and interest that would result from such examinations.

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Earnings Per Share

6 Months Ended

Jun. 30, 2023

Earnings Per Share [Abstract]

Earnings Per Share

Earnings Per Share

The following table presents the calculation of basic and diluted earnings per share ("EPS") (dollars and shares in millions, except per share amounts):

	For the Three Months Ended June 30,				For the Six Months Ended June 30,
	2023		2022		2023		2022
Numerator
Net income	$	901	$	1,103	$	1,869	$	2,336
Preferred stock dividends	—		—		(31)		(31)
Net income available to common stockholders	901		1,103		1,838		2,305
Income allocated to participating securities	(6)		(6)		(12)		(12)
Net income allocated to common stockholders	$	895	$	1,097	$	1,826	$	2,293
Denominator
Weighted-average shares of common stock outstanding	253		279		257		282
Weighted-average shares of common stock outstanding and common stock equivalents	253		279		257		282
Basic earnings per common share	$	3.54	$	3.93	$	7.09	$	8.13
Diluted earnings per common share	$	3.54	$	3.93	$	7.09	$	8.12

Anti-dilutive securities were not material and had no impact on the computation of diluted EPS for the three or six months ended June 30, 2023 and 2022.

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Capital Adequacy

6 Months Ended

Jun. 30, 2023

Broker-Dealer, Net Capital Requirement, SEC Regulation [Abstract]

Capital Adequacy

Capital Adequacy

DFS is subject to the capital adequacy guidelines of the Federal Reserve. Discover Bank, the Company's banking subsidiary, is subject to various regulatory capital requirements as administered by the FDIC. Failure to meet minimum capital requirements can result in the initiation of certain mandatory and possibly additional discretionary actions by regulators that, if undertaken, could limit the Company's business activities and have a direct material effect on the financial condition and operating results of DFS and Discover Bank. Under capital adequacy guidelines and the regulatory framework for prompt corrective action, DFS and Discover Bank must meet specific risk-based capital requirements and leverage ratios that involve quantitative measures of assets, liabilities and certain off-balance sheet items, as calculated under regulatory guidelines. Capital amounts and classification are also subject to qualitative judgments by the regulators about components, risk weightings and other factors.

DFS and Discover Bank are subject to regulatory and capital rules issued by the Federal Reserve and FDIC, respectively, under the Basel Committee's December 2010 framework ("Basel III rules"). Under the Basel III rules, DFS and Discover Bank are classified as "standardized approach" entities. Standardized approach entities are defined as U.S. banking organizations with consolidated total assets over $50 billion but not exceeding $250 billion and consolidated total on-balance sheet foreign exposure less than $10 billion.

In accordance with the final rule on the impact of current expected credit losses ("CECL") on regulatory capital, the Company has elected to phase in the impact over three years beginning in 2022. Accordingly, the Company's Common Equity Tier 1 ("CET1") capital ratios are higher than they otherwise would have been. The Company's CET1 capital ratios will continue to be favorably impacted by this election over the phase-in period, which ends December 31, 2024.

As of June 30, 2023 and December 31, 2022, DFS and Discover Bank met all Basel III minimum capital ratio requirements to which they were subject. DFS and Discover Bank also met the requirements to be considered "well-capitalized" under Regulation Y and prompt corrective action rules, respectively. There have been no conditions or events that management believes have changed DFS' or Discover Bank's category. To be categorized as "well-capitalized", DFS and Discover Bank must maintain minimum capital ratios outlined in the table below.

The following table shows the actual capital amounts and ratios of DFS and Discover Bank and comparisons of each to the regulatory minimum and "well-capitalized" requirements (dollars in millions):

	Actual				Minimum Capital Requirements			Capital Requirements To Be Classified as Well-Capitalized
	Amount		Ratio(1)		Amount		Ratio	Amount(2)		Ratio(2)
June 30, 2023
Total capital (to risk-weighted assets)
Discover Financial Services	$	17,215	14.3	%	$	9,659	≥8.0%	$	12,073	≥10.0%
Discover Bank	$	16,444	13.8	%	$	9,532	≥8.0%	$	11,915	≥10.0%
Tier 1 capital (to risk-weighted assets)
Discover Financial Services	$	15,144	12.5	%	$	7,244	≥6.0%	$	7,244	≥6.0%
Discover Bank	$	13,543	11.4	%	$	7,149	≥6.0%	$	9,532	≥8.0%
Tier 1 capital (to average assets)
Discover Financial Services	$	15,144	11.1	%	$	5,458	≥4.0%	N/A		N/A
Discover Bank	$	13,543	10.1	%	$	5,377	≥4.0%	$	6,722	≥5.0%
Common Equity Tier 1 (to risk-weighted assets)
Discover Financial Services	$	14,088	11.7	%	$	5,433	≥4.5%	N/A		N/A
Discover Bank	$	13,543	11.4	%	$	5,362	≥4.5%	$	7,745	≥6.5%
December 31, 2022
Total capital (to risk-weighted assets)
Discover Financial Services(3)	$	18,004	15.8	%	$	9,139	≥8.0%	$	11,424	≥10.0%
Discover Bank	$	16,579	14.7	%	$	9,015	≥8.0%	$	11,268	≥10.0%
Tier 1 capital (to risk-weighted assets)
Discover Financial Services(3)	$	16,039	14.0	%	$	6,854	≥6.0%	$	6,854	≥6.0%
Discover Bank	$	13,683	12.1	%	$	6,761	≥6.0%	$	9,015	≥8.0%
Tier 1 capital (to average assets)
Discover Financial Services(3)	$	16,039	12.5	%	$	5,147	≥4.0%	N/A		N/A
Discover Bank	$	13,683	10.8	%	$	5,086	≥4.0%	$	6,357	≥5.0%
Common Equity Tier 1 (to risk-weighted assets)
Discover Financial Services(3)	$	14,983	13.1	%	$	5,141	≥4.5%	N/A		N/A
Discover Bank	$	13,683	12.1	%	$	5,071	≥4.5%	$	7,324	≥6.5%

    

(1)Capital ratios are calculated based on the Basel III standardized approach rules, subject to applicable transition provisions, including CECL transition provisions.

(2)The Basel III rules do not establish well-capitalized thresholds for these measures for bank holding companies. Existing well-capitalized thresholds established in the Federal Reserve's Regulation Y have been included where available.

(3)Capital amounts and ratios have been updated to reflect the impact of the restatement described in Note 18: Immaterial Restatement of Prior Period Financial Statements.

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Commitments, Contingencies and Guarantees

6 Months Ended

Jun. 30, 2023

Commitments Contingencies and Guarantees [Abstract]

Commitments, Contingencies and Guarantees

Commitments, Contingencies and Guarantees

In the normal course of business, the Company enters into a number of off-balance sheet commitments, transactions and obligations under guarantee arrangements that expose the Company to varying degrees of risk. The Company's commitments, contingencies and guarantee relationships are described below.

Commitments

Unused Credit Arrangements

At June 30, 2023, the Company had unused credit arrangements for loans of approximately $229.9 billion. Such arrangements arise primarily from agreements with customers for unused lines of credit on certain credit cards and certain other loan products, provided there is no violation of conditions in the related agreements. These arrangements, substantially all of which the Company can terminate at any time and which do not necessarily represent future cash requirements, are periodically reviewed based on account usage, customer creditworthiness and loan qualification. As the Company’s credit card loans are unconditionally cancellable, no liability for expected credit losses is required for unused lines of credit. For all

other loans, the Company records a liability for expected credit losses for unfunded commitments, which is presented as part of accrued expenses and other liabilities in the consolidated statements of financial condition.

Contingencies

See Note 13: Litigation and Regulatory Matters for a description of potential liability arising from pending litigation or regulatory proceedings involving the Company.

Guarantees

The Company has obligations under certain guarantee arrangements, including contracts, indemnification agreements and representations and warranties, which contingently require the Company to make payments to the guaranteed party based on changes in an underlying asset, liability or equity security of a guaranteed party, rate or index. Also included as guarantees are contracts that contingently require the Company to make payments to a guaranteed party based on another entity's failure to perform under an agreement. The Company's use of guarantees is disclosed below by type of guarantee.

Securitizations Representations and Warranties

As part of the Company's financing activities, the Company provides representations and warranties that certain assets pledged as collateral in secured borrowing arrangements conform to specified guidelines. Due diligence is performed by the Company, which is intended to ensure that asset guideline qualifications are met. If the assets pledged as collateral do not meet certain conforming guidelines, the Company may be required to replace, repurchase or sell such assets. In its credit card securitization activities, the Company would replace nonconforming receivables through the allocation of excess seller's interest or from additional transfers from the unrestricted pool of receivables. If the Company could not add enough receivables to satisfy the requirement, an early amortization (or repayment) of investors' interests would be triggered. In its student loan securitizations, the Company would generally repurchase the loans from the trust at the outstanding principal amount plus interest.

The maximum potential amount of future payments the Company could be required to make would be equal to the current outstanding balances of third-party investor interests in credit card asset-backed securities and the principal amount of any private student loan secured borrowings, plus any unpaid interest for the corresponding secured borrowings. The Company has recorded substantially all of the maximum potential amount of future payments in long-term borrowings on the Company's condensed consolidated statements of financial condition. The Company has not recorded any incremental contingent liability associated with its secured borrowing representations and warranties. Management believes that the probability of having to replace, repurchase or sell assets pledged as collateral under secured borrowing arrangements, including an early amortization event, is low.

Counterparty Settlement Guarantees

Diners Club and DFS Services LLC (on behalf of PULSE) have various counterparty exposures, which are listed below:

•Merchant Guarantee. Diners Club has entered into contractual relationships with certain international merchants, which generally include travel-related businesses, for the benefit of all Diners Club licensees. The licensees hold the primary liability to settle the transactions of their customers with these merchants. However, Diners Club retains a counterparty exposure if a licensee fails to meet its financial payment obligation to one of these merchants.

•ATM Guarantee. PULSE entered into contractual relationships with certain international ATM acquirers in which DFS Services LLC retains counterparty exposure if an issuer fails to fulfill its settlement obligation.

•Global Network Alliance Guarantee. Discover Network, Diners Club and PULSE have entered into contractual relationships with certain international payment networks in which DFS Services LLC retains the counterparty exposure if a network fails to fulfill its settlement obligation.

The maximum potential amount of future payments related to such contingent obligations is dependent upon the transaction volume processed between the time a potential counterparty defaults on its settlement and the time at which the Company disables the settlement of any further transactions for the defaulting party. The Company has some contractual remedies to offset these counterparty settlement exposures (such as letters of credit or pledged deposits), however, there is no limitation on the maximum amount the Company may be liable to pay.

The actual amount of the potential exposure cannot be quantified as the Company cannot determine whether particular counterparties will fail to meet their settlement obligations. In the event all licensees and/or issuers were to become unable to settle their transactions, the Company estimates its maximum potential counterparty exposures to these settlement guarantees would be approximately $90 million as of June 30, 2023.

The Company believes that the estimated amounts of maximum potential future payments are not representative of the Company's actual potential loss exposure given Diners Club's and PULSE's insignificant historical losses from these counterparty exposures. As of June 30, 2023, the Company had not recorded any contingent liability in the condensed consolidated financial statements for these counterparty exposures and management believes that the probability of any payments under these arrangements is low.

Discover Network Merchant Chargeback Guarantees

The Company operates the Discover Network, issues payment cards and permits third parties to issue payment cards. The Company is contingently liable for certain transactions processed on the Discover Network in the event of a dispute between the payment card customer and a merchant. The contingent liability arises if the disputed transaction involves a merchant or merchant acquirer with whom the Discover Network has a direct relationship. If a dispute is resolved in the customer's favor, the Discover Network will credit or refund the disputed amount to the Discover Network card issuer, who in turn credits its customer's account. The Discover Network will then charge back the disputed amount of the payment card transaction to the merchant or merchant acquirer, where permitted by the applicable agreement, to seek recovery of amounts already paid to the merchant for payment card transactions. If the Discover Network is unable to collect the amount subject to dispute from the merchant or merchant acquirer (e.g., in the event of merchant default or dissolution or after expiration of the time period for chargebacks in the applicable agreement), the Discover Network will bear the loss for the amount credited or refunded to the customer. In most instances, a loss by the Discover Network is unlikely to arise in connection with payments on card transactions because most products or services are delivered when purchased and credits are issued by merchants on returned items in a timely fashion, thus minimizing the likelihood of cardholder disputes with respect to amounts paid by the Discover Network. However, where the product or service is not scheduled to be provided to the customer until a later date following the purchase, the likelihood of a contingent payment obligation by the Discover Network increases. Losses related to merchant chargebacks were not material for the three and six months ended June 30, 2023 and 2022.

The maximum potential amount of obligations of the Discover Network arising from such contingent obligations is estimated to be the portion of the total Discover Network transaction volume processed to date for which timely and valid disputes may be raised under applicable law and relevant issuer and customer agreements. There is no limitation on the maximum amount the Company may be liable to pay to issuers. However, the Company believes that such amount is not representative of the Company's actual potential loss exposure based on the Company's historical experience. The actual amount of the potential exposure cannot be quantified as the Company cannot determine whether the current or cumulative transaction volumes may include or result in disputed transactions.

The following table summarizes certain information regarding merchant chargeback guarantees (dollars in millions):

	For the Three Months Ended June 30,				For the Six Months Ended June 30,
	2023		2022		2023		2022
Aggregate sales transaction volume(1)	$	65,850	$	65,586	$	126,683	$	122,739

(1)Represents transactions processed on the Discover Network for which a potential liability exists that, in aggregate, can differ from credit card sales volume.

The Company did not record any contingent liability in the condensed consolidated financial statements for merchant chargeback guarantees as of June 30, 2023 and December 31, 2022. The Company mitigates the risk of potential loss exposure by withholding settlement from merchants, obtaining third-party guarantees, or obtaining escrow deposits or letters of credit from certain merchant acquirers or merchants that are considered a higher risk due to various factors such as time delays in the delivery of products or services. As of June 30, 2023 and December 31, 2022, the Company had escrow deposits and settlement withholdings of $10 million and $11 million, respectively, which are recorded in interest-bearing deposit accounts and accrued expenses and other liabilities on the Company's condensed consolidated statements of financial condition.

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Litigation and Regulatory Matters

6 Months Ended

Jun. 30, 2023

Loss Contingency [Abstract]

Litigation and Regulatory Matters

Litigation and Regulatory Matters

In the normal course of business, from time to time, the Company has been named as a defendant in various legal actions, including arbitrations, class actions and other litigation, arising in connection with its activities. Certain of the actual or threatened legal actions include claims for substantial compensatory and/or punitive damages or claims for indeterminate amounts of damages. The litigation process is not predictable and can lead to unexpected results. The Company contests liability and/or the amount of damages as appropriate in each pending matter.

The Company has historically offered its customers an arbitration clause in its customer agreements. The arbitration clause allows the Company and its customers to quickly and economically resolve disputes. Additionally, the arbitration clause has in some instances limited the costs of, and the Company's exposure to, litigation. Future legal and regulatory challenges and prohibitions may cause the Company to discontinue its offering and use of such clauses. From time to time, the Company is involved in legal actions challenging its arbitration clause. Bills may be periodically introduced in Congress to directly or indirectly prohibit the use of pre-dispute arbitration clauses.

The Company is also involved, from time to time, in other reviews, investigations and proceedings (both formal and informal) by governmental agencies regarding the Company's business including, among other matters, consumer regulatory, accounting, tax and other operational matters. The investigations and proceedings may result in significant adverse judgments, settlements, fines, penalties, injunctions, decreases in regulatory ratings, customer restitution or other relief. These outcomes could materially impact the Company's condensed consolidated financial statements, increase its cost of operations, or limit the Company's ability to execute its business strategies and engage in certain business activities. Certain subsidiaries of the Company are subject to a consent order with the Consumer Financial Protection Bureau ("CFPB") regarding certain private student loan servicing practices, as described below. Pursuant to powers granted under federal banking laws, regulatory agencies have broad and sweeping discretion and may assess civil money penalties, require changes to certain business practices or require customer restitution at any time.

In accordance with applicable accounting guidance, the Company establishes an accrued liability for legal and regulatory matters when those matters present loss contingencies that are both probable and estimable. Litigation and regulatory settlement-related expenses were immaterial for the three and six months ended June 30, 2023 and 2022.

There may be an exposure to loss in excess of any amounts accrued. The Company believes the estimate of the aggregate range of reasonably possible losses (meaning the likelihood of losses is more than remote but less than likely), in excess of the amounts that the Company has accrued for legal and regulatory proceedings, is up to $160 million as of June 30, 2023. This estimated range of reasonably possible losses is based on currently available information for those proceedings in which the Company is involved and considers the Company's best estimate of such losses for those matters for which an estimate can be made. It does not represent the Company's maximum potential loss exposure. Various aspects of the legal proceedings underlying the estimated range will change from time to time and actual results may vary significantly from the estimate.

The Company's estimated range noted above involves significant judgment, given the varying stages of the proceedings, the existence of numerous yet to be resolved issues, the breadth of the claims (often spanning multiple years and, in some cases, a wide range of business activities), unspecified damages and/or the novelty of the legal issues presented. The outcome of pending matters could adversely affect the Company's reputation and be material to the Company's condensed consolidated financial condition, operating results and cash flows for a particular future period, depending on, among other things, the level of the Company's income for such period.

In July 2015, the Company announced that its subsidiaries, Discover Bank, The Student Loan Corporation and Discover Products Inc. (the "Discover Subsidiaries"), agreed to a consent order with the CFPB with respect to certain private student loan servicing practices (the “2015 Order”). The 2015 Order expired in July 2020. In December 2020, the Discover Subsidiaries agreed to a consent order (the “2020 Order”) with the CFPB resolving the agency’s investigation into Discover Bank’s compliance with the 2015 Order. In connection with the 2020 Order, Discover is required to implement a redress and compliance plan and must pay at least $10 million in consumer redress to consumers who may have been harmed and has paid a $25 million civil money penalty to the CFPB.

In July 2023, the Company received a proposed consent order from the FDIC in connection with consumer compliance. This proposed consent order does not include the card product misclassification issue described below.

On March 8, 2016, a class-action lawsuit was filed against the Company, other credit card networks, other issuing banks and EMVCo in the U.S. District Court for the Northern District of California (B&R Supermarket, Inc., d/b/a Milam's

Market, et al. v. Visa, Inc. et al.) alleging a conspiracy by defendants to shift fraud liability to merchants with the migration to the EMV security standard and chip technology. The plaintiffs assert joint and several liability among the defendants and seek unspecified damages, including treble damages, attorneys' fees, costs and injunctive relief. In May 2017, the Court entered an order transferring the entire action to a federal court in New York that is presiding over certain related claims that are pending in the actions consolidated as MDL 1720. In August 2020, the Court granted the plaintiffs' Motion to Certify a Class. The defendants appealed the ruling, which was denied in January 2021. Expert discovery closed on February 28, 2022. On June 3, 2022, the Court granted Plaintiffs' Motion to Approve Class Notices. The Company filed its renewed motion to compel arbitration, motion for summary judgment, and Daubert challenges on November 30, 2022, with briefing scheduled to close on July 27, 2023. The Company is not in a position at this time to assess the likely outcome or its exposure, if any, with respect to this matter. However, the Company will seek to defend itself vigorously against all claims asserted by the plaintiffs.

Card Product Misclassification

Beginning around mid-2007, the Company incorrectly classified certain credit card accounts into its highest merchant and merchant acquirer pricing tier. Incremental revenue resulting from this card product misclassification amounted to less than 1% of the Company's cumulative discount and interchange revenue, gross, since that time. The misclassification affected pricing for certain merchants and merchant acquirers, but not for cardholders. As of June 30, 2023, the Company’s consolidated financial statements reflect a liability of $365 million within accrued expenses and other liabilities to provide refunds to merchants and merchant acquirers as a result of the card product misclassification.

Management is taking actions to correct the card product misclassification going forward and to prepare a program to compensate affected direct merchants and merchant acquirers. It is not possible to know with certainty the final amount of potential refunds at this time given differences in individual merchant agreements, changes in network terms and availability of historical data. Regulators may require refunds or other remediation that may result in other charges or an amount different than the Company’s current estimate. An investigation into this issue by an external law firm working at the direction of the Audit Committee of the Board of Directors is ongoing.

The Company is in discussions with its regulators regarding this matter and corporate governance and risk management. The Company expects these discussions will likely result in enforcement actions, which may include, among other remedies, monetary penalties, the amount of which cannot be estimated at this time.

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Fair Value Measurements

6 Months Ended

Jun. 30, 2023

Fair Value Disclosures [Abstract]

Fair Value Measurements

Fair Value Measurements

Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Accounting Standards Codification ("ASC") Topic 820, Fair Value Measurement, provides a three-level hierarchy for classifying the inputs to valuation techniques used to measure fair value of financial instruments based on whether the inputs are observable or unobservable. It also requires certain disclosures about those measurements. The three-level valuation hierarchy is as follows:

•Level 1: Fair values determined by Level 1 inputs are defined as those that utilize quoted prices (unadjusted) in active markets for identical assets or liabilities that the Company has the ability to access.

•Level 2: Fair values determined by Level 2 inputs are those that utilize inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either directly or indirectly. Level 2 inputs include quoted prices for similar assets and liabilities in active or inactive markets, quoted prices for the identical assets in an inactive market and inputs other than quoted prices that are observable for the asset or liability, such as interest rates and yield curves that are observable at commonly quoted intervals. The Company evaluates factors such as the frequency of transactions, the size of the bid-ask spread and the significance of adjustments made when considering transactions involving similar assets or liabilities to assess the relevance of those observed prices. If relevant and observable prices are available, the fair values of the related assets or liabilities would be classified as Level 2.

•Level 3: Fair values determined by Level 3 inputs are those based on unobservable inputs and include situations where there is little, if any, market activity for the asset or liability being valued. In instances where the inputs used to measure fair value may fall into different levels of the fair value hierarchy, the level in the fair value hierarchy in which the measurements are classified is based on the lowest level input that is significant to the fair value measurement in its entirety. Accordingly, the Company may utilize both observable and unobservable inputs in determining the fair values of financial instruments classified within the Level 3 category.

The Company evaluates the classification of each fair value measurement within the hierarchy at least quarterly.

The Company's assessment of the significance of a particular input to the fair value measurement in its entirety requires judgment and involves consideration of factors specific to the asset or liability. Furthermore, certain techniques used to measure fair value involve some degree of judgment and, as a result, are not necessarily indicative of the amounts the Company would realize in a current market exchange.

Assets and Liabilities Measured at Fair Value on a Recurring Basis

Assets and liabilities measured at fair value on a recurring basis are as follows (dollars in millions):

	Quoted Price in Active Markets for Identical Assets  (Level 1)		Significant Other Observable Inputs  (Level 2)		Significant Unobservable Inputs  (Level 3)		Total
Balance at June 30, 2023
Assets
Fair value - OCI
U.S. Treasury and U.S. GSE securities	$	12,706	$	8	$	—	$	12,714
Residential mortgage-backed securities - Agency	—		507		—		507
Available-for-sale investment securities	$	12,706	$	515	$	—	$	13,221
Derivative financial instruments - cash flow hedges(1)	$	—	$	2	$	—	$	2
Fair value - Net income
Marketable equity securities	$	33	$	—	$	—	$	33
Derivative financial instruments - fair value hedges(1)	$	—	$	2	$	—	$	2
Balance at December 31, 2022
Assets
Fair value - OCI
U.S. Treasury and U.S. GSE securities	$	11,416	$	7	$	—	$	11,423
Residential mortgage-backed securities - Agency	—		564		—		564
Available-for-sale investment securities	$	11,416	$	571	$	—	$	11,987
Derivative financial instruments - cash flow hedges(1)	$	—	$	1	$	—	$	1
Fair value - Net income
Marketable equity securities	$	41	$	—	$	—	$	41
Liabilities
Fair value - OCI
Derivative financial instruments - cash flow hedges(1)	$	—	$	3	$	—	$	3
Fair value - Net income
Derivative financial instruments - fair value hedges(1)	$	—	$	2	$	—	$	2

.

(1)Derivative instrument carrying values in an asset or liability position are presented as part of other assets or accrued expenses and other liabilities, respectively, in the Company's condensed consolidated statements of financial condition.

Available-for-Sale Investment Securities

Investment securities classified as available-for-sale consist of U.S. Treasury and U.S. GSE securities and RMBS. The fair value estimates of investment securities classified as Level 1, consisting of U.S. Treasury securities, are determined based on quoted market prices for the same securities. The fair value estimates of U.S. GSE securities and RMBS are classified as Level 2 and are valued by maximizing the use of relevant observable inputs, including quoted prices for similar securities, benchmark yield curves and market-corroborated inputs.

The Company validates the fair value estimates provided by pricing services primarily by comparing to valuations obtained through other pricing sources. The Company evaluates pricing variances among different pricing sources to ensure that the valuations utilized are reasonable. The Company also corroborates the reasonableness of the fair value estimates with analysis of trends of significant inputs, such as market interest rate curves. The Company further performs due diligence in understanding the procedures and techniques performed by the pricing services to derive fair value estimates.

At June 30, 2023, amounts reported in RMBS reflect U.S. government agency and U.S. GSE obligations issued by Ginnie Mae, Fannie Mae and Freddie Mac with an aggregate par value of $531 million, a weighted-average coupon of 4.07% and a weighted-average remaining maturity of four years.

Marketable Equity Securities

The Company holds non-controlling equity positions in payment service entities that have actively traded stock and therefore have readily determinable fair values. The Company classifies these equity securities as Level 1, the fair value estimates of which are determined based on quoted share prices for the same securities.

Derivative Financial Instruments

The Company's derivative financial instruments consist of interest rate swaps and foreign exchange forward contracts. These instruments are classified as Level 2 as their fair values are estimated using proprietary pricing models, containing certain assumptions based on readily observable market-based inputs, including interest rate curves, option volatility and foreign currency forward and spot rates. In determining fair values, the pricing models use widely accepted valuation techniques, including discounted cash flow analysis on the expected cash flows of each derivative. This analysis reflects the contractual terms of the derivatives, including the period to maturity and the observable market-based inputs. The fair values of the interest rate swaps are determined using the market standard methodology of netting the discounted future fixed cash receipts (or payments) and the discounted expected variable cash payments (or receipts). The variable cash payments are based on an expectation of future interest rates derived from the observable market interest rate curves. The Company considers collateral and master netting agreements that mitigate credit exposure to counterparties in determining the counterparty credit risk valuation adjustment. The fair values of the currency instruments are valued by comparing the contracted forward exchange rate pertaining to the specific contract maturities to the current market exchange rate.

The Company validates the fair value estimates of interest rate swaps primarily through comparison to the fair value estimates computed by the counterparties to each of the derivative transactions. The Company evaluates pricing variances among different pricing sources to ensure that the valuations utilized are reasonable. The Company also corroborates the reasonableness of the fair value estimates with analysis of trends of significant inputs, such as market interest rate curves. The Company performs due diligence in understanding the impact of any changes to the valuation techniques performed by proprietary pricing models before implementation, working closely with the third-party valuation service and reviewing the service's control objectives at least annually. The Company corroborates the fair value of foreign exchange forward contracts through independent calculation of the fair value estimates.

Assets and Liabilities Measured at Fair Value on a Non-Recurring Basis

The Company also has assets that, under certain conditions, are subject to measurement at fair value on a non-recurring basis. These assets include those associated with acquired businesses, including goodwill. For these assets, measurement at fair value in periods subsequent to the initial recognition of the assets may be applicable whenever one is tested for impairment. No impairments were recognized related to these assets during the three and six months ended June 30, 2023 and 2022.

Financial Instruments Measured at Other Than Fair Value

The following tables disclose the estimated fair value of the Company's financial assets and financial liabilities that are not required to be carried at fair value (dollars in millions):

Balance at June 30, 2023	Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Total		Carrying Value
Assets
Amortized cost
Residential mortgage-backed securities - Agency	$	—	$	224	$	—	$	224	$	245
Held-to-maturity investment securities	$	—	$	224	$	—	$	224	$	245
Net loan receivables	$	—	$	—	$	116,379	$	116,379	$	109,842
Carrying value approximates fair value(1)
Cash and cash equivalents	$	8,605	$	—	$	—	$	8,605	$	8,605
Restricted cash	$	39	$	—	$	—	$	39	$	39
Accrued interest receivables(2)	$	—	$	1,289	$	—	$	1,289	$	1,289
Liabilities
Amortized cost
Time deposits(3)	$	—	$	39,075	$	—	$	39,075	$	39,332
Long-term borrowings - owed to securitization investors	$	—	$	10,903	$	74	$	10,977	$	11,216
Other long-term borrowings	—		8,613		—		8,613		9,060
Long-term borrowings	$	—	$	19,516	$	74	$	19,590	$	20,276
Carrying value approximates fair value(1)
Accrued interest payables(2)	$	—	$	361	$	—	$	361	$	361
Balance at December 31, 2022
Assets
Amortized cost
Residential mortgage-backed securities - Agency	$	—	$	199	$	—	$	199	$	221
Held-to-maturity investment securities	$	—	$	199	$	—	$	199	$	221
Net loan receivables	$	—	$	—	$	110,796	$	110,796	$	104,746
Carrying value approximates fair value(1)
Cash and cash equivalents	$	8,856	$	—	$	—	$	8,856	$	8,856
Restricted cash	$	41	$	—	$	—	$	41	$	41
Accrued interest receivables(2)	$	—	$	1,211	$	—	$	1,211	$	1,211
Liabilities
Amortized cost
Time deposits(3)	$	—	$	32,710	$	—	$	32,710	$	33,070
Long-term borrowings - owed to securitization investors	$	—	$	9,862	$	84	$	9,946	$	10,259
Other long-term borrowings	—		9,468		—		9,468		9,849
Long-term borrowings	$	—	$	19,330	$	84	$	19,414	$	20,108
Carrying value approximates fair value(1)
Accrued interest payables(2)	$	—	$	308	$	—	$	308	$	308

(1)The carrying values of these assets and liabilities approximate fair value due to their short-term nature.

(2)Accrued interest receivable and payable carrying values are presented as part of other assets and accrued expenses and other liabilities, respectively, in the Company's condensed consolidated statements of financial condition.

(3)Excludes deposits without contractually defined maturities for all periods presented.

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Derivatives and Hedging Activities

6 Months Ended

Jun. 30, 2023

Derivative Instruments and Hedging Activities Disclosure [Abstract]

Derivatives and Hedging Activities

Derivatives and Hedging Activities

The Company uses derivatives to manage its exposure to various financial risks. The Company does not enter into derivatives for trading or speculative purposes. Certain derivatives used to manage the Company's exposure to foreign currency are not designated as hedges and do not qualify for hedge accounting.

Derivatives may give rise to counterparty credit risk, which generally is mitigated through collateral arrangements as described under the sub-heading "— Collateral Requirements and Credit-Risk Related Contingency Features." The Company enters into derivative transactions with established dealers that meet minimum credit criteria established by the Company. All counterparties must be pre-approved before engaging in any transaction with the Company. The Company regularly monitors counterparties to ensure compliance with the Company's risk policies and limits. In determining the counterparty credit risk valuation adjustment for the fair values of derivatives, if any, the Company considers collateral and legally enforceable master netting agreements that mitigate credit exposure to related counterparties.

All derivatives are recorded in other assets at their gross positive fair values and in accrued expenses and other liabilities at their gross negative fair values. See Note 14: Fair Value Measurements for a description of the valuation methodologies used for derivatives. Cash collateral amounts associated with derivative positions that are cleared through an exchange are legally characterized as settlement of the derivative positions. Such collateral amounts are reflected as offsets to the associated derivatives balances recorded in other assets or in accrued expenses and other liabilities. Other cash collateral posted and held balances are recorded in other assets and deposits, respectively, in the condensed consolidated statements of financial condition. Collateral amounts recorded in the condensed consolidated statements of financial condition are based on the net collateral posted or held position for each applicable legal entity's master netting arrangement with each counterparty.

Derivatives Designated as Hedges

Derivatives designated and qualifying as a hedge of the exposure to variability in expected future cash flows arising from changes in interest rates, or other types of forecasted transactions, are considered cash flow hedges. Derivatives designated and qualifying as a hedge of the exposure to changes in the fair value of an asset, liability, or firm commitment attributable to a particular risk, such as interest rate risk, are considered fair value hedges.

Cash Flow Hedges

The Company uses interest rate swaps to manage its exposure to variability in cash flows related to changes in interest rates on interest-earning assets and funding instruments. These interest rate swaps qualify for hedge accounting in accordance with ASC Topic 815, Derivatives and Hedging ("ASC 815"). At June 30, 2023 and December 31, 2022, the Company's outstanding cash flow hedges primarily relate to interest receipts from credit card receivables and had an initial maximum period of four years and three years, respectively.

The change in the fair value of derivatives designated as cash flow hedges is recorded in OCI and is subsequently reclassified into earnings in the period that the hedged forecasted cash flows affect earnings. Amounts reported in AOCI related to derivatives at June 30, 2023, will be reclassified to interest income and interest expense as interest receipts and payments are accrued on the Company's then outstanding credit card receivables and certain floating-rate debt, respectively. During the next 12 months, the Company estimates it will reclassify $110 million into pretax earnings related to its cash flow hedges.

Fair Value Hedges

The Company is exposed to changes in the fair value of its fixed-rate debt obligations due to changes in interest rates. The Company uses interest rate swaps to manage its exposure to changes in the fair value of certain fixed-rate long-term borrowings, including securitized debt and bank notes, attributable to changes in the respective benchmark rates. These interest rate swaps qualify as fair value hedges in accordance with ASC 815. Changes in the fair values of both (i) the derivatives and (ii) the hedged long-term borrowings attributable to the interest-rate risk being hedged are recorded in interest expense. The changes generally provide substantial offset to one another, with any difference recognized in interest expense.

Derivatives Not Designated as Hedges

Foreign Exchange Forward Contracts

The Company has foreign exchange forward contracts that are economic hedges and are not designated as accounting hedges. The Company enters into foreign exchange forward contracts to manage foreign currency risk. Changes in the fair value of these contracts are recorded in other income on the condensed consolidated statements of income.

Derivatives Cleared Through an Exchange

Cash variation margin payments on derivatives cleared through an exchange are legally considered settlement payments and are accounted for with corresponding derivative positions as one unit of account and not presented separately as collateral. With settlement payments on derivative positions cleared through this exchange reflected as offsets to the associated derivative asset and liability balances, the fair values of derivative instruments and collateral balances shown are generally reduced.

Derivatives Activity

The following table summarizes the fair value (including accrued interest) and outstanding notional amounts of derivative instruments and related collateral balances (dollars in millions):

	June 30, 2023							December 31, 2022
	Notional Amount		Number of Outstanding Derivative Contracts	Derivative Assets		Derivative Liabilities		Notional Amount		Derivative Assets		Derivative Liabilities
Derivatives designated as hedges
Interest rate swaps—cash flow hedge	$	8,900	15	$	2	$	—	$	5,000	$	1	$	3
Interest rate swaps—fair value hedge	$	7,750	9	2		—		$	4,425	—		2
Derivatives not designated as hedges
Foreign exchange forward contracts(1)	$	26	7	—		—		$	25	—		—
Total gross derivative assets/liabilities(2)				4		—				1		5
Less: collateral held/posted(3)				—		—				—		(5)
Total net derivative assets/liabilities				$	4	$	—			$	1	$	—

(1)The foreign exchange forward contracts have notional amounts of EUR 6 million, GBP 6 million, SGD 1 million, INR 788 million and AUD 2 million as of June 30, 2023, and notional amounts of EUR 6 million, GBP 6 million, SGD 1 million, INR 788 million and AUD 2 million as of December 31, 2022.

(2)In addition to the derivatives disclosed in the table, the Company enters into forward contracts to purchase when-issued mortgage-backed securities as part of its community reinvestment initiatives. At June 30, 2023 and December 31, 2022, the Company had one outstanding contract with a total notional amount of $16 million and $48 million, respectively, and immaterial fair values.

(3)Collateral amounts, which consist of cash and investment securities, are limited to the related derivative asset/liability balance and do not include excess collateral received/pledged.

The following amounts were recorded on the statements of financial condition related to cumulative basis adjustments for fair value hedges (dollars in millions):

	June 30, 2023				December 31, 2022
	Carrying Amount of Hedged Liabilities		Cumulative Amount of Fair Value Hedging Adjustment (Decreasing) the Carrying Amount of Hedged Liabilities(1)		Carrying Amount of Hedged Liabilities		Cumulative Amount of Fair Value Hedging Adjustment (Decreasing) the Carrying Amount of Hedged Liabilities(1)
Long-term borrowings	$	7,615	$	(100)	$	4,386	$	(3)

(1)The balance includes $18 million and $28 million of cumulative hedging adjustments related to discontinued hedging relationships as of June 30, 2023 and December 31, 2022, respectively.

The following table summarizes the impact of the derivative instruments on income and indicates where within the condensed consolidated financial statements such impact is reported (dollars in millions):

	Location and Amount of (Losses) Gains Recognized on the Condensed Consolidated Statements of Income
	Interest Expense
	Long-Term Borrowings		Interest Income (Credit Card)		Other Income
For the Three Months Ended June 30, 2023
Total amounts of income and expense line items presented in the condensed consolidated statements of income, where the effects of fair value or cash flow hedges are recorded	$	(208)	$	3,466	$	28
The effects of cash flow and fair value hedging
Gains (losses) on fair value hedging relationships
Amounts reclassified from OCI into earnings	$	2	$	(18)	$	—
Gains (losses) on fair value hedging relationships
Gains on hedged items	$	122	$	—	$	—
Losses on interest rate swaps	(149)		—		—
Total losses on fair value hedging relationships	$	(27)	$	—	$	—
For the Three Months Ended June 30, 2022
Total amounts of income and expense line items presented in the condensed consolidated statements of income, where the effects of fair value or cash flow hedges are recorded	$	(131)	$	2,424	$	21
The effects of cash flow and fair value hedging
Losses on cash flow hedging relationships
Amounts reclassified from OCI into earnings	$	(1)	$	—	$	—
Gains (losses) on fair value hedging relationships
Gains on hedged items	$	22	$	—	$	—
Losses on interest rate swaps	(18)		—		—
Total gains on fair value hedging relationships	$	4	$	—	$	—
The effects of derivatives not designated in hedging relationships
Gains on derivatives not designated as hedges	$	—	$	—	$	1

	Location and Amount of (Losses) Gains Recognized on the Condensed Consolidated Statements of Income
	Interest Expense		Interest Income (Credit Card)
	Long-Term Borrowings				Other Income
For the Six Months Ended June 30, 2023
Total amounts of income and expense line items presented in the condensed consolidated statements of income, where the effects of fair value or cash flow hedges are recorded	$	(397)	$	6,787	$	50
The effects of cash flow and fair value hedging
Gains (losses) on cash flow hedging relationships
Amounts reclassified from OCI into earnings	$	4	$	(25)	$	—
Gains (losses) on fair value hedging relationships
Gains on hedged items	$	87	$	—	$	—
Losses on interest rate swaps	(128)		—		—
Total losses on fair value hedging relationships	$	(41)	$	—	$	—
For the Six Months Ended June 30, 2022
Total amounts of income and expense line items presented in the condensed consolidated statements of income, where the effects of fair value or cash flow hedges are recorded	$	(248)	$	4,692	$	45
The effects of cash flow and fair value hedging
Losses on cash flow hedging relationships
Amounts reclassified from OCI into earnings	$	(2)	$	—	$	—
Gains (losses) on fair value hedging relationships
Gains on hedged items	$	69	$	—	$	—
Losses on interest rate swaps	(50)		—		—
Total gains on fair value hedging relationships	$	19	$	—	$	—
The effects of derivatives not designated in hedging relationships
Gains on derivatives not designated as hedges	$	—	$	—	$	1

For the impact of the derivative instruments on OCI, see Note 8: Accumulated Other Comprehensive Income.

Collateral Requirements and Credit-Risk Related Contingency Features

The Company has master netting arrangements and minimum collateral posting thresholds with its counterparties for its fair value and cash flow hedge interest rate swaps and foreign exchange forward contracts. The Company has not sought a legal opinion in relation to the enforceability of its master netting arrangements and, as such, does not report any of these positions on a net basis. Collateral is required by either the Company or its subsidiaries or the counterparty depending on the net fair value position of the derivatives held with that counterparty. These collateral receivable or payable amounts are generally not offset against the fair value of these derivatives but are recorded separately in other assets or deposits. Most of the Company's cash collateral amounts relate to positions cleared through an exchange and are reflected as offsets to the associated derivatives balances recorded in other assets and accrued expenses and other liabilities.

The Company also has agreements with certain of its derivative counterparties that contain a provision under which the Company could be declared in default on any of its derivative obligations if the Company defaults on any of its indebtedness, including default where the lender has not accelerated repayment of the indebtedness.

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Segment Disclosures

6 Months Ended

Jun. 30, 2023

Segment Reporting [Abstract]

Segment Disclosures

Segment Disclosures

The Company manages its business activities in two segments: Digital Banking and Payment Services.

•Digital Banking: The Digital Banking segment includes Discover-branded credit cards issued to individuals on the Discover Network and other consumer products and services, including private student loans, personal loans, home loans and other consumer lending and deposit products. The majority of Digital Banking revenues relate to interest income earned on the segment's loan products. Additionally, the Company's credit card products generate substantially all revenues related to discount and interchange, protection products and loan fee income.

•Payment Services: The Payment Services segment includes PULSE, an automated teller machine, debit and electronic funds transfer network; Diners Club, a global payments network; and the Company's Network Partners business, which provides payment transaction processing and settlement services on the Discover Network. The majority of Payment Services revenues relate to transaction processing revenue from PULSE and royalty and licensee revenue from Diners Club.

The business segment reporting provided to and used by the Company's chief operating decision-maker is prepared using the following principles and allocation conventions:

•The Company aggregates operating segments when determining reportable segments.

•Corporate overhead is not allocated between segments; all corporate overhead is included in the Digital Banking segment.

•Through its operation of the Discover Network, the Digital Banking segment incurs fixed marketing, servicing and infrastructure costs that are not specifically allocated among the segments, except for an allocation of direct and incremental costs driven by the Company's Payment Services segment.

•The Company's assets are not allocated among the operating segments in the information reviewed by the Company's chief operating decision-maker.

•The revenues of each segment are derived from external sources. The segments do not earn revenue from intercompany sources.

•Income taxes are not specifically allocated between the operating segments in the information reviewed by the Company's chief operating decision maker.

The following table presents segment data (dollars in millions):

	Digital Banking		Payment Services		Total
For the Three Months Ended June 30, 2023
Interest income
Credit card loans	$	3,466	$	—	$	3,466
Private student loans	255		—		255
Personal loans	278		—		278
Other loans	73		—		73
Other interest income	218		—		218
Total interest income	4,290		—		4,290
Interest expense	1,113		—		1,113
Net interest income	3,177		—		3,177
Provision for credit losses	1,305		—		1,305
Other income	586		115		701
Other expense	1,359		45		1,404
Income before income taxes	$	1,099	$	70	$	1,169
For the Three Months Ended June 30, 2022
Interest income
Credit card loans	$	2,424	$	—	$	2,424
Private student loans	196		—		196
Personal loans	206		—		206
Other loans	37		—		37
Other interest income	52		—		52
Total interest income	2,915		—		2,915
Interest expense	305		—		305
Net interest income	2,610		—		2,610
Provision for credit losses	549		—		549
Other income	546		57		603
Other expense	1,186		37		1,223
Income before income taxes	$	1,421	$	20	$	1,441

	Digital Banking		Payment Services		Total
For the Six Months Ended June 30, 2023
Interest income
Credit card loans	$	6,787	$	—	$	6,787
Private student loans	507		—		507
Personal loans	526		—		526
Other loans	137		—		137
Other interest income	410		—		410
Total interest income	8,367		—		8,367
Interest expense	2,058		—		2,058
Net interest income	6,309		—		6,309
Provision for credit losses	2,407		—		2,407
Other income	1,108		203		1,311
Other expense	2,701		86		2,787
Income before income taxes	$	2,309	$	117	$	2,426
For the Six Months Ended June 30, 2022
Interest income
Credit card loans	$	4,692	$	—	$	4,692
Private student loans	386		—		386
Personal loans	412		—		412
Other loans	69		—		69
Other interest income	92		—		92
Total interest income	5,651		—		5,651
Interest expense	562		—		562
Net interest income	5,089		—		5,089
Provision for credit losses	703		—		703
Other income (loss)	1,021		(6)		1,015
Other expense	2,278		75		2,353
Income (loss) before income taxes	$	3,129	$	(81)	$	3,048

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Revenue from Contracts with Customers

6 Months Ended

Jun. 30, 2023

Revenue from Contract with Customer [Abstract]

Revenue from Contracts with Customers

Revenue from Contracts with Customers

ASC Topic 606, Revenue from Contracts with Customers ("ASC 606"), generally applies to the sales of any good or service for which no other specific accounting guidance is provided. ASC 606 defines a principles-based model under which revenue from a contract is allocated to the distinct performance obligations within the contract and recognized in income as each performance obligation is satisfied. The Company's revenue that is subject to this model includes discount and interchange, protection products fees, transaction processing revenue and certain amounts classified as other income.

The following table presents revenue from contracts with customers disaggregated by business segment and reconciles revenue from contracts with customers to total other income (dollars in millions):

	Digital Banking		Payment Services		Total
For the Three Months Ended June 30, 2023
Other income subject to ASC 606
Discount and interchange revenue, net(1)	$	349	$	21	$	370
Protection products revenue	44		—		44
Transaction processing revenue	—		72		72
Other income	7		21		28
Total other income subject to ASC 606(2)	400		114		514
Other income not subject to ASC 606
Loan fee income	186		—		186
Gains on equity investments	—		1		1
Total other income not subject to ASC 606	186		1		187
Total other income by operating segment	$	586	$	115	$	701
For the Three Months Ended June 30, 2022
Other income subject to ASC 606
Discount and interchange revenue, net(1)	$	359	$	20	$	379
Protection products revenue	42		—		42
Transaction processing revenue	—		61		61
Other income	3		18		21
Total other income subject to ASC 606(2)	404		99		503
Other income not subject to ASC 606
Loan fee income	142		—		142
Gains (losses) on equity investments	—		(42)		(42)
Total other income (loss) not subject to ASC 606	142		(42)		100
Total other income by operating segment	$	546	$	57	$	603

	Digital Banking		Payment Services		Total
For the Six Months Ended June 30, 2023
Other income subject to ASC 606
Discount and interchange revenue, net(1)	$	659	$	41	$	700
Protection products revenue	87		—		87
Transaction processing revenue	—		139		139
Other income	10		40		50
Total other income subject to ASC 606(2)	$	756	$	220	$	976
Other income not subject to ASC 606
Loan fee income	352		—		352
Gains (losses) on equity investments	—		(17)		(17)
Total other income (loss) not subject to ASC 606	352		(17)		335
Total other income by operating segment	$	1,108	$	203	$	1,311
For the Six Months Ended June 30, 2022
Other income subject to ASC 606
Discount and interchange revenue, net(1)	$	646	$	42	$	688
Protection products revenue	86		—		86
Transaction processing revenue	—		118		118
Other income	6		39		45
Total other income subject to ASC 606(2)	738		199		937
Other income not subject to ASC 606
Loan fee income	282		—		282
Gains (losses) on equity investments	1		(205)		(204)
Total other income (loss) not subject to ASC 606	283		(205)		78
Total other income (loss) by operating segment	$	1,021	$	(6)	$	1,015

(1)Net of rewards, including Cashback Bonus rewards, of $788 million and $743 million for the three months ended June 30, 2023 and 2022, respectively, and $1.5 billion and $1.4 billion for the six months ended June 30, 2023 and 2022. respectively.

(2)Excludes $3 million and $10 million of deposit product fees that are reported within net interest income for the three and six months ended June 30, 2023, respectively. Deposit product fees were immaterial for the three and six months ended June 30, 2022.

For a detailed description of the Company's significant revenue recognition accounting policies, see Note 2: Summary of Significant Accounting Policies to the consolidated financial statements in the Company's annual report on Form 10-K for the year ended December 31, 2022.

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Immaterial Restatement of Prior Period Items

6 Months Ended

Jun. 30, 2023

Prior Period Adjustment [Abstract]

Error Correction

Immaterial Restatement of Prior Period Financial StatementsBeginning around mid-2007, the Company incorrectly classified certain credit card accounts into its highest merchant and merchant acquirer pricing tier. The card product classification impacts the pricing and charging of discount and interchange revenue, which is recorded within discount and interchange revenue, net, on the consolidated statements of income. The Company determined the revenue impact of the incorrect card product classification was immaterial to the consolidated financial statements for all impacted prior periods. For comparative purposes, the Company has made these immaterial corrections to the recognition of discount and interchange revenue, as well as the related impacts to assets, liabilities and retained earnings in the prior periods presented in this Form 10-Q. Assets were impacted by adjustments to deferred tax assets, and liabilities were impacted by an adjustment to the liability for estimated refunds to merchants and merchant acquirers.

The prior period impacts to the Company's consolidated statement of financial condition were as shown below (dollars in millions):

	March 31, 2023						December 31, 2022
	As Previously Reported		Restatement Impacts		As Restated		As Previously Reported		Restatement Impacts		As Restated
Assets
Other Assets	$	4,381	$	80	$	4,461	$	4,519	$	78	$	4,597
Total Assets	$	133,061	$	80	$	133,141	$	131,628	$	78	$	131,706
Liabilities and Stockholders' Equity
Liabilities
Accrued Expenses and other liabilities	$	4,843	$	335	$	5,178	$	5,294	$	324	$	5,618
Total Liabilities	$	118,746	$	335	$	119,081	$	117,038	$	324	$	117,362
Stockholders' Equity
Retained Earnings	$	29,292	$	(255)	$	29,037	$	28,453	$	(246)	$	28,207
Total Stockholders' Equity	$	14,315	$	(255)	$	14,060	$	14,590	$	(246)	$	14,344
Total Liabilities and Stockholders' Equity	$	133,061	$	80	$	133,141	$	131,628	$	78	$	131,706

The prior period impacts to the Company's consolidated statements of income and the related impacts to the consolidated statements of comprehensive income were as shown below (dollars in millions):

	For the Three Months Ended March 31, 2023
	As Previously Reported		Restatement Impacts		As Restated
Other income
Discount and interchange revenue, net	$	341	$	(11)	$	330
Total other income	$	621	$	(11)	$	610
Income before income taxes	$	1,268	$	(11)	$	1,257
Income tax expense	$	292	$	(3)	$	289
Net Income	$	976	$	(8)	$	968
Net income allocated to common stockholders	$	939	$	(8)	$	931
Basic earnings per common share	$	3.58	$	(0.03)	$	3.55
Diluted earnings per common share	$	3.58	$	(0.03)	$	3.55

	For the Three Months Ended June 30, 2022						For the Six Months Ended June 30, 2022
	As Previously Reported		Restatement Impacts		As Restated		As Previously Reported		Restatement Impacts		As Restated
Other income
Discount and interchange revenue, net	$	390	$	(11)	$	379	$	710	$	(22)	$	688
Total other income	$	614	$	(11)	$	603	$	1,037	$	(22)	$	1,015
Income before income taxes	$	1,452	$	(11)	$	1,441	$	3,070	$	(22)	$	3,048
Income tax expense	$	341	$	(3)	$	338	$	717	$	(5)	$	712
Net Income	$	1,111	$	(8)	$	1,103	$	2,353	$	(17)	$	2,336
Net income allocated to common stockholders	$	1,105	$	(8)	$	1,097	$	2,309	$	(16)	$	2,293
Basic earnings per common share	$	3.96	$	(0.03)	$	3.93	$	8.19	$	(0.06)	$	8.13
Diluted earnings per common share	$	3.96	$	(0.03)	$	3.93	$	8.18	$	(0.06)	$	8.12

The prior period impacts to the Company's consolidated statements of changes in stockholders' equity were as shown below (dollars in millions):

	Retained Earnings		Total Stockholders' Equity
As Previously Reported
For the Three Months Ended June 30, 2022
Balance at March 31, 2022	$	25,833	$	13,433
Net Income	$	1,111	$	1,111
Balance at June 30, 2022	$	26,776	$	13,764
Restatement Impacts
For the Three Months Ended June 30, 2022
Balance at March 31, 2022	$	(237)	$	(237)
Net Income	$	(8)	$	(8)
Balance at June 30, 2022	$	(245)	$	(245)
As Restated
For the Three Months Ended June 30, 2022
Balance at March 31, 2022	$	25,596	$	13,196
Net Income	$	1,103	$	1,103
Balance at June 30, 2022	$	26,531	$	13,519
	Retained Earnings		Total Stockholders' Equity
As Previously Reported
For the Six Months Ended June 30, 2022
Balance at December 31, 2021	$	24,766	$	13,408
Net Income	$	2,353	$	2,353
Balance at June 30, 2022	$	26,776	$	13,764
Restatement Impacts
For the Six Months Ended June 30, 2022
Balance at December 31, 2021	$	(228)	$	(228)
Net Income	$	(17)	$	(17)
Balance at June 30, 2022	$	(245)	$	(245)
As Restated
For the Six Months Ended June 30, 2022
Balance at December 31, 2021	$	24,538	$	13,180
Net Income	$	2,336	$	2,336
Balance at June 30, 2022	$	26,531	$	13,519

The prior period impacts to the Company's consolidated statements of cash flows were as follows (dollars in millions):

	For the Three Months Ended March 31, 2023						For the Six Months Ended June 30, 2022
	As Previously Reported		Restatement Impacts		As Restated		As Previously Reported		Restatement Impacts		As Restated
Cash flows provided by operating activities
Net Income	$	976	$	(8)	$	968	$	2,353	$	(17)	$	2,336
Adjustments to reconcile net income to net cash provided by operating activities:
Deferred income taxes	$	(112)	$	(3)	$	(115)	$	(140)	$	(5)	$	(145)
Changes in assets and liabilities:
(Decrease) increase in accrued expenses and liabilities	$	(387)	$	11	$	(376)	$	301	$	22	$	323
Net cash provided by operating activities	$	1,791	$	—	$	1,791	$	3,346	$	—	$	3,346

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Subsequent Events	6 Months Ended
	Jun. 30, 2023
Subsequent Events [Abstract]
Subsequent Events	Subsequent EventsThe Company has evaluated events and transactions that have occurred subsequent to June 30, 2023, and determined that there were no subsequent events that would require recognition or disclosure in the condensed consolidated financial statements.

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Background and Basis of Presentation (Policies)	6 Months Ended
	Jun. 30, 2023
Organization, Consolidation and Presentation of Financial Statements [Abstract]
Basis of presentation	The accompanying condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the U.S. ("GAAP") for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by GAAP for complete consolidated financial statements. In the opinion of management, the financial statements reflect all adjustments necessary for the fair presentation of results for the interim period. All such adjustments are of a normal, recurring nature.
Use of estimates	The preparation of financial statements in conformity with GAAP requires the Company to make estimates and assumptions that affect the amounts reported in the condensed consolidated financial statements and related disclosures. These estimates are based on information available as of the date of the condensed consolidated financial statements. The Company believes that the estimates used in the preparation of the condensed consolidated financial statements are reasonable. Actual results could differ from these estimates.

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Investments (Tables)

6 Months Ended

Jun. 30, 2023

Investments, Debt and Equity Securities [Abstract]

Schedule of Investment Securities

The Company's investment securities consist of the following (dollars in millions):

	June 30, 2023		December 31, 2022
U.S. Treasury(1) and U.S. GSE(2) securities	$	12,714	$	11,423
Residential mortgage-backed securities - Agency(3)	752		785
Total investment securities	$	13,466	$	12,208

(1)Includes $292 million and $97 million of U.S. Treasury securities pledged as swap collateral as of June 30, 2023 and December 31, 2022, respectively.

(2)Consists of a security issued by the Federal Home Loan Bank.

(3)Consists of securities issued by Fannie Mae, Freddie Mac, or Ginnie Mae.

Schedule of Amortized Cost, Gross Unrealized Gains, Gross Unrealized Losses and Fair Value

The amortized cost, gross unrealized gains and losses and fair value of available-for-sale and held-to-maturity investment securities are as follows (dollars in millions):

	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value
At June 30, 2023
Available-for-Sale Investment Securities(1)
U.S. Treasury and U.S. GSE securities	$	12,947	$	5	$	(238)	$	12,714
Residential mortgage-backed securities - Agency	531		—		(24)		507
Total available-for-sale investment securities	$	13,478	$	5	$	(262)	$	13,221
Held-to-Maturity Investment Securities(2)
Residential mortgage-backed securities - Agency(3)	$	245	$	—	$	(21)	$	224
Total held-to-maturity investment securities	$	245	$	—	$	(21)	$	224
At December 31, 2022
Available-for-Sale Investment Securities(1)
U.S. Treasury and U.S. GSE securities	$	11,580	$	21	$	(178)	$	11,423
Residential mortgage-backed securities - Agency	587		—		(23)		564
Total available-for-sale investment securities	$	12,167	$	21	$	(201)	$	11,987
Held-to-Maturity Investment Securities(2)
Residential mortgage-backed securities - Agency(3)	$	221	$	—	$	(22)	$	199
Total held-to-maturity investment securities	$	221	$	—	$	(22)	$	199

(1)Available-for-sale investment securities are reported at fair value.

(2)Held-to-maturity investment securities are reported at amortized cost.

(3)Amounts represent residential mortgage-backed securities ("RMBS") that were classified as held-to-maturity as they were entered into as a part of the Company's community reinvestment initiatives.

Schedule of Fair Value of Securities in a Continuous Unrealized Loss Position for Less Than 12 Months and More Than 12 Months

The following table provides information about available-for-sale investment securities with aggregate gross unrealized losses and the length of time that individual investment securities have been in a continuous unrealized loss position (dollars in millions):

	Number of Securities in a Loss Position	Less than 12 months				More than 12 months
		Fair Value		Unrealized Losses		Fair Value		Unrealized Losses
At June 30, 2023
Available-for-Sale Investment Securities
U.S. Treasury and U.S. GSE securities	183	$	8,357	$	(133)	$	3,288	$	(105)
Residential mortgage-backed securities - Agency	32	$	415	$	(19)	$	92	$	(5)
At December 31, 2022
Available-for-Sale Investment Securities
U.S. Treasury and U.S. GSE securities	123	$	9,060	$	(175)	$	106	$	(3)
Residential mortgage-backed securities - Agency	34	$	559	$	(22)	$	5	$	(1)

Schedule of Maturities of Available-for-Sale Debt Securities and Held-to-Maturity Debt Securities

Maturities of available-for-sale debt securities and held-to-maturity debt securities are provided in the following table (dollars in millions):

At June 30, 2023	One Year or Less		After One Year Through Five Years		After Five Years Through Ten Years		After Ten Years		Total
Available-for-Sale Investment Securities — Amortized Cost
U.S. Treasury and U.S. GSE securities	$	1,875	$	10,737	$	335	$	—	$	12,947
Residential mortgage-backed securities - Agency(1)	2		78		41		410		531
Total available-for-sale investment securities	$	1,877	$	10,815	$	376	$	410	$	13,478
Held-to-Maturity Investment Securities — Amortized Cost
Residential mortgage-backed securities - Agency(1)	$	—	$	—	$	—	$	245	$	245
Total held-to-maturity investment securities	$	—	$	—	$	—	$	245	$	245
Available-for-Sale Investment Securities — Fair Values
U.S. Treasury and U.S. GSE securities	$	1,844	$	10,539	$	331	$	—	$	12,714
Residential mortgage-backed securities - Agency(1)	2		74		39		392		507
Total available-for-sale investment securities	$	1,846	$	10,613	$	370	$	392	$	13,221
Held-to-Maturity Investment Securities — Fair Values
Residential mortgage-backed securities - Agency(1)	$	—	$	—	$	—	$	224	$	224
Total held-to-maturity investment securities	$	—	$	—	$	—	$	224	$	224

(1)Maturities of RMBS are reflective of the contractual maturities of the investment.

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Loan Receivables (Tables)

3 Months Ended

6 Months Ended

Jun. 30, 2023

Jun. 30, 2023

Receivables [Abstract]

Schedule of Loan Receivables

The Company's classes of receivables within the two portfolio segments are depicted in the following table (dollars in millions):

	June 30, 2023		December 31, 2022
Credit card loans(1)(2)	$	93,955	$	90,113
Other loans(3)
Private student loans(4)	10,241		10,308
Personal loans	9,106		7,998
Other loans	4,604		3,701
Total other loans	23,951		22,007
Total loan receivables	117,906		112,120
Allowance for credit losses	(8,064)		(7,374)
Net loan receivables	$	109,842	$	104,746

(1)Amounts include carrying values of $14.3 billion and $13.5 billion underlying investors' interest in trust debt at June 30, 2023 and December 31, 2022, respectively, and $10.7 billion and $12.2 billion in seller's interest at June 30, 2023 and December 31, 2022, respectively. See Note 4: Credit Card and Private Student Loan Securitization Activities for additional information.

(2)Unbilled accrued interest receivable on credit card loans, which is presented as part of other assets in the Company's condensed consolidated statements of financial condition, was $622 million and $611 million at June 30, 2023 and December 31, 2022, respectively.

(3)Accrued interest receivable on private student, personal and other loans, which is presented as part of other assets in the Company's condensed consolidated statements of financial condition, was $515 million, $56 million and $15 million, respectively, at June 30, 2023 and $468 million, $49 million and $11 million, respectively, at December 31, 2022.

(4)At June 30, 2023 and December 31, 2022, there were $6.0 billion of private student loans in repayment.

Schedule of Credit Risk Profile by FICO Score and Origination Year

The following table provides the distribution of the amortized cost basis (excluding accrued interest receivable presented in other assets) by the most recent FICO scores available for the Company's customers for credit card, private student and personal loan receivables (dollars in millions):

	Credit Risk Profile by FICO Score
	June 30, 2023								December 31, 2022
	660 and Above				Less than 660 or No Score				660 and Above				Less than 660 or No Score
	$		%		$		%		$		%		$		%
Credit card loans	$	76,591	82	%	$	17,364	18	%	$	73,827	82	%	$	16,286	18	%
Private student loans by origination year(1)(2)
2023	$	259	96	%	$	12	4	%
2022	1,563		95	%	87		5	%	$	1,172	94	%	$	77	6	%
2021	1,573		95	%	83		5	%	1,668		95	%	81		5	%
2020	1,266		95	%	66		5	%	1,365		95	%	65		5	%
2019	1,121		94	%	68		6	%	1,221		95	%	67		5	%
Prior	3,880		94	%	263		6	%	4,306		94	%	286		6	%
Total private student loans	$	9,662	94	%	$	579	6	%	$	9,732	94	%	$	576	6	%
Personal loans by origination year
2023	$	2,927	99	%	$	20	1	%
2022	3,408		96	%	143		4	%	$	4,270	98	%	$	77	2	%
2021	1,464		94	%	93		6	%	1,958		96	%	91		4	%
2020	537		94	%	34		6	%	790		95	%	40		5	%
2019	281		91	%	28		9	%	444		92	%	38		8	%
Prior	141		82	%	30		18	%	249		86	%	41		14	%
Total personal loans	$	8,758	96	%	$	348	4	%	$	7,711	96	%	$	287	4	%

(1)A majority of private student loan originations occur in the third quarter and disbursements can span multiple calendar years.

(2)FICO score represents the higher credit score of the cosigner or borrower.

Schedule of Delinquent Loans by Origination Year

The amortized cost basis (excluding accrued interest receivable presented in other assets) of delinquent loans in the Company's loan portfolio is shown below for credit card, private student and personal loan receivables (dollars in millions):

	June 30, 2023						December 31, 2022
	30-89 Days Delinquent		90 or More Days Delinquent		Total Past Due		30-89 Days Delinquent		90 or More Days Delinquent		Total Past Due
Credit card loans	$	1,420	$	1,269	$	2,689	$	1,250	$	1,028	$	2,278
Private student loans by origination year(1)
2023	$	—	$	—	$	—
2022	2		1		3		$	—	$	—	$	—
2021	11		4		15		6		1		7
2020	16		5		21		14		3		17
2019	19		6		25		19		5		24
Prior	115		39		154		128		36		164
Total private student loans	$	163	$	55	$	218	$	167	$	45	$	212
Personal loans by origination year
2023	$	4	$	1	$	5
2022	30		10		40		$	12	$	3	$	15
2021	17		6		23		15		6		21
2020	7		2		9		8		2		10
2019	5		2		7		6		2		8
Prior	4		3		7		6		3		9
Total personal loans	$	67	$	24	$	91	$	47	$	16	$	63

(1)Private student loans may include a deferment period, during which borrowers are not required to make payments while enrolled in school at least half time as determined by the school. During a deferment period, these loans do not advance into delinquency.

Schedule of Changes in the Allowance for Credit Losses

The following tables provide changes in the Company's allowance for credit losses (dollars in millions):

	For the Three Months Ended June 30, 2023
	Credit Card Loans		Private Student Loans		Personal Loans		Other Loans		Total Loans
Balance at March 31, 2023	$	6,135	$	872	$	622	$	62	$	7,691
Additions
Provision for credit losses(1)	1,232		9		50		6		1,297
Deductions
Charge-offs	(1,051)		(38)		(64)		—		(1,153)
Recoveries	209		6		14		—		229
Net charge-offs	(842)		(32)		(50)		—		(924)
Balance at June 30, 2023	$	6,525	$	849	$	622	$	68	$	8,064
	For the Three Months Ended June 30, 2022
	Credit Card Loans		Private Student Loans		Personal Loans		Other Loans		Total Loans
Balance at March 31, 2022	$	5,120	$	870	$	613	$	44	$	6,647
Additions
Provision for credit losses(1)	568		(11)		(20)		2		539
Deductions
Charge-offs	(587)		(33)		(39)		—		(659)
Recoveries	206		6		18		—		230
Net charge-offs	(381)		(27)		(21)		—		(429)
Balance at June 30, 2022	$	5,307	$	832	$	572	$	46	$	6,757
	For the Six Months Ended June 30, 2023
	Credit Card Loans		Private Student Loans		Personal Loans		Other Loans		Total Loans
Balance at December 31, 2022	$	5,883	$	839	$	595	$	57	$	7,374
Cumulative effect of ASU No. 2022-02 adoption(2)	(66)		—		(2)		—		(68)
Balance at January 1, 2023	5,817		839		593		57		7,306
Additions
Provision for credit losses(1)	2,234		69		118		11		2,432
Deductions
Charge-offs	(1,930)		(71)		(118)		—		(2,119)
Recoveries	404		12		29		—		445
Net charge-offs	(1,526)		(59)		(89)		—		(1,674)
Balance at June 30, 2023	$	6,525	$	849	$	622	$	68	$	8,064
	For the Six Months Ended June 30, 2022
	Credit Card Loans		Private Student Loans		Personal Loans		Other Loans		Total Loans
Balance at December 31, 2021	5,273		843		662		44		6,822
Additions
Provision for credit losses(1)	746		34		(50)		2		732
Deductions
Charge-offs	(1,128)		(57)		(77)		—		(1,262)
Recoveries	416		12		37		—		465
Net charge-offs	(712)		(45)		(40)		—		(797)
Balance at June 30, 2022	$	5,307	$	832	$	572	$	46	$	6,757

(1)Excludes an $8 million and $10 million adjustment of the liability for expected credit losses on unfunded commitments for the three months ended June 30, 2023 and 2022, respectively, and $25 million and $29 million for the six months ended June 30, 2023 and 2022, respectively, as the liability is recorded in accrued expenses and other liabilities in the Company's condensed consolidated statements of financial condition.

(2)Represents the adjustment to the allowance for credit losses as a result of the adoption of ASU No. 2022-02 on January 1, 2023, which eliminated the requirement to apply discounted cash flow measurements for certain troubled debt restructurings.

Schedule of Net Charge-offs of Interest and Fee Revenues on Loan Receivables

Net charge-offs of principal are recorded against the allowance for credit losses, as shown in the preceding table. Information regarding net charge-offs of interest and fee revenues on credit card and other loans is as follows (dollars in millions):

	For the Three Months Ended June 30,				For the Six Months Ended June 30,
	2023		2022		2023		2022
Interest and fees accrued subsequently charged-off, net of recoveries (recorded as a reduction of interest income)	$	156	$	69	$	284	$	135
Fees accrued subsequently charged-off, net of recoveries (recorded as a reduction to other income)	$	46	$	23	$	87	$	44

Schedule of Gross Charge Offs from Loan Receivables

Gross principal charge-offs of the Company's loan portfolio are presented in the table below, on a year-to-date basis, for credit card, private student and personal loan receivables (dollars in millions):

	For the Six Months Ended June 30, 2023
Credit card loans	$	1,930
Private student loans by origination year
2023	$	—
2022	1
2021	6
2020	9
2019	11
Prior	44
Total private student loans	$	71
Personal loans by origination year
2023	$	1
2022	41
2021	39
2020	17
2019	13
Prior	7
Total personal loans	$	118

Schedule of Delinquent and Non-Accruing Loans

The amortized cost basis (excluding accrued interest receivable presented in other assets) of delinquent and non-accruing loans in the Company's loan portfolio is shown below for each class of loan receivables (dollars in millions):(1)

	30-89 Days Delinquent		90 or More Days Delinquent		Total Past Due		90 or More Days Delinquent and Accruing		Total Non-accruing(2)
At June 30, 2023
Credit card loans	$	1,420	$	1,269	$	2,689	$	1,192	$	255
Other loans
Private student loans	163		55		218		55		8
Personal loans	67		24		91		23		8
Other loans	16		13		29		2		27
Total other loans	246		92		338		80		43
Total loan receivables	$	1,666	$	1,361	$	3,027	$	1,272	$	298
At December 31, 2022
Credit card loans	$	1,250	$	1,028	$	2,278	$	1,003	$	176
Other loans
Private student loans	167		45		212		45		8
Personal loans	47		16		63		16		7
Other loans	13		12		25		1		23
Total other loans	227		73		300		62		38
Total loan receivables	$	1,477	$	1,101	$	2,578	$	1,065	$	214

(1)The payment status of both modified and unmodified loans is included in this table.

(2)The Company estimates that the gross interest income that would have been recorded under the original terms of non-accruing credit card loans was $10 million and $5 million for the three months ended June 30, 2023 and 2022, respectively, and $18 million and $11 million for the six months ended June 30, 2023 and 2022, respectively. The Company does not separately track the amount of gross interest income that would have been recorded under the original terms of loans. Instead, the Company estimated this amount based on customers' current balances and most recent interest rates.

Schedule of Financing Receivables in Modification , Amortized Cost Basis

The following table provides the period-end amortized cost basis, by modification category, of loans to borrowers experiencing financial difficulty that entered a modification program during the period (dollars in millions). Some of the loans presented in the table below may no longer be enrolled in a program at period-end:

	For the Three Months Ended June 30,			For the Six Months Ended June 30,(1)
	2023			2023
Credit card loans(2)(3)
Interest rate reduction	$	560		$	1,158
Total credit card loans(4)	$	560		$	1,158
% of total class of financing receivables	0.60		%	1.23		%
Private student loans(2)
Payment delay(5)	$	20		$	22
Interest rate reduction and payment delay(5)	21			50
Total private student loans(4)	$	41		$	72
% of total class of financing receivables	0.40		%	0.70		%
Personal loans(2)
Payment delay(5)	$	3		$	4
Term extension(6)	8			16
Interest rate reduction and payment delay(5)	16			29
Interest rate reduction and term extension(6)	8			14
Total personal loans(2)	$	35		$	63
% of total class of financing receivables	0.38		%	0.69		%

(1)    The current quarter-to-date enrollment figures, when aggregated with previously disclosed quarter-to-date amounts, will not equal the year-to-date amounts in this table because all year-to-date enrollments are presented using the current period-end amortized cost basis.

(2)    Accrued interest receivable (including unbilled accrued interest receivable for credit card loans) on modified loans to borrowers experiencing financial difficulty, which is presented as part of other assets in the Company's condensed consolidated statements of financial condition, was immaterial at June 30, 2023.

(3)    Accounts that entered a credit card loan modification program include $113 million and $231 million that were converted from revolving line-of-credit arrangements to term loans during the three and six months ended June 30, 2023, respectively.

(4)    For settlements, the amortized cost basis is zero at period-end and therefore there is no amount reported for principal forgiveness in the table above. See financial effects table below for principal forgiveness to borrowers experiencing financial difficulty.

(5)    The Company defines a payment delay as a temporary reduction in payments below the original contractually required payment amounts (e.g., interest only payments). The Company's credit card loan modification programs do not result in an other than insignificant delay in payment.

(6)    The Company defines term extensions as only those modifications for which the maturity date is extended beyond the original contractual maturity date by virtue of a change in terms other than a payment delay as defined above. Modifications to credit card loans are not considered term extensions because credit card loans do not have a fixed repayment term.

Schedule of Loan Modification Effects

The following table provides information on the financial effects of loan modifications to borrowers experiencing financial difficulty, by modification type, made during the period (dollars in millions):

	For the Three Months Ended June 30,			For the Six Months Ended June 30,
	2023			2023
Credit card loans
Weighted-average interest rate reduction	13.80		%	13.58		%
Principal forgiven	$	46		$	46
Interest and fees forgiven(1)	$	35		$	47
Private student loans
Weighted-average interest rate reduction	8.55		%	8.26		%
Payment delay duration (in months)(2)	6 to 12			6 to 12
Principal forgiven	$	—		$	—
Personal loans
Weighted-average interest rate reduction	12.01		%	11.80		%
Weighted-average term extension (in months)	39			38
Payment delay duration (in months)(2)	6 to 12			6 to 12
Principal forgiven	$	—		$	—

(1)     Represents the amount of interest and fees forgiven resulting from accounts entering into a credit card loan modification program and pre-charge off settlements. Interest and fees forgiven are reversed against the respective line items in the consolidated statements of income.

(2)    For private student loan payment delays, the Company offers up to six consecutive months of delay and most commonly limits assistance to a life of loan maximum of 12 months. For personal loan payment delays, the Company limits this assistance to a life of loan maximum of 12 months.

Schedule of Financing Receivable, Past Due, Modified

The following table presents the payment status and period-end amortized cost basis, by class of loan receivable, of loans that were modified on or after January 1, 2023 to borrowers experiencing financial difficulty (dollars in millions):(1)

	Current		30-89 Days Delinquent		90 or More Days Delinquent
At June 30, 2023
Credit card loans	$	931	$	115	$	112
Private student loans	66		5		1
Personal loans	53		7		3
Total	$	1,050	$	127	$	116

(1)    This table includes any loan that entered a modification program during the period without regard to whether it remained in a modification program as of the reporting date.

Schedule of Loans That Entered a Modification Program During the Period

The following table provides information on loans that entered a TDR program during the period (dollars in millions):

	For the Three Months Ended June 30, 2022			For the Six Months Ended June 30, 2022
	Number of Accounts	Balances		Number of Accounts	Balances
Accounts that entered a TDR program during the period
Credit card loans(1)	49,341	$	313	103,852	$	657
Private student loans	1,523	$	29	3,278	$	60
Personal loans	1,603	$	22	2,762	$	37

(1)Accounts that entered a credit card TDR program include $71 million and $146 million that were converted from revolving line-of-credit arrangements to term loans during the three and six months ended June 30, 2022, respectively.

Schedule of Troubled Debt Restructurings That Subsequently Defaulted

The following table presents the carrying value of loans that experienced a default during the period that had been modified in a TDR during the 15 months preceding the end of each period (dollars in millions):

	For the Three Months Ended June 30, 2022			For the Six Months Ended June 30, 2022
	Number of Accounts	Aggregated Outstanding Balances Upon Default		Number of Accounts	Aggregated Outstanding Balances Upon Default
TDRs that subsequently defaulted
Credit card loans(1)(2)	5,703	$	28	10,238	$	51
Private student loans(3)	161	$	3	267	$	5
Personal loans(2)	275	$	4	536	$	7

(1)For credit card loans that default from a temporary loan modification program, accounts revert back to the pre-modification terms and charging privileges remain suspended in most cases.

(2)For credit card loans and personal loans, a customer defaults from a loan modification program after either two consecutive missed payments or at charge-off, depending on the program. The outstanding balance upon default is generally the loan balance at the end of the month prior to default.

(3)For student loans, a customer defaults from a loan modification after they are 60 or more days delinquent. The outstanding balance upon default is generally the loan balance at the end of the month prior to default.

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Credit Card and Private Student Loan Securitization Activities (Tables)

6 Months Ended

Jun. 30, 2023

Variable Interest Entities Disclosure [Abstract]

Schedule of Restricted Credit Card Securitized Assets

The carrying values of these restricted assets, which are presented on the Company's condensed consolidated statements of financial condition as relating to securitization activities, are shown in the following table (dollars in millions):

	June 30, 2023		December 31, 2022
Restricted cash	$	31	$	33
Investors' interests held by third-party investors	11,275		10,200
Investors' interests held by wholly-owned subsidiaries of Discover Bank	2,997		3,341
Seller's interest	10,732		12,220
Loan receivables(1)	25,004		25,761
Allowance for credit losses allocated to securitized loan receivables(1)	(1,109)		(1,152)
Net loan receivables	23,895		24,609
Other assets	2		2
Carrying value of assets of consolidated variable interest entities	$	23,928	$	24,644

(1)The Company maintains its allowance for credit losses at an amount equal to lifetime expected credit losses associated with all loan receivables, which includes all loan receivables in the trusts. Therefore, the credit risk associated with the transferred receivables is fully reflected on the Company's statements of financial condition in accordance with GAAP.

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Deposits (Tables)

6 Months Ended

Jun. 30, 2023

Deposits [Abstract]

Schedule of Certificates of Deposit Maturities

The following table summarizes certificates of deposits maturing over the remainder of this year, over each of the next four years and thereafter (dollars in millions):

	At June 30, 2023
2023	$	10,661
2024	15,578
2025	4,097
2026	2,951
2027	3,871
Thereafter	2,174
Total	$	39,332

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Long-Term Borrowings (Tables)

6 Months Ended

Jun. 30, 2023

Debt Disclosure [Abstract]

Schedule of Long-Term Borrowings and Weighted Average Interest Rates

Long-term borrowings consist of borrowings having original maturities of one year or more. The following table provides a summary of the Company's long-term borrowings and weighted-average interest rates on outstanding balances (dollars in millions):

	June 30, 2023					December 31, 2022
	Maturity	Interest Rate	Weighted-Average Interest Rate	Outstanding Amount		Outstanding Amount
Securitized Debt
Fixed-rate asset-backed securities(1)	2024-2026	0.58% - 5.03%	3.17%	$	9,917	$	8,401
Floating-rate asset-backed securities(2)	2023-2024	5.58% - 5.79%	5.74%	1,225		1,774
Total Discover Card Master Trust I and Discover Card Execution Note Trust				11,142		10,175
Floating-rate asset-backed security(3)(4)	2031	9.25%	9.25%	74		84
Total private student loan securitization trust				74		84
Total long-term borrowings - owed to securitization investors				11,216		10,259
Discover Financial Services (Parent Company)
Fixed-rate senior notes	2024-2032	3.75% - 6.70%	4.68%	3,334		3,333
Fixed-rate retail notes	2023-2031	2.85% - 4.40%	3.77%	152		154
Discover Bank
Fixed-rate senior bank notes(1)	2023-2030	2.45% - 4.65%	3.68%	4,552		5,348
Fixed-rate subordinated bank notes(1)(5)	2028	4.68%	4.68%	497		489
Floating-rate Federal Home Loan Bank advance(6)	2023	5.29%	5.29%	525		525
Total long-term borrowings				$	20,276	$	20,108

(1)The Company uses interest rate swaps to hedge portions of these long-term borrowings against changes in fair value attributable to changes in the applicable benchmark interest rates. The use of these interest rate swaps impacts the carrying value of the debt. See Note 15: Derivatives and Hedging Activities.

(2)DCENT floating-rate asset-backed securities include issuances with the following interest rate terms: 1-month LIBOR + 39 to 60 basis points as of June 30, 2023.

(3)The private student loan securitization trust floating-rate asset-backed security includes an issuance with the following interest rate term: Prime rate + 100 basis points as of June 30, 2023.

(4)Repayment of this debt is dependent upon the timing of principal and interest payments on the underlying private student loans. The date shown represents the final maturity date.

(5)The fixed-rate subordinated bank notes include a rate reset on August 9, 2023, to the 5-year SOFR spread-adjusted swap rate + 173 basis points.

(6)The floating-rate Federal Home Loan Bank (“FHLB”) advance includes the following interest rate term: SOFR + 23 basis points as of June 30, 2023.

Schedule of Long-Term Borrowings Maturities

The following table summarizes long-term borrowings maturing over the remainder of this year, over each of the next four years and thereafter (dollars in millions):

	June 30, 2023
2023	$	1,837
2024	3,727
2025	6,098
2026	4,867
2027	1,000
Thereafter	2,747
Total	$	20,276

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Preferred Stock (Tables)

6 Months Ended

Jun. 30, 2023

Equity [Abstract]

Schedule of Stock by Class

The table below presents a summary of the Company's non-cumulative perpetual preferred stock that is outstanding at June 30, 2023 (dollars in millions, except per depositary share amounts):

Series	Description	Initial Issuance Date	Liquidation Preference and Redemption Price per Depositary Share(1)		Per Annum Dividend Rate in effect at June 30, 2023		Total Depositary Shares Authorized, Issued and Outstanding		Carrying Value
							June 30, 2023	December 31, 2022	June 30, 2023		December 31, 2022
C(2)(3)(4)	Fixed-to-Floating Rate	10/31/2017	$	1,000	5.500	%	570,000	570,000	$	563	$	563
D(2)(5)(6)	Fixed-Rate Reset	6/22/2020	$	1,000	6.125	%	500,000	500,000	493		493
Total Preferred Stock							1,070,000	1,070,000	$	1,056	$	1,056

(1)Redeemable at the redemption price plus declared and unpaid dividends.

(2)Issued as depositary shares, each representing 1/100th interest in a share of the corresponding series of preferred stock. Each preferred share has a par value of $0.01.

(3)Redeemable at the Company’s option, subject to regulatory approval, either (i) in whole or in part on any dividend payment date on or after October 30, 2027, or (ii) in whole but not in part, at any time within 90 days following a regulatory capital treatment event (as defined in the certificate of designations for the Series C preferred stock).

(4)Any dividends declared are payable semi-annually in arrears at a rate of 5.500% per annum until October 30, 2027. Thereafter, dividends declared will be payable quarterly in arrears at a floating rate equal to 3-month LIBOR plus a spread of 3.076% per annum.

(5)Redeemable at the Company’s option, subject to regulatory approval, either (i) in whole or in part during the three-month period prior to, and including, each reset date (as defined in the certificate of designations for the Series D preferred stock) or (ii) in whole but not in part, at any time within 90 days following a regulatory capital treatment event (as defined in the certificate of designations for the Series D Preferred Stock).

(6)Any dividends declared are payable semi-annually in arrears at a rate of 6.125% per annum until September 23, 2025, after which the dividend rate will reset every 5 years to a fixed annual rate equal to the 5-year Treasury plus a spread of 5.783%.

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Accumulated Other Comprehensive Income (Tables)

6 Months Ended

Jun. 30, 2023

Accumulated Other Comprehensive Income (Loss), Net of Tax [Abstract]

Schedule of Changes in Accumulated Other Comprehensive Income (Loss)

Changes in each component of accumulated other comprehensive income ("AOCI") were as follows (dollars in millions):

	Unrealized (Losses) Gains on Available-for-Sale Investment Securities, Net of Tax		Losses on Cash Flow Hedges, Net of Tax		Losses on Pension Plan, Net of Tax		AOCI
For the Three Months Ended June 30, 2023
Balance at March 31, 2023	$	(44)	$	(2)	$	(189)	$	(235)
Net change	(151)		(84)		—		(235)
Balance at June 30, 2023	$	(195)	$	(86)	$	(189)	$	(470)
For the Three Months Ended June 30, 2022
Balance at March 31, 2022	$	(7)	$	(7)	$	(199)	$	(213)
Net change	(41)		3		—		(38)
Balance at June 30, 2022	$	(48)	$	(4)	$	(199)	$	(251)
For the Six Months Ended June 30, 2023
Balance at December 31, 2022	$	(136)	$	(14)	$	(189)	$	(339)
Net change	(59)		(72)		—		(131)
Balance at June 30, 2023	$	(195)	$	(86)	$	(189)	$	(470)
For the Six Months Ended June 30, 2022
Balance at December 31, 2021	$	114	$	(9)	$	(199)	$	(94)
Net change	(162)		5		—		(157)
Balance at June 30, 2022	$	(48)	$	(4)	$	(199)	$	(251)

Schedule of Other Comprehensive Income Before Reclassifications and Amounts Reclassified from AOCI

The following table presents each component of other comprehensive income ("OCI") before reclassifications and amounts reclassified from AOCI for each component of OCI before- and after-tax (dollars in millions):

	Before Tax		Tax Benefit (Expense)		Net of Tax
For the Three Months Ended June 30, 2023
Available-for-Sale Investment Securities
Net unrealized holding losses arising during the period	$	(199)	$	48	$	(151)
Net change	$	(199)	$	48	$	(151)
Cash Flow Hedges
Net unrealized losses arising during the period	$	(127)	$	31	$	(96)
Amounts reclassified from AOCI	16		(4)		12
Net change	$	(111)	$	27	$	(84)
For the Three Months Ended June 30, 2022
Available-for-Sale Investment Securities
Net unrealized holding losses arising during the period	$	(53)	$	12	$	(41)
Net change	$	(53)	$	12	$	(41)
Cash Flow Hedges
Net unrealized gains arising during the period	$	3	$	(1)	$	2
Amounts reclassified from AOCI	1		—		1
Net change	$	4	$	(1)	$	3
For the Six Months Ended June 30, 2023
Available-for-Sale Investment Securities
Net unrealized holding losses arising during the period	$	(77)	$	18	$	(59)
Net change	$	(77)	$	18	$	(59)
Cash Flow Hedges
Net unrealized losses arising during the period	$	(117)	$	29	$	(88)
Amounts reclassified from AOCI	21		(5)		16
Net change	$	(96)	$	24	$	(72)
For the Six Months Ended June 30, 2022
Available-for-Sale Investment Securities
Net unrealized holding losses arising during the period	$	(213)	$	51	$	(162)
Net change	$	(213)	$	51	$	(162)
Cash Flow Hedges
Net unrealized gains arising during the period	$	2	$	(1)	$	1
Amounts reclassified from AOCI	2		2		4
Net change	$	4	$	1	$	5

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Income Taxes (Tables)

6 Months Ended

Jun. 30, 2023

Income Tax Disclosure [Abstract]

Schedule of Effective Income Tax Rate Calculation

The following table presents the calculation of the Company's effective income tax rate (dollars in millions):

	For the Three Months Ended June 30,						For the Six Months Ended June 30,
	2023			2022			2023			2022
Income before income taxes	$	1,169		$	1,441		$	2,426		$	3,048
Income tax expense	$	268		$	338		$	557		$	712
Effective income tax rate	23.0		%	23.5		%	23.0		%	23.4		%

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Earnings Per Share (Tables)

6 Months Ended

Jun. 30, 2023

Earnings Per Share [Abstract]

Schedule of Basic and Diluted EPS

The following table presents the calculation of basic and diluted earnings per share ("EPS") (dollars and shares in millions, except per share amounts):

	For the Three Months Ended June 30,				For the Six Months Ended June 30,
	2023		2022		2023		2022
Numerator
Net income	$	901	$	1,103	$	1,869	$	2,336
Preferred stock dividends	—		—		(31)		(31)
Net income available to common stockholders	901		1,103		1,838		2,305
Income allocated to participating securities	(6)		(6)		(12)		(12)
Net income allocated to common stockholders	$	895	$	1,097	$	1,826	$	2,293
Denominator
Weighted-average shares of common stock outstanding	253		279		257		282
Weighted-average shares of common stock outstanding and common stock equivalents	253		279		257		282
Basic earnings per common share	$	3.54	$	3.93	$	7.09	$	8.13
Diluted earnings per common share	$	3.54	$	3.93	$	7.09	$	8.12

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Capital Adequacy (Tables)

6 Months Ended

Jun. 30, 2023

Broker-Dealer, Net Capital Requirement, SEC Regulation [Abstract]

Schedule of Minimum and Well-Capitalized Requirements

The following table shows the actual capital amounts and ratios of DFS and Discover Bank and comparisons of each to the regulatory minimum and "well-capitalized" requirements (dollars in millions):

	Actual				Minimum Capital Requirements			Capital Requirements To Be Classified as Well-Capitalized
	Amount		Ratio(1)		Amount		Ratio	Amount(2)		Ratio(2)
June 30, 2023
Total capital (to risk-weighted assets)
Discover Financial Services	$	17,215	14.3	%	$	9,659	≥8.0%	$	12,073	≥10.0%
Discover Bank	$	16,444	13.8	%	$	9,532	≥8.0%	$	11,915	≥10.0%
Tier 1 capital (to risk-weighted assets)
Discover Financial Services	$	15,144	12.5	%	$	7,244	≥6.0%	$	7,244	≥6.0%
Discover Bank	$	13,543	11.4	%	$	7,149	≥6.0%	$	9,532	≥8.0%
Tier 1 capital (to average assets)
Discover Financial Services	$	15,144	11.1	%	$	5,458	≥4.0%	N/A		N/A
Discover Bank	$	13,543	10.1	%	$	5,377	≥4.0%	$	6,722	≥5.0%
Common Equity Tier 1 (to risk-weighted assets)
Discover Financial Services	$	14,088	11.7	%	$	5,433	≥4.5%	N/A		N/A
Discover Bank	$	13,543	11.4	%	$	5,362	≥4.5%	$	7,745	≥6.5%
December 31, 2022
Total capital (to risk-weighted assets)
Discover Financial Services(3)	$	18,004	15.8	%	$	9,139	≥8.0%	$	11,424	≥10.0%
Discover Bank	$	16,579	14.7	%	$	9,015	≥8.0%	$	11,268	≥10.0%
Tier 1 capital (to risk-weighted assets)
Discover Financial Services(3)	$	16,039	14.0	%	$	6,854	≥6.0%	$	6,854	≥6.0%
Discover Bank	$	13,683	12.1	%	$	6,761	≥6.0%	$	9,015	≥8.0%
Tier 1 capital (to average assets)
Discover Financial Services(3)	$	16,039	12.5	%	$	5,147	≥4.0%	N/A		N/A
Discover Bank	$	13,683	10.8	%	$	5,086	≥4.0%	$	6,357	≥5.0%
Common Equity Tier 1 (to risk-weighted assets)
Discover Financial Services(3)	$	14,983	13.1	%	$	5,141	≥4.5%	N/A		N/A
Discover Bank	$	13,683	12.1	%	$	5,071	≥4.5%	$	7,324	≥6.5%

    

(1)Capital ratios are calculated based on the Basel III standardized approach rules, subject to applicable transition provisions, including CECL transition provisions.

(2)The Basel III rules do not establish well-capitalized thresholds for these measures for bank holding companies. Existing well-capitalized thresholds established in the Federal Reserve's Regulation Y have been included where available.

(3)Capital amounts and ratios have been updated to reflect the impact of the restatement described in Note 18: Immaterial Restatement of Prior Period Financial Statements.

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Commitments, Contingencies and Guarantees (Tables)

6 Months Ended

Jun. 30, 2023

Guarantor Obligations [Line Items]

Schedule of Maximum Potential Counterparty Exposures Related to Settlement Guarantees and Merchant Chargeback Guarantee

	For the Three Months Ended June 30,				For the Six Months Ended June 30,
	2023		2022		2023		2022
Aggregate sales transaction volume(1)	$	65,850	$	65,586	$	126,683	$	122,739

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Fair Value Measurements (Tables)

6 Months Ended

Jun. 30, 2023

Fair Value Disclosures [Abstract]

Schedule of Assets and Liabilities Measured at Fair Value on a Recurring Basis

Assets and liabilities measured at fair value on a recurring basis are as follows (dollars in millions):

	Quoted Price in Active Markets for Identical Assets  (Level 1)		Significant Other Observable Inputs  (Level 2)		Significant Unobservable Inputs  (Level 3)		Total
Balance at June 30, 2023
Assets
Fair value - OCI
U.S. Treasury and U.S. GSE securities	$	12,706	$	8	$	—	$	12,714
Residential mortgage-backed securities - Agency	—		507		—		507
Available-for-sale investment securities	$	12,706	$	515	$	—	$	13,221
Derivative financial instruments - cash flow hedges(1)	$	—	$	2	$	—	$	2
Fair value - Net income
Marketable equity securities	$	33	$	—	$	—	$	33
Derivative financial instruments - fair value hedges(1)	$	—	$	2	$	—	$	2
Balance at December 31, 2022
Assets
Fair value - OCI
U.S. Treasury and U.S. GSE securities	$	11,416	$	7	$	—	$	11,423
Residential mortgage-backed securities - Agency	—		564		—		564
Available-for-sale investment securities	$	11,416	$	571	$	—	$	11,987
Derivative financial instruments - cash flow hedges(1)	$	—	$	1	$	—	$	1
Fair value - Net income
Marketable equity securities	$	41	$	—	$	—	$	41
Liabilities
Fair value - OCI
Derivative financial instruments - cash flow hedges(1)	$	—	$	3	$	—	$	3
Fair value - Net income
Derivative financial instruments - fair value hedges(1)	$	—	$	2	$	—	$	2

.

(1)Derivative instrument carrying values in an asset or liability position are presented as part of other assets or accrued expenses and other liabilities, respectively, in the Company's condensed consolidated statements of financial condition.

Schedule of Financial Instruments Measured at Other Than Fair Value

The following tables disclose the estimated fair value of the Company's financial assets and financial liabilities that are not required to be carried at fair value (dollars in millions):

Balance at June 30, 2023	Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Total		Carrying Value
Assets
Amortized cost
Residential mortgage-backed securities - Agency	$	—	$	224	$	—	$	224	$	245
Held-to-maturity investment securities	$	—	$	224	$	—	$	224	$	245
Net loan receivables	$	—	$	—	$	116,379	$	116,379	$	109,842
Carrying value approximates fair value(1)
Cash and cash equivalents	$	8,605	$	—	$	—	$	8,605	$	8,605
Restricted cash	$	39	$	—	$	—	$	39	$	39
Accrued interest receivables(2)	$	—	$	1,289	$	—	$	1,289	$	1,289
Liabilities
Amortized cost
Time deposits(3)	$	—	$	39,075	$	—	$	39,075	$	39,332
Long-term borrowings - owed to securitization investors	$	—	$	10,903	$	74	$	10,977	$	11,216
Other long-term borrowings	—		8,613		—		8,613		9,060
Long-term borrowings	$	—	$	19,516	$	74	$	19,590	$	20,276
Carrying value approximates fair value(1)
Accrued interest payables(2)	$	—	$	361	$	—	$	361	$	361
Balance at December 31, 2022
Assets
Amortized cost
Residential mortgage-backed securities - Agency	$	—	$	199	$	—	$	199	$	221
Held-to-maturity investment securities	$	—	$	199	$	—	$	199	$	221
Net loan receivables	$	—	$	—	$	110,796	$	110,796	$	104,746
Carrying value approximates fair value(1)
Cash and cash equivalents	$	8,856	$	—	$	—	$	8,856	$	8,856
Restricted cash	$	41	$	—	$	—	$	41	$	41
Accrued interest receivables(2)	$	—	$	1,211	$	—	$	1,211	$	1,211
Liabilities
Amortized cost
Time deposits(3)	$	—	$	32,710	$	—	$	32,710	$	33,070
Long-term borrowings - owed to securitization investors	$	—	$	9,862	$	84	$	9,946	$	10,259
Other long-term borrowings	—		9,468		—		9,468		9,849
Long-term borrowings	$	—	$	19,330	$	84	$	19,414	$	20,108
Carrying value approximates fair value(1)
Accrued interest payables(2)	$	—	$	308	$	—	$	308	$	308

(1)The carrying values of these assets and liabilities approximate fair value due to their short-term nature.

(2)Accrued interest receivable and payable carrying values are presented as part of other assets and accrued expenses and other liabilities, respectively, in the Company's condensed consolidated statements of financial condition.

(3)Excludes deposits without contractually defined maturities for all periods presented.

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Derivatives and Hedging Activities (Tables)

6 Months Ended

Jun. 30, 2023

Derivative Instruments and Hedging Activities Disclosure [Abstract]

Schedule of Fair Value and Outstanding Notional Amounts of Derivative Instruments and Related Collateral Balances

The following table summarizes the fair value (including accrued interest) and outstanding notional amounts of derivative instruments and related collateral balances (dollars in millions):

	June 30, 2023							December 31, 2022
	Notional Amount		Number of Outstanding Derivative Contracts	Derivative Assets		Derivative Liabilities		Notional Amount		Derivative Assets		Derivative Liabilities
Derivatives designated as hedges
Interest rate swaps—cash flow hedge	$	8,900	15	$	2	$	—	$	5,000	$	1	$	3
Interest rate swaps—fair value hedge	$	7,750	9	2		—		$	4,425	—		2
Derivatives not designated as hedges
Foreign exchange forward contracts(1)	$	26	7	—		—		$	25	—		—
Total gross derivative assets/liabilities(2)				4		—				1		5
Less: collateral held/posted(3)				—		—				—		(5)
Total net derivative assets/liabilities				$	4	$	—			$	1	$	—

(1)The foreign exchange forward contracts have notional amounts of EUR 6 million, GBP 6 million, SGD 1 million, INR 788 million and AUD 2 million as of June 30, 2023, and notional amounts of EUR 6 million, GBP 6 million, SGD 1 million, INR 788 million and AUD 2 million as of December 31, 2022.

(2)In addition to the derivatives disclosed in the table, the Company enters into forward contracts to purchase when-issued mortgage-backed securities as part of its community reinvestment initiatives. At June 30, 2023 and December 31, 2022, the Company had one outstanding contract with a total notional amount of $16 million and $48 million, respectively, and immaterial fair values.

(3)Collateral amounts, which consist of cash and investment securities, are limited to the related derivative asset/liability balance and do not include excess collateral received/pledged.

Schedule of Hedged Items in Fair Value Hedging Relationship

The following amounts were recorded on the statements of financial condition related to cumulative basis adjustments for fair value hedges (dollars in millions):

	June 30, 2023				December 31, 2022
	Carrying Amount of Hedged Liabilities		Cumulative Amount of Fair Value Hedging Adjustment (Decreasing) the Carrying Amount of Hedged Liabilities(1)		Carrying Amount of Hedged Liabilities		Cumulative Amount of Fair Value Hedging Adjustment (Decreasing) the Carrying Amount of Hedged Liabilities(1)
Long-term borrowings	$	7,615	$	(100)	$	4,386	$	(3)

(1)The balance includes $18 million and $28 million of cumulative hedging adjustments related to discontinued hedging relationships as of June 30, 2023 and December 31, 2022, respectively.

Schedule of Impact of the Derivative Instruments on Income

The following table summarizes the impact of the derivative instruments on income and indicates where within the condensed consolidated financial statements such impact is reported (dollars in millions):

	Location and Amount of (Losses) Gains Recognized on the Condensed Consolidated Statements of Income
	Interest Expense
	Long-Term Borrowings		Interest Income (Credit Card)		Other Income
For the Three Months Ended June 30, 2023
Total amounts of income and expense line items presented in the condensed consolidated statements of income, where the effects of fair value or cash flow hedges are recorded	$	(208)	$	3,466	$	28
The effects of cash flow and fair value hedging
Gains (losses) on fair value hedging relationships
Amounts reclassified from OCI into earnings	$	2	$	(18)	$	—
Gains (losses) on fair value hedging relationships
Gains on hedged items	$	122	$	—	$	—
Losses on interest rate swaps	(149)		—		—
Total losses on fair value hedging relationships	$	(27)	$	—	$	—
For the Three Months Ended June 30, 2022
Total amounts of income and expense line items presented in the condensed consolidated statements of income, where the effects of fair value or cash flow hedges are recorded	$	(131)	$	2,424	$	21
The effects of cash flow and fair value hedging
Losses on cash flow hedging relationships
Amounts reclassified from OCI into earnings	$	(1)	$	—	$	—
Gains (losses) on fair value hedging relationships
Gains on hedged items	$	22	$	—	$	—
Losses on interest rate swaps	(18)		—		—
Total gains on fair value hedging relationships	$	4	$	—	$	—
The effects of derivatives not designated in hedging relationships
Gains on derivatives not designated as hedges	$	—	$	—	$	1

	Location and Amount of (Losses) Gains Recognized on the Condensed Consolidated Statements of Income
	Interest Expense		Interest Income (Credit Card)
	Long-Term Borrowings				Other Income
For the Six Months Ended June 30, 2023
Total amounts of income and expense line items presented in the condensed consolidated statements of income, where the effects of fair value or cash flow hedges are recorded	$	(397)	$	6,787	$	50
The effects of cash flow and fair value hedging
Gains (losses) on cash flow hedging relationships
Amounts reclassified from OCI into earnings	$	4	$	(25)	$	—
Gains (losses) on fair value hedging relationships
Gains on hedged items	$	87	$	—	$	—
Losses on interest rate swaps	(128)		—		—
Total losses on fair value hedging relationships	$	(41)	$	—	$	—
For the Six Months Ended June 30, 2022
Total amounts of income and expense line items presented in the condensed consolidated statements of income, where the effects of fair value or cash flow hedges are recorded	$	(248)	$	4,692	$	45
The effects of cash flow and fair value hedging
Losses on cash flow hedging relationships
Amounts reclassified from OCI into earnings	$	(2)	$	—	$	—
Gains (losses) on fair value hedging relationships
Gains on hedged items	$	69	$	—	$	—
Losses on interest rate swaps	(50)		—		—
Total gains on fair value hedging relationships	$	19	$	—	$	—
The effects of derivatives not designated in hedging relationships
Gains on derivatives not designated as hedges	$	—	$	—	$	1

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Segment Disclosures (Tables)

6 Months Ended

Jun. 30, 2023

Segment Reporting [Abstract]

Schedule of Segment Disclosures

The following table presents segment data (dollars in millions):

	Digital Banking		Payment Services		Total
For the Three Months Ended June 30, 2023
Interest income
Credit card loans	$	3,466	$	—	$	3,466
Private student loans	255		—		255
Personal loans	278		—		278
Other loans	73		—		73
Other interest income	218		—		218
Total interest income	4,290		—		4,290
Interest expense	1,113		—		1,113
Net interest income	3,177		—		3,177
Provision for credit losses	1,305		—		1,305
Other income	586		115		701
Other expense	1,359		45		1,404
Income before income taxes	$	1,099	$	70	$	1,169
For the Three Months Ended June 30, 2022
Interest income
Credit card loans	$	2,424	$	—	$	2,424
Private student loans	196		—		196
Personal loans	206		—		206
Other loans	37		—		37
Other interest income	52		—		52
Total interest income	2,915		—		2,915
Interest expense	305		—		305
Net interest income	2,610		—		2,610
Provision for credit losses	549		—		549
Other income	546		57		603
Other expense	1,186		37		1,223
Income before income taxes	$	1,421	$	20	$	1,441

	Digital Banking		Payment Services		Total
For the Six Months Ended June 30, 2023
Interest income
Credit card loans	$	6,787	$	—	$	6,787
Private student loans	507		—		507
Personal loans	526		—		526
Other loans	137		—		137
Other interest income	410		—		410
Total interest income	8,367		—		8,367
Interest expense	2,058		—		2,058
Net interest income	6,309		—		6,309
Provision for credit losses	2,407		—		2,407
Other income	1,108		203		1,311
Other expense	2,701		86		2,787
Income before income taxes	$	2,309	$	117	$	2,426
For the Six Months Ended June 30, 2022
Interest income
Credit card loans	$	4,692	$	—	$	4,692
Private student loans	386		—		386
Personal loans	412		—		412
Other loans	69		—		69
Other interest income	92		—		92
Total interest income	5,651		—		5,651
Interest expense	562		—		562
Net interest income	5,089		—		5,089
Provision for credit losses	703		—		703
Other income (loss)	1,021		(6)		1,015
Other expense	2,278		75		2,353
Income (loss) before income taxes	$	3,129	$	(81)	$	3,048

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Revenue from Contracts with Customers (Tables)

6 Months Ended

Jun. 30, 2023

Revenue from Contract with Customer [Abstract]

Schedule of Revenue from Contracts with Customers Disaggregated by Business Segment

The following table presents revenue from contracts with customers disaggregated by business segment and reconciles revenue from contracts with customers to total other income (dollars in millions):

	Digital Banking		Payment Services		Total
For the Three Months Ended June 30, 2023
Other income subject to ASC 606
Discount and interchange revenue, net(1)	$	349	$	21	$	370
Protection products revenue	44		—		44
Transaction processing revenue	—		72		72
Other income	7		21		28
Total other income subject to ASC 606(2)	400		114		514
Other income not subject to ASC 606
Loan fee income	186		—		186
Gains on equity investments	—		1		1
Total other income not subject to ASC 606	186		1		187
Total other income by operating segment	$	586	$	115	$	701
For the Three Months Ended June 30, 2022
Other income subject to ASC 606
Discount and interchange revenue, net(1)	$	359	$	20	$	379
Protection products revenue	42		—		42
Transaction processing revenue	—		61		61
Other income	3		18		21
Total other income subject to ASC 606(2)	404		99		503
Other income not subject to ASC 606
Loan fee income	142		—		142
Gains (losses) on equity investments	—		(42)		(42)
Total other income (loss) not subject to ASC 606	142		(42)		100
Total other income by operating segment	$	546	$	57	$	603

	Digital Banking		Payment Services		Total
For the Six Months Ended June 30, 2023
Other income subject to ASC 606
Discount and interchange revenue, net(1)	$	659	$	41	$	700
Protection products revenue	87		—		87
Transaction processing revenue	—		139		139
Other income	10		40		50
Total other income subject to ASC 606(2)	$	756	$	220	$	976
Other income not subject to ASC 606
Loan fee income	352		—		352
Gains (losses) on equity investments	—		(17)		(17)
Total other income (loss) not subject to ASC 606	352		(17)		335
Total other income by operating segment	$	1,108	$	203	$	1,311
For the Six Months Ended June 30, 2022
Other income subject to ASC 606
Discount and interchange revenue, net(1)	$	646	$	42	$	688
Protection products revenue	86		—		86
Transaction processing revenue	—		118		118
Other income	6		39		45
Total other income subject to ASC 606(2)	738		199		937
Other income not subject to ASC 606
Loan fee income	282		—		282
Gains (losses) on equity investments	1		(205)		(204)
Total other income (loss) not subject to ASC 606	283		(205)		78
Total other income (loss) by operating segment	$	1,021	$	(6)	$	1,015

(1)Net of rewards, including Cashback Bonus rewards, of $788 million and $743 million for the three months ended June 30, 2023 and 2022, respectively, and $1.5 billion and $1.4 billion for the six months ended June 30, 2023 and 2022. respectively.

(2)Excludes $3 million and $10 million of deposit product fees that are reported within net interest income for the three and six months ended June 30, 2023, respectively. Deposit product fees were immaterial for the three and six months ended June 30, 2022.

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Immaterial Restatement of Prior Period Items (Tables)

6 Months Ended

Jun. 30, 2023

Prior Period Adjustment [Abstract]

Schedule of Error Corrections and Prior Period Adjustments

The prior period impacts to the Company's consolidated statement of financial condition were as shown below (dollars in millions):

	March 31, 2023						December 31, 2022
	As Previously Reported		Restatement Impacts		As Restated		As Previously Reported		Restatement Impacts		As Restated
Assets
Other Assets	$	4,381	$	80	$	4,461	$	4,519	$	78	$	4,597
Total Assets	$	133,061	$	80	$	133,141	$	131,628	$	78	$	131,706
Liabilities and Stockholders' Equity
Liabilities
Accrued Expenses and other liabilities	$	4,843	$	335	$	5,178	$	5,294	$	324	$	5,618
Total Liabilities	$	118,746	$	335	$	119,081	$	117,038	$	324	$	117,362
Stockholders' Equity
Retained Earnings	$	29,292	$	(255)	$	29,037	$	28,453	$	(246)	$	28,207
Total Stockholders' Equity	$	14,315	$	(255)	$	14,060	$	14,590	$	(246)	$	14,344
Total Liabilities and Stockholders' Equity	$	133,061	$	80	$	133,141	$	131,628	$	78	$	131,706

The prior period impacts to the Company's consolidated statements of income and the related impacts to the consolidated statements of comprehensive income were as shown below (dollars in millions):

	For the Three Months Ended March 31, 2023
	As Previously Reported		Restatement Impacts		As Restated
Other income
Discount and interchange revenue, net	$	341	$	(11)	$	330
Total other income	$	621	$	(11)	$	610
Income before income taxes	$	1,268	$	(11)	$	1,257
Income tax expense	$	292	$	(3)	$	289
Net Income	$	976	$	(8)	$	968
Net income allocated to common stockholders	$	939	$	(8)	$	931
Basic earnings per common share	$	3.58	$	(0.03)	$	3.55
Diluted earnings per common share	$	3.58	$	(0.03)	$	3.55

	For the Three Months Ended June 30, 2022						For the Six Months Ended June 30, 2022
	As Previously Reported		Restatement Impacts		As Restated		As Previously Reported		Restatement Impacts		As Restated
Other income
Discount and interchange revenue, net	$	390	$	(11)	$	379	$	710	$	(22)	$	688
Total other income	$	614	$	(11)	$	603	$	1,037	$	(22)	$	1,015
Income before income taxes	$	1,452	$	(11)	$	1,441	$	3,070	$	(22)	$	3,048
Income tax expense	$	341	$	(3)	$	338	$	717	$	(5)	$	712
Net Income	$	1,111	$	(8)	$	1,103	$	2,353	$	(17)	$	2,336
Net income allocated to common stockholders	$	1,105	$	(8)	$	1,097	$	2,309	$	(16)	$	2,293
Basic earnings per common share	$	3.96	$	(0.03)	$	3.93	$	8.19	$	(0.06)	$	8.13
Diluted earnings per common share	$	3.96	$	(0.03)	$	3.93	$	8.18	$	(0.06)	$	8.12

The prior period impacts to the Company's consolidated statements of changes in stockholders' equity were as shown below (dollars in millions):

	Retained Earnings		Total Stockholders' Equity
As Previously Reported
For the Three Months Ended June 30, 2022
Balance at March 31, 2022	$	25,833	$	13,433
Net Income	$	1,111	$	1,111
Balance at June 30, 2022	$	26,776	$	13,764
Restatement Impacts
For the Three Months Ended June 30, 2022
Balance at March 31, 2022	$	(237)	$	(237)
Net Income	$	(8)	$	(8)
Balance at June 30, 2022	$	(245)	$	(245)
As Restated
For the Three Months Ended June 30, 2022
Balance at March 31, 2022	$	25,596	$	13,196
Net Income	$	1,103	$	1,103
Balance at June 30, 2022	$	26,531	$	13,519
	Retained Earnings		Total Stockholders' Equity
As Previously Reported
For the Six Months Ended June 30, 2022
Balance at December 31, 2021	$	24,766	$	13,408
Net Income	$	2,353	$	2,353
Balance at June 30, 2022	$	26,776	$	13,764
Restatement Impacts
For the Six Months Ended June 30, 2022
Balance at December 31, 2021	$	(228)	$	(228)
Net Income	$	(17)	$	(17)
Balance at June 30, 2022	$	(245)	$	(245)
As Restated
For the Six Months Ended June 30, 2022
Balance at December 31, 2021	$	24,538	$	13,180
Net Income	$	2,336	$	2,336
Balance at June 30, 2022	$	26,531	$	13,519

The prior period impacts to the Company's consolidated statements of cash flows were as follows (dollars in millions):

	For the Three Months Ended March 31, 2023						For the Six Months Ended June 30, 2022
	As Previously Reported		Restatement Impacts		As Restated		As Previously Reported		Restatement Impacts		As Restated
Cash flows provided by operating activities
Net Income	$	976	$	(8)	$	968	$	2,353	$	(17)	$	2,336
Adjustments to reconcile net income to net cash provided by operating activities:
Deferred income taxes	$	(112)	$	(3)	$	(115)	$	(140)	$	(5)	$	(145)
Changes in assets and liabilities:
(Decrease) increase in accrued expenses and liabilities	$	(387)	$	11	$	(376)	$	301	$	22	$	323
Net cash provided by operating activities	$	1,791	$	—	$	1,791	$	3,346	$	—	$	3,346

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Background and Basis of Presentation (Narrative) (Details)	6 Months Ended
	Jun. 30, 2023 segment
Organization, Consolidation and Presentation of Financial Statements [Abstract]
Number of reportable segments (in number of segments)	2

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Investments (Narrative) (Details) - USD ($) $ in Millions	3 Months Ended		6 Months Ended
	Jun. 30, 2023	Jun. 30, 2022	Jun. 30, 2023	Jun. 30, 2022	Dec. 31, 2022
Summary of Investment Holdings [Line Items]
Proceeds from the sale of available-for-sale securities	$ 0	$ 0	$ 0	$ 0
Debt Securities, Available-for-Sale, Gain (Loss)	0	0	0	0
Contingent liabilities related to equity method investments	0		0		$ 0
Losses on equity investments	(1)	42	17	204
Other Investments in Payment Service Entities with Actively Traded Stocks
Summary of Investment Holdings [Line Items]
Losses on equity investments		$ 42		$ 207
Other Assets [Member] | Payment Services [Member]
Summary of Investment Holdings [Line Items]
Equity securities without readily determinable fair value	34		34		39
Fair value of payment services equity investments with readily determinable fair values	33		33		41
Other Assets [Member] | Community Reinvestment Act [Member]
Summary of Investment Holdings [Line Items]
Equity method investments	411		411		416
Affordable housing project equity method investments	377		377		375
Other Liabilities [Member] | Community Reinvestment Act [Member]
Summary of Investment Holdings [Line Items]
Contingent liabilities related to equity method investments	103		103		111
Contingent liabilities related to affordable housing project equity method investments	$ 96		$ 96		$ 100

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Investments (Schedule of Investment Securities) (Details) - USD ($) $ in Millions		Jun. 30, 2023	Dec. 31, 2022
Summary of Investment Holdings [Line Items]
Investment securities		$ 13,466	$ 12,208
US Treasury and Government
Summary of Investment Holdings [Line Items]
Investment securities	[1],[2]	12,714	11,423
Residential Mortgage-Backed Securities - Agency [Member]
Summary of Investment Holdings [Line Items]
Investment securities	[1]	752	785
U.S. Treasury Securities [Member]
Summary of Investment Holdings [Line Items]
Derivative collateral		$ 292	$ 97

[1] Consists of securities issued by Fannie Mae, Freddie Mac, or Ginnie Mae.

[2] Includes $292 million and $97 million of U.S. Treasury securities pledged as swap collateral as of June 30, 2023 and December 31, 2022, respectively.(2)Consists of a security issued by the Federal Home Loan Bank.

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Investments (Schedule of Amortized Cost, Gross Unrealized Gains, Gross Unrealized Losses and Fair Value) (Details) - USD ($) $ in Millions		Jun. 30, 2023		Dec. 31, 2022
Summary of Investment Holdings [Line Items]
Available-for-sale investment securities, amortized cost	[1]	$ 13,478		$ 12,167
Available-for-sale investment securities, gross unrealized gains	[1]	5		21
Available-for-sale investment securities, gross unrealized losses	[1]	(262)		(201)
Available-for-sale investment securities, fair value	[1]	13,221		11,987
Held-to-maturity investment securities, amortized cost	[2]	245		221
Held-to-maturity investment securities, gross unrealized gains	[2]	0		0
Held-to-maturity investment securities, gross unrealized losses	[2]	(21)		(22)
Held-to-maturity investment securities, fair value	[2]	224		199
US Treasury and Government
Summary of Investment Holdings [Line Items]
Available-for-sale investment securities, amortized cost	[1]	12,947		11,580
Available-for-sale investment securities, gross unrealized gains	[1]	5		21
Available-for-sale investment securities, gross unrealized losses	[1]	(238)		(178)
Available-for-sale investment securities, fair value	[1]	12,714		11,423
Residential Mortgage-Backed Securities - Agency [Member]
Summary of Investment Holdings [Line Items]
Available-for-sale investment securities, amortized cost	[1]	531	[3]	587
Available-for-sale investment securities, gross unrealized gains	[1]	0		0
Available-for-sale investment securities, gross unrealized losses	[1]	(24)		(23)
Available-for-sale investment securities, fair value	[1]	507	[3]	564
Held-to-maturity investment securities, amortized cost	[2],[4]	245	[3]	221
Held-to-maturity investment securities, gross unrealized gains	[2],[4]	0		0
Held-to-maturity investment securities, gross unrealized losses	[2],[4]	(21)		(22)
Held-to-maturity investment securities, fair value	[2],[4]	$ 224	[3]	$ 199

[1] Available-for-sale investment securities are reported at fair value.

[2] Held-to-maturity investment securities are reported at amortized cost.

[3] Maturities of RMBS are reflective of the contractual maturities of the investment.

[4] Amounts represent residential mortgage-backed securities ("RMBS") that were classified as held-to-maturity as they were entered into as a part of the Company's community reinvestment initiatives.

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Investments (Schedule of Fair Value of Securities in a Continuous Unrealized Loss Position for Less Than 12 Months and More Than 12 Months) (Details) $ in Millions	Jun. 30, 2023 USD ($) securities	Dec. 31, 2022 USD ($) securities
US Treasury and Government
Summary of Investment Holdings [Line Items]
Available-for-sale investment securities, continuous unrealized loss position, number of securities | securities	183	123
Available-for-sale investment securities, continuous unrealized loss position, less than 12 months, fair value	$ 8,357	$ 9,060
Available-for-sale securities, continuous unrealized loss position, less than 12 months, accumulated loss	(133)	(175)
Debt securities, available-for-sale, continuous unrealized loss position, 12 months or longer, fair value	3,288	106
Available-for-sale investment securities, continuous unrealized loss position, more than 12 months, unrealized losses	$ (105)	$ (3)
Residential Mortgage-Backed Securities - Agency [Member]
Summary of Investment Holdings [Line Items]
Available-for-sale investment securities, continuous unrealized loss position, number of securities | securities	32	34
Available-for-sale investment securities, continuous unrealized loss position, less than 12 months, fair value	$ 415	$ 559
Available-for-sale securities, continuous unrealized loss position, less than 12 months, accumulated loss	(19)	(22)
Debt securities, available-for-sale, continuous unrealized loss position, 12 months or longer, fair value	92	5
Available-for-sale investment securities, continuous unrealized loss position, more than 12 months, unrealized losses	$ (5)	$ (1)

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Investments (Schedule of Maturities of Available-for-Sale Debt Securities and Held-to-Maturity Debt Securities) (Details) - USD ($) $ in Millions		Jun. 30, 2023		Dec. 31, 2022
Summary of Investment Holdings [Line Items]
Available-for-sale investment securities, debt maturities, one year or less, amortized cost		$ 1,877
Available-for-sale investment securities, debt maturities, after one year through five years, amortized cost		10,815
Available-for-sale investment securities, debt maturities, after five years through ten years, amortized cost		376
Available-for-sale investment securities, debt maturities, after ten years, amortized cost		410
Available-for-sale investment securities, amortized cost	[1]	13,478		$ 12,167
Held-to-maturity investment securities, debt maturities, one year or less, amortized cost		0
Held-to-maturity investment securities, debt maturities, after one year through five years, amortized cost		0
Held-to-maturity investment securities, debt maturities, after five years through ten years, amortized cost		0
Held-to-maturity investment securities, debt maturities, after ten years, amortized cost		245
Held-to-maturity investment securities, amortized cost	[2]	245		221
Available-for-sale investment securities, debt maturities, one year or less, fair value		1,846
Available-for-sale investment securities, debt maturities, after one year through five years, fair value		10,613
Available-for-sale investment securities, debt maturities, after five years through ten years, fair value		370
Available-for-sale investment securities, debt maturities, after ten years, fair value		392
Available-for-sale investment securities, fair value	[1]	13,221		11,987
Held-to-maturity investment securities, debt maturities, one year or less, fair value		0
Held-to-maturity investment securities, debt maturities, after one year through five years, fair value		0
Held-to-maturity investment securities, debt maturities, after five years through ten years, fair value		0
Held-to-maturity investment securities, debt maturities, after ten years, fair value		224
Held-to-maturity investment securities, fair value	[2]	224		199
US Treasury and Government
Summary of Investment Holdings [Line Items]
Available-for-sale investment securities, debt maturities, one year or less, amortized cost		1,875
Available-for-sale investment securities, debt maturities, after one year through five years, amortized cost		10,737
Available-for-sale investment securities, debt maturities, after five years through ten years, amortized cost		335
Available-for-sale investment securities, debt maturities, after ten years, amortized cost		0
Available-for-sale investment securities, amortized cost	[1]	12,947		11,580
Available-for-sale investment securities, debt maturities, one year or less, fair value		1,844
Available-for-sale investment securities, debt maturities, after one year through five years, fair value		10,539
Available-for-sale investment securities, debt maturities, after five years through ten years, fair value		331
Available-for-sale investment securities, debt maturities, after ten years, fair value		0
Available-for-sale investment securities, fair value	[1]	12,714		11,423
Residential Mortgage-Backed Securities - Agency [Member]
Summary of Investment Holdings [Line Items]
Available-for-sale investment securities, debt maturities, one year or less, amortized cost	[3]	2
Available-for-sale investment securities, debt maturities, after one year through five years, amortized cost	[3]	78
Available-for-sale investment securities, debt maturities, after five years through ten years, amortized cost	[3]	41
Available-for-sale investment securities, debt maturities, after ten years, amortized cost	[3]	410
Available-for-sale investment securities, amortized cost	[1]	531	[3]	587
Held-to-maturity investment securities, debt maturities, one year or less, amortized cost	[3]	0
Held-to-maturity investment securities, debt maturities, after one year through five years, amortized cost	[3]	0
Held-to-maturity investment securities, debt maturities, after five years through ten years, amortized cost	[3]	0
Held-to-maturity investment securities, debt maturities, after ten years, amortized cost	[3]	245
Held-to-maturity investment securities, amortized cost	[2],[4]	245	[3]	221
Available-for-sale investment securities, debt maturities, one year or less, fair value	[3]	2
Available-for-sale investment securities, debt maturities, after one year through five years, fair value	[3]	74
Available-for-sale investment securities, debt maturities, after five years through ten years, fair value	[3]	39
Available-for-sale investment securities, debt maturities, after ten years, fair value	[3]	392
Available-for-sale investment securities, fair value	[1]	507	[3]	564
Held-to-maturity investment securities, debt maturities, one year or less, fair value	[3]	0
Held-to-maturity investment securities, debt maturities, after one year through five years, fair value	[3]	0
Held-to-maturity investment securities, debt maturities, after five years through ten years, fair value	[3]	0
Held-to-maturity investment securities, debt maturities, after ten years, fair value	[3]	224
Held-to-maturity investment securities, fair value	[2],[4]	$ 224	[3]	$ 199

[1] Available-for-sale investment securities are reported at fair value.

[2] Held-to-maturity investment securities are reported at amortized cost.

[3] Maturities of RMBS are reflective of the contractual maturities of the investment.

[4] Amounts represent residential mortgage-backed securities ("RMBS") that were classified as held-to-maturity as they were entered into as a part of the Company's community reinvestment initiatives.

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Loan Receivables (Narrative) (Details) $ in Millions	3 Months Ended							6 Months Ended
	Jun. 30, 2023 USD ($)	Mar. 31, 2023 USD ($)	Dec. 31, 2022 USD ($)	Sep. 30, 2022	Jun. 30, 2022 USD ($)		Mar. 31, 2022 USD ($)	Jun. 30, 2023 USD ($) segment	Jun. 30, 2022 USD ($)	Dec. 31, 2021 USD ($)
Accounts, Notes, Loans and Financing Receivable [Line Items]
Number of loan portfolio segments (in segments) | segment								2
Allowance for credit losses	$ 8,064	$ 7,691	$ 7,374		$ 6,757		$ 6,647	$ 8,064	$ 6,757	$ 6,822
Allowance for credit losses, period increase (decrease)	$ 373							$ 690
Expected EOY Unemployment Rate	4.00%							4.00%
Expected Future Peak Unemployment Rate	4.30%							4.30%
Expected EY Annualized Increase in GDP	1.56%							1.56%
Reasonable and supportable forecast period	18 months	18 months	18 months	18 months	18 months		18 months
Reversion period								12 months	12 months
Percentage of defaulted loans that were charged off at the end of the month in which they defaulted (in percent)					62.00%				63.00%
Minimum [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Delinquent Loan Qualification Period								30 days
Personal Loans [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Temporary Reduced Payment Program, Maximum Period of Payment Reduction								12 months
Maximum repayment term for permanent modification programs (in years)								9 years
Credit Card Loans [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Allowance for credit losses	$ 6,525	$ 6,135	$ 5,883		$ 5,307		$ 5,120	$ 6,525	$ 5,307	5,273
Temporary Reduced Payment Program, Maximum Period of Payment Reduction								12 months
Permanent workout program maturity (in months)								72 months
TDRs that subsequently defaulted, aggregated outstanding balances upon default	73				28	[1],[2]		$ 84	51
Interest and fees forgiven due to loan modification program	35				6			47	13
Total Other Loans [Member] | Private Student Loans [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Allowance for credit losses	849	872	839		832		870	849	832	843
TDRs that subsequently defaulted, aggregated outstanding balances upon default					3	[3]			5
Total Other Loans [Member] | Personal Loans [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Allowance for credit losses	$ 622	$ 622	$ 595		572		$ 613	$ 622	572	$ 662
TDRs that subsequently defaulted, aggregated outstanding balances upon default					$ 4	[1]			$ 7

[1] For credit card loans and personal loans, a customer defaults from a loan modification program after either two consecutive missed payments or at charge-off, depending on the program. The outstanding balance upon default is generally the loan balance at the end of the month prior to default.

[2] For credit card loans that default from a temporary loan modification program, accounts revert back to the pre-modification terms and charging privileges remain suspended in most cases.

[3] For student loans, a customer defaults from a loan modification after they are 60 or more days delinquent. The outstanding balance upon default is generally the loan balance at the end of the month prior to default.

XML

Loan Receivables (Schedule of Loan Receivables) (Details) - USD ($) $ in Millions		Jun. 30, 2023	Mar. 31, 2023	Dec. 31, 2022	Jun. 30, 2022	Mar. 31, 2022	Dec. 31, 2021
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loan receivables		$ 117,906		$ 112,120
Allowance for credit losses		(8,064)	$ (7,691)	(7,374)	$ (6,757)	$ (6,647)	$ (6,822)
Net loan receivables		109,842		104,746
Variable Interest Entity, Primary Beneficiary [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loan receivables		25,165		25,937
Allowance for credit losses		(1,109)		(1,152)
Credit Card Securitization Trusts [Member] | Variable Interest Entity, Primary Beneficiary [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loan receivables	[1]	25,004		25,761
Allowance for credit losses	[1]	(1,109)		(1,152)
Net loan receivables		23,895		24,609
Seller's interest		10,732		12,220
Credit Card Loans [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loan receivables	[2],[3]	93,955		90,113
Allowance for credit losses		(6,525)	(6,135)	(5,883)	(5,307)	(5,120)	(5,273)
Accrued interest receivable		622		611
Credit Card Loans [Member] | Credit Card Securitization Trusts [Member] | Variable Interest Entity, Primary Beneficiary [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Investors' interest		14,300		13,500
Seller's interest		10,700		12,200
Total Other Loans [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loan receivables	[4]	23,951		22,007
Total Other Loans [Member] | Private Student Loans [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loan receivables	[4],[5]	10,241		10,308
Allowance for credit losses		(849)	(872)	(839)	(832)	(870)	(843)
Accrued interest receivable		515		468
Private student loans in repayment		6,000
Total Other Loans [Member] | Personal Loans [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loan receivables	[4]	9,106		7,998
Allowance for credit losses		(622)	(622)	(595)	(572)	(613)	(662)
Accrued interest receivable		56		49
Total Other Loans [Member] | Other Loans [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loan receivables	[4]	4,604		3,701
Allowance for credit losses		(68)	$ (62)	(57)	$ (46)	$ (44)	$ (44)
Accrued interest receivable		$ 15		$ 11

[1] The Company maintains its allowance for credit losses at an amount equal to lifetime expected credit losses associated with all loan receivables, which includes all loan receivables in the trusts. Therefore, the credit risk associated with the transferred receivables is fully reflected on the Company's statements of financial condition in accordance with GAAP.

[2] Amounts include carrying values of $14.3 billion and $13.5 billion underlying investors' interest in trust debt at June 30, 2023 and December 31, 2022, respectively, and $10.7 billion and $12.2 billion in seller's interest at June 30, 2023 and December 31, 2022, respectively. See Note 4: Credit Card and Private Student Loan Securitization Activities for additional information.

[3] Unbilled accrued interest receivable on credit card loans, which is presented as part of other assets in the Company's condensed consolidated statements of financial condition, was $622 million and $611 million at June 30, 2023 and December 31, 2022, respectively.

[4] Accrued interest receivable on private student, personal and other loans, which is presented as part of other assets in the Company's condensed consolidated statements of financial condition, was $515 million, $56 million and $15 million, respectively, at June 30, 2023 and $468 million, $49 million and $11 million, respectively, at December 31, 2022.

[5] .

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Loan Receivables (Schedule of Credit Risk Profile by FICO Score and Origination Year) (Details) - USD ($) $ in Millions		Jun. 30, 2023	Dec. 31, 2022
Financing Receivable, Credit Quality Indicator [Line Items]
Loan receivables		$ 117,906	$ 112,120
Credit Card Loans [Member]
Financing Receivable, Credit Quality Indicator [Line Items]
Loan receivables	[1],[2]	93,955	90,113
Credit Card Loans [Member] | FICO Score, 660 and Above [Member]
Financing Receivable, Credit Quality Indicator [Line Items]
Loan receivables, credit card		$ 76,591	$ 73,827
FICO distribution %, credit card		82.00%	82.00%
Credit Card Loans [Member] | FICO Score, Less Than 660 Or No Score [Member]
Financing Receivable, Credit Quality Indicator [Line Items]
Loan receivables, credit card		$ 17,364	$ 16,286
FICO distribution %, credit card		18.00%	18.00%
Total Other Loans [Member]
Financing Receivable, Credit Quality Indicator [Line Items]
Loan receivables	[3]	$ 23,951	$ 22,007
Total Other Loans [Member] | Private Student Loans [Member]
Financing Receivable, Credit Quality Indicator [Line Items]
Loan receivables	[3],[4]	10,241	10,308
Total Other Loans [Member] | Private Student Loans [Member] | FICO Score, 660 and Above [Member]
Financing Receivable, Credit Quality Indicator [Line Items]
Loan receivables, originated in 2023	[5],[6]	$ 259
FICO distribution %, originated in 2023	[5],[6]	96.00%
Loan receivables, originated in 2022	[5],[6]	$ 1,563	$ 1,172
FICO distribution %, originated in 2022	[5],[6]	95.00%	94.00%
Loan receivables, originated in 2021	[5],[6]	$ 1,573	$ 1,668
FICO distribution %, originated in 2021	[5],[6]	95.00%	95.00%
Loan receivables, originated in 2020	[5],[6]	$ 1,266	$ 1,365
FICO distribution %, originated in 2020	[5],[6]	95.00%	95.00%
Loan receivables, originated in 2019	[5],[6]	$ 1,121	$ 1,221
FICO distribution %, originated in 2019	[5],[6]	94.00%	95.00%
Loan receivables, originated prior to 2019	[5],[6]	$ 3,880	$ 4,306
FICO distribution %, originated prior to 2019	[5],[6]	94.00%	94.00%
Loan receivables	[5],[6]	$ 9,662	$ 9,732
FICO distribution %, loan receivables	[5],[6]	94.00%	94.00%
Total Other Loans [Member] | Private Student Loans [Member] | FICO Score, Less Than 660 Or No Score [Member]
Financing Receivable, Credit Quality Indicator [Line Items]
Loan receivables, originated in 2023	[5],[6]	$ 12
FICO distribution %, originated in 2023	[5],[6]	4.00%
Loan receivables, originated in 2022	[5],[6]	$ 87	$ 77
FICO distribution %, originated in 2022	[5],[6]	5.00%	6.00%
Loan receivables, originated in 2021	[5],[6]	$ 83	$ 81
FICO distribution %, originated in 2021	[5],[6]	5.00%	5.00%
Loan receivables, originated in 2020	[5],[6]	$ 66	$ 65
FICO distribution %, originated in 2020	[5],[6]	5.00%	5.00%
Loan receivables, originated in 2019	[5],[6]	$ 68	$ 67
FICO distribution %, originated in 2019	[5],[6]	6.00%	5.00%
Loan receivables, originated prior to 2019	[5],[6]	$ 263	$ 286
FICO distribution %, originated prior to 2019	[5],[6]	6.00%	6.00%
Loan receivables	[5],[6]	$ 579	$ 576
FICO distribution %, loan receivables	[5],[6]	6.00%	6.00%
Total Other Loans [Member] | Personal Loans [Member]
Financing Receivable, Credit Quality Indicator [Line Items]
Loan receivables	[3]	$ 9,106	$ 7,998
Total Other Loans [Member] | Personal Loans [Member] | FICO Score, 660 and Above [Member]
Financing Receivable, Credit Quality Indicator [Line Items]
Loan receivables, originated in 2023		$ 2,927
FICO distribution %, originated in 2023		99.00%
Loan receivables, originated in 2022		$ 3,408	$ 4,270
FICO distribution %, originated in 2022		96.00%	98.00%
Loan receivables, originated in 2021		$ 1,464	$ 1,958
FICO distribution %, originated in 2021		94.00%	96.00%
Loan receivables, originated in 2020		$ 537	$ 790
FICO distribution %, originated in 2020		94.00%	95.00%
Loan receivables, originated in 2019		$ 281	$ 444
FICO distribution %, originated in 2019		91.00%	92.00%
Loan receivables, originated prior to 2019		$ 141	$ 249
FICO distribution %, originated prior to 2019		82.00%	86.00%
Loan receivables		$ 8,758	$ 7,711
FICO distribution %, loan receivables		96.00%	96.00%
Total Other Loans [Member] | Personal Loans [Member] | FICO Score, Less Than 660 Or No Score [Member]
Financing Receivable, Credit Quality Indicator [Line Items]
Loan receivables, originated in 2023		$ 20
FICO distribution %, originated in 2023		1.00%
Loan receivables, originated in 2022		$ 143	$ 77
FICO distribution %, originated in 2022		4.00%	2.00%
Loan receivables, originated in 2021		$ 93	$ 91
FICO distribution %, originated in 2021		6.00%	4.00%
Loan receivables, originated in 2020		$ 34	$ 40
FICO distribution %, originated in 2020		6.00%	5.00%
Loan receivables, originated in 2019		$ 28	$ 38
FICO distribution %, originated in 2019		9.00%	8.00%
Loan receivables, originated prior to 2019		$ 30	$ 41
FICO distribution %, originated prior to 2019		18.00%	14.00%
Loan receivables		$ 348	$ 287
FICO distribution %, loan receivables		4.00%	4.00%

[1] Amounts include carrying values of $14.3 billion and $13.5 billion underlying investors' interest in trust debt at June 30, 2023 and December 31, 2022, respectively, and $10.7 billion and $12.2 billion in seller's interest at June 30, 2023 and December 31, 2022, respectively. See Note 4: Credit Card and Private Student Loan Securitization Activities for additional information.

[2] Unbilled accrued interest receivable on credit card loans, which is presented as part of other assets in the Company's condensed consolidated statements of financial condition, was $622 million and $611 million at June 30, 2023 and December 31, 2022, respectively.

[3] Accrued interest receivable on private student, personal and other loans, which is presented as part of other assets in the Company's condensed consolidated statements of financial condition, was $515 million, $56 million and $15 million, respectively, at June 30, 2023 and $468 million, $49 million and $11 million, respectively, at December 31, 2022.

[4] .

[5] A majority of private student loan originations occur in the third quarter and disbursements can span multiple calendar years.

[6] FICO score represents the higher credit score of the cosigner or borrower.

XML

Loan Receivables (Schedule of Delinquent Loans by Origination Year) (Details) - USD ($) $ in Millions		Jun. 30, 2023	Dec. 31, 2022
Financing Receivable, Credit Quality Indicator [Line Items]
Loan receivables		$ 117,906	$ 112,120
Credit Card Loans [Member]
Financing Receivable, Credit Quality Indicator [Line Items]
Loan receivables	[1],[2]	93,955	90,113
Total Other Loans [Member]
Financing Receivable, Credit Quality Indicator [Line Items]
Loan receivables	[3]	23,951	22,007
Total Other Loans [Member] | Private Student Loans [Member]
Financing Receivable, Credit Quality Indicator [Line Items]
Loan receivables	[3],[4]	10,241	10,308
Total Other Loans [Member] | Personal Loans [Member]
Financing Receivable, Credit Quality Indicator [Line Items]
Loan receivables	[3]	9,106	7,998
30-89 Days Delinquent [Member]
Financing Receivable, Credit Quality Indicator [Line Items]
Loan receivables		1,666	1,477
30-89 Days Delinquent [Member] | Credit Card Loans [Member]
Financing Receivable, Credit Quality Indicator [Line Items]
Loan receivables, credit card		1,420	1,250
30-89 Days Delinquent [Member] | Total Other Loans [Member]
Financing Receivable, Credit Quality Indicator [Line Items]
Loan receivables		246	227
30-89 Days Delinquent [Member] | Total Other Loans [Member] | Private Student Loans [Member]
Financing Receivable, Credit Quality Indicator [Line Items]
Loan receivables, originated in 2023	[5]	0
Loan receivables, originated in 2022	[5]	2	0
Loan receivables, originated in 2021	[5]	11	6
Loan receivables, originated in 2020	[5]	16	14
Loan receivables, originated in 2019	[5]	19	19
Loan receivables, originated prior to 2019	[5]	115	128
Loan receivables	[5]	163	167
30-89 Days Delinquent [Member] | Total Other Loans [Member] | Personal Loans [Member]
Financing Receivable, Credit Quality Indicator [Line Items]
Loan receivables, originated in 2023		4
Loan receivables, originated in 2022		30	12
Loan receivables, originated in 2021		17	15
Loan receivables, originated in 2020		7	8
Loan receivables, originated in 2019		5	6
Loan receivables, originated prior to 2019		4	6
Loan receivables		67	47
90 or More Days Delinquent [Member]
Financing Receivable, Credit Quality Indicator [Line Items]
Loan receivables		1,361	1,101
90 or More Days Delinquent [Member] | Credit Card Loans [Member]
Financing Receivable, Credit Quality Indicator [Line Items]
Loan receivables, credit card		1,269	1,028
90 or More Days Delinquent [Member] | Total Other Loans [Member]
Financing Receivable, Credit Quality Indicator [Line Items]
Loan receivables		92	73
90 or More Days Delinquent [Member] | Total Other Loans [Member] | Private Student Loans [Member]
Financing Receivable, Credit Quality Indicator [Line Items]
Loan receivables, originated in 2023	[5]	0
Loan receivables, originated in 2022	[5]	1	0
Loan receivables, originated in 2021	[5]	4	1
Loan receivables, originated in 2020	[5]	5	3
Loan receivables, originated in 2019	[5]	6	5
Loan receivables, originated prior to 2019	[5]	39	36
Loan receivables	[5]	55	45
90 or More Days Delinquent [Member] | Total Other Loans [Member] | Personal Loans [Member]
Financing Receivable, Credit Quality Indicator [Line Items]
Loan receivables, originated in 2023		1
Loan receivables, originated in 2022		10	3
Loan receivables, originated in 2021		6	6
Loan receivables, originated in 2020		2	2
Loan receivables, originated in 2019		2	2
Loan receivables, originated prior to 2019		3	3
Loan receivables		24	16
Total Past Due [Member]
Financing Receivable, Credit Quality Indicator [Line Items]
Loan receivables		3,027	2,578
Total Past Due [Member] | Credit Card Loans [Member]
Financing Receivable, Credit Quality Indicator [Line Items]
Loan receivables, credit card		2,689	2,278
Total Past Due [Member] | Total Other Loans [Member]
Financing Receivable, Credit Quality Indicator [Line Items]
Loan receivables		338	300
Total Past Due [Member] | Total Other Loans [Member] | Private Student Loans [Member]
Financing Receivable, Credit Quality Indicator [Line Items]
Loan receivables, originated in 2023	[5]	0
Loan receivables, originated in 2022	[5]	3	0
Loan receivables, originated in 2021	[5]	15	7
Loan receivables, originated in 2020	[5]	21	17
Loan receivables, originated in 2019	[5]	25	24
Loan receivables, originated prior to 2019	[5]	154	164
Loan receivables	[5]	218	212
Total Past Due [Member] | Total Other Loans [Member] | Personal Loans [Member]
Financing Receivable, Credit Quality Indicator [Line Items]
Loan receivables, originated in 2023		5
Loan receivables, originated in 2022		40	15
Loan receivables, originated in 2021		23	21
Loan receivables, originated in 2020		9	10
Loan receivables, originated in 2019		7	8
Loan receivables, originated prior to 2019		7	9
Loan receivables		$ 91	$ 63

[1] Amounts include carrying values of $14.3 billion and $13.5 billion underlying investors' interest in trust debt at June 30, 2023 and December 31, 2022, respectively, and $10.7 billion and $12.2 billion in seller's interest at June 30, 2023 and December 31, 2022, respectively. See Note 4: Credit Card and Private Student Loan Securitization Activities for additional information.

[2] Unbilled accrued interest receivable on credit card loans, which is presented as part of other assets in the Company's condensed consolidated statements of financial condition, was $622 million and $611 million at June 30, 2023 and December 31, 2022, respectively.

[3] Accrued interest receivable on private student, personal and other loans, which is presented as part of other assets in the Company's condensed consolidated statements of financial condition, was $515 million, $56 million and $15 million, respectively, at June 30, 2023 and $468 million, $49 million and $11 million, respectively, at December 31, 2022.

[4] .

[5] Private student loans may include a deferment period, during which borrowers are not required to make payments while enrolled in school at least half time as determined by the school. During a deferment period, these loans do not advance into delinquency.

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Loan Receivables (Schedule of Changes in the Allowance for Credit Losses) (Details) - USD ($) $ in Millions	3 Months Ended		6 Months Ended
	Jun. 30, 2023	Jun. 30, 2022	Jun. 30, 2023	Jun. 30, 2022
Financing Receivable, Allowance for Credit Loss [Roll Forward]
Allowance for credit losses, balance at beginning of period	$ 7,691	$ 6,647	$ 7,374	$ 6,822
Provision for credit losses(1)	(1,297)	(539)	(2,432)	(732)
Charge-offs	(1,153)	(659)	(2,119)	(1,262)
Recoveries	229	230	445	465
Net charge-offs	(924)	(429)	(1,674)	(797)
Allowance for credit losses, balance at end of period	8,064	6,757	8,064	6,757
Off-Balance-Sheet, Credit Loss, Liability, Credit Loss Expense (Reversal)	(8)	(10)	25	29
Cumulative Effect, Period of Adoption, Adjustment | Accounting Standards Update 2022-02
Financing Receivable, Allowance for Credit Loss [Roll Forward]
Allowance for credit losses, balance at beginning of period			(68)
Allowance for credit losses, balance at end of period	0		0
Cumulative Effect, Period of Adoption, Adjusted Balance | Accounting Standards Update 2022-02
Financing Receivable, Allowance for Credit Loss [Roll Forward]
Allowance for credit losses, balance at beginning of period			7,306
Credit Card Loans [Member]
Financing Receivable, Allowance for Credit Loss [Roll Forward]
Allowance for credit losses, balance at beginning of period	6,135	5,120	5,883	5,273
Provision for credit losses(1)	(1,232)	(568)	(2,234)	(746)
Charge-offs	(1,051)	(587)	(1,930)	(1,128)
Recoveries	209	206	404	416
Net charge-offs	(842)	(381)	(1,526)	(712)
Allowance for credit losses, balance at end of period	6,525	5,307	6,525	5,307
Credit Card Loans [Member] | Cumulative Effect, Period of Adoption, Adjustment | Accounting Standards Update 2022-02
Financing Receivable, Allowance for Credit Loss [Roll Forward]
Allowance for credit losses, balance at beginning of period			(66)
Credit Card Loans [Member] | Cumulative Effect, Period of Adoption, Adjusted Balance | Accounting Standards Update 2022-02
Financing Receivable, Allowance for Credit Loss [Roll Forward]
Allowance for credit losses, balance at beginning of period			5,817
Total Other Loans [Member] | Private Student Loans [Member]
Financing Receivable, Allowance for Credit Loss [Roll Forward]
Allowance for credit losses, balance at beginning of period	872	870	839	843
Provision for credit losses(1)	(9)	11	(69)	(34)
Charge-offs	(38)	(33)	(71)	(57)
Recoveries	6	6	12	12
Net charge-offs	(32)	(27)	(59)	(45)
Allowance for credit losses, balance at end of period	849	832	849	832
Total Other Loans [Member] | Private Student Loans [Member] | Cumulative Effect, Period of Adoption, Adjustment | Accounting Standards Update 2022-02
Financing Receivable, Allowance for Credit Loss [Roll Forward]
Allowance for credit losses, balance at beginning of period			0
Total Other Loans [Member] | Private Student Loans [Member] | Cumulative Effect, Period of Adoption, Adjusted Balance | Accounting Standards Update 2022-02
Financing Receivable, Allowance for Credit Loss [Roll Forward]
Allowance for credit losses, balance at beginning of period			839
Total Other Loans [Member] | Personal Loans [Member]
Financing Receivable, Allowance for Credit Loss [Roll Forward]
Allowance for credit losses, balance at beginning of period	622	613	595	662
Provision for credit losses(1)	(50)	(20)	(118)	50
Charge-offs	(64)	(39)	(118)	(77)
Recoveries	14	18	29	37
Net charge-offs	(50)	(21)	(89)	(40)
Allowance for credit losses, balance at end of period	622	572	622	572
Total Other Loans [Member] | Personal Loans [Member] | Cumulative Effect, Period of Adoption, Adjustment | Accounting Standards Update 2022-02
Financing Receivable, Allowance for Credit Loss [Roll Forward]
Allowance for credit losses, balance at beginning of period			(2)
Total Other Loans [Member] | Personal Loans [Member] | Cumulative Effect, Period of Adoption, Adjusted Balance | Accounting Standards Update 2022-02
Financing Receivable, Allowance for Credit Loss [Roll Forward]
Allowance for credit losses, balance at beginning of period			593
Total Other Loans [Member] | Other Loans [Member]
Financing Receivable, Allowance for Credit Loss [Roll Forward]
Allowance for credit losses, balance at beginning of period	62	44	57	44
Provision for credit losses(1)	(6)	(2)	(11)	(2)
Charge-offs	0	0	0	0
Recoveries	0	0	0	0
Net charge-offs	0	0	0	0
Allowance for credit losses, balance at end of period	$ 68	$ 46	68	$ 46
Total Other Loans [Member] | Other Loans [Member] | Cumulative Effect, Period of Adoption, Adjustment | Accounting Standards Update 2022-02
Financing Receivable, Allowance for Credit Loss [Roll Forward]
Allowance for credit losses, balance at beginning of period			0
Total Other Loans [Member] | Other Loans [Member] | Cumulative Effect, Period of Adoption, Adjusted Balance | Accounting Standards Update 2022-02
Financing Receivable, Allowance for Credit Loss [Roll Forward]
Allowance for credit losses, balance at beginning of period			$ 57

XML

Loan Receivables (Schedule of Net Charge-offs of Interest and Fee Revenues on Loan Receivables) (Details) - USD ($) $ in Millions	3 Months Ended		6 Months Ended
	Jun. 30, 2023	Jun. 30, 2022	Jun. 30, 2023	Jun. 30, 2022
Receivables [Abstract]
Interest and fees accrued subsequently charged-off, net of recoveries (recorded as a reduction of interest income)	$ 156	$ 69	$ 284	$ 135
Fees accrued subsequently charged-off, net of recoveries (recorded as a reduction to other income)	$ 46	$ 23	$ 87	$ 44

XML

Loan Receivables (Schedule of Gross Principal Charge-offs (Details) - USD ($) $ in Millions	3 Months Ended		6 Months Ended
	Jun. 30, 2023	Jun. 30, 2022	Jun. 30, 2023	Jun. 30, 2022
Financing Receivable, Loan Modifications [Line Items]
Financing Receivable, Allowance for Credit Loss, Writeoff	$ 1,153	$ 659	$ 2,119	$ 1,262
Credit Card Loans [Member]
Financing Receivable, Loan Modifications [Line Items]
Financing Receivable Revolving Writeoff			1,930
Financing Receivable, Allowance for Credit Loss, Writeoff	1,051	587	1,930	1,128
Total Other Loans [Member] | Private Student Loans [Member]
Financing Receivable, Loan Modifications [Line Items]
Gross Principal Charge-off, Year One, Originated, Current Fiscal Year			0
Gross Principal Charge-off, Year Two, Originated, Year Before Current Fiscal Year			1
Gross Principal Charge-off, Year Three, Originated, Two Years Before Current Fiscal Year			6
Gross Principal Charge-off, Year Four, Originated, Three Years Before Current Fiscal Year			9
Gross Principal Charge-off, Year Five, Originated, Four Years Before Current Fiscal Year			11
Gross Principal Charge-off Originated More Than Five Years Before Current Fiscal Year			44
Financing Receivable, Allowance for Credit Loss, Writeoff	38	33	71	57
Total Other Loans [Member] | Personal Loans [Member]
Financing Receivable, Loan Modifications [Line Items]
Gross Principal Charge-off, Year One, Originated, Current Fiscal Year			1
Gross Principal Charge-off, Year Two, Originated, Year Before Current Fiscal Year			41
Gross Principal Charge-off, Year Three, Originated, Two Years Before Current Fiscal Year			39
Gross Principal Charge-off, Year Four, Originated, Three Years Before Current Fiscal Year			17
Gross Principal Charge-off, Year Five, Originated, Four Years Before Current Fiscal Year			13
Gross Principal Charge-off Originated More Than Five Years Before Current Fiscal Year			7
Financing Receivable, Allowance for Credit Loss, Writeoff	$ 64	$ 39	$ 118	$ 77

XML

Loan Receivables (Schedule of Delinquent and Non-Accruing Loans) (Details) - USD ($) $ in Millions		3 Months Ended		6 Months Ended
		Jun. 30, 2023	Jun. 30, 2022	Jun. 30, 2023	Jun. 30, 2022	Dec. 31, 2022
Financing Receivable, Past Due [Line Items]
Loan receivables		$ 117,906		$ 117,906		$ 112,120
Loan receivables, 90 or more days delinquent and accruing		1,272		1,272		1,065
Loan receivables, total non-accruing	[1]	298		298		214
30-89 Days Delinquent [Member]
Financing Receivable, Past Due [Line Items]
Loan receivables		1,666		1,666		1,477
90 or More Days Delinquent [Member]
Financing Receivable, Past Due [Line Items]
Loan receivables		1,361		1,361		1,101
Total Past Due [Member]
Financing Receivable, Past Due [Line Items]
Loan receivables		3,027		3,027		2,578
Credit Card Loans [Member]
Financing Receivable, Past Due [Line Items]
Loan receivables	[2],[3]	93,955		93,955		90,113
Loan receivables, 90 or more days delinquent and accruing		1,192		1,192		1,003
Loan receivables, total non-accruing	[1]	255		255		176
Estimated gross interest income that would have been recorded based on original terms		10	$ 5	18	$ 11
Credit Card Loans [Member] | 30-89 Days Delinquent [Member]
Financing Receivable, Past Due [Line Items]
Loan receivables, credit card		1,420		1,420		1,250
Credit Card Loans [Member] | 90 or More Days Delinquent [Member]
Financing Receivable, Past Due [Line Items]
Loan receivables, credit card		1,269		1,269		1,028
Credit Card Loans [Member] | Total Past Due [Member]
Financing Receivable, Past Due [Line Items]
Loan receivables, credit card		2,689		2,689		2,278
Total Other Loans [Member]
Financing Receivable, Past Due [Line Items]
Loan receivables	[4]	23,951		23,951		22,007
Loan receivables, 90 or more days delinquent and accruing		80		80		62
Loan receivables, total non-accruing	[1]	43		43		38
Total Other Loans [Member] | 30-89 Days Delinquent [Member]
Financing Receivable, Past Due [Line Items]
Loan receivables		246		246		227
Total Other Loans [Member] | 90 or More Days Delinquent [Member]
Financing Receivable, Past Due [Line Items]
Loan receivables		92		92		73
Total Other Loans [Member] | Total Past Due [Member]
Financing Receivable, Past Due [Line Items]
Loan receivables		338		338		300
Total Other Loans [Member] | Private Student Loans [Member]
Financing Receivable, Past Due [Line Items]
Loan receivables	[4],[5]	10,241		10,241		10,308
Loan receivables, 90 or more days delinquent and accruing		55		55		45
Loan receivables, total non-accruing	[1]	8		8		8
Total Other Loans [Member] | Private Student Loans [Member] | 30-89 Days Delinquent [Member]
Financing Receivable, Past Due [Line Items]
Loan receivables	[6]	163		163		167
Total Other Loans [Member] | Private Student Loans [Member] | 90 or More Days Delinquent [Member]
Financing Receivable, Past Due [Line Items]
Loan receivables	[6]	55		55		45
Total Other Loans [Member] | Private Student Loans [Member] | Total Past Due [Member]
Financing Receivable, Past Due [Line Items]
Loan receivables	[6]	218		218		212
Total Other Loans [Member] | Personal Loans [Member]
Financing Receivable, Past Due [Line Items]
Loan receivables	[4]	9,106		9,106		7,998
Loan receivables, 90 or more days delinquent and accruing		23		23		16
Loan receivables, total non-accruing	[1]	8		8		7
Total Other Loans [Member] | Personal Loans [Member] | 30-89 Days Delinquent [Member]
Financing Receivable, Past Due [Line Items]
Loan receivables		67		67		47
Total Other Loans [Member] | Personal Loans [Member] | 90 or More Days Delinquent [Member]
Financing Receivable, Past Due [Line Items]
Loan receivables		24		24		16
Total Other Loans [Member] | Personal Loans [Member] | Total Past Due [Member]
Financing Receivable, Past Due [Line Items]
Loan receivables		91		91		63
Total Other Loans [Member] | Other Loans [Member]
Financing Receivable, Past Due [Line Items]
Loan receivables	[4]	4,604		4,604		3,701
Loan receivables, 90 or more days delinquent and accruing		2		2		1
Loan receivables, total non-accruing	[1]	27		27		23
Total Other Loans [Member] | Other Loans [Member] | 30-89 Days Delinquent [Member]
Financing Receivable, Past Due [Line Items]
Loan receivables		16		16		13
Total Other Loans [Member] | Other Loans [Member] | 90 or More Days Delinquent [Member]
Financing Receivable, Past Due [Line Items]
Loan receivables		13		13		12
Total Other Loans [Member] | Other Loans [Member] | Total Past Due [Member]
Financing Receivable, Past Due [Line Items]
Loan receivables		$ 29		$ 29		$ 25

[1] The Company estimates that the gross interest income that would have been recorded under the original terms of non-accruing credit card loans was $10 million and $5 million for the three months ended June 30, 2023 and 2022, respectively, and $18 million and $11 million for the six months ended June 30, 2023 and 2022, respectively. The Company does not separately track the amount of gross interest income that would have been recorded under the original terms of loans. Instead, the Company estimated this amount based on customers' current balances and most recent interest rates.

[2] Amounts include carrying values of $14.3 billion and $13.5 billion underlying investors' interest in trust debt at June 30, 2023 and December 31, 2022, respectively, and $10.7 billion and $12.2 billion in seller's interest at June 30, 2023 and December 31, 2022, respectively. See Note 4: Credit Card and Private Student Loan Securitization Activities for additional information.

[3] Unbilled accrued interest receivable on credit card loans, which is presented as part of other assets in the Company's condensed consolidated statements of financial condition, was $622 million and $611 million at June 30, 2023 and December 31, 2022, respectively.

[4] Accrued interest receivable on private student, personal and other loans, which is presented as part of other assets in the Company's condensed consolidated statements of financial condition, was $515 million, $56 million and $15 million, respectively, at June 30, 2023 and $468 million, $49 million and $11 million, respectively, at December 31, 2022.

[5] .

[6] Private student loans may include a deferment period, during which borrowers are not required to make payments while enrolled in school at least half time as determined by the school. During a deferment period, these loans do not advance into delinquency.

XML

Loan Receivables (Schedule of Loans That Entered a Modification Program During the Period) (Details) - USD ($) $ in Millions	3 Months Ended		6 Months Ended
	Jun. 30, 2023	Jun. 30, 2022	Jun. 30, 2023		Jun. 30, 2022
Credit Card Loans [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Financing Receivable, Troubled Debt Restructuring, Postmodification	$ 560		$ 1,158	[1]
Financing Receivable, Modified in Period, to Total Financing Receivables, Percentage	0.60%		1.23%	[1]
Financing Receivable, Revolving, Converted to Term Loan During Period	$ 113	$ 71	$ 231		$ 146
Credit Card Loans [Member] | Contractual Interest Rate Reduction
Accounts, Notes, Loans and Financing Receivable [Line Items]
Financing Receivable, Troubled Debt Restructuring, Postmodification	560		1,158	[1]
Total Other Loans [Member] | Private Student Loans [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Financing Receivable, Troubled Debt Restructuring, Postmodification	$ 41		$ 72
Financing Receivable, Modified in Period, to Total Financing Receivables, Percentage	0.40%		0.70%
Total Other Loans [Member] | Private Student Loans [Member] | Payment Deferral
Accounts, Notes, Loans and Financing Receivable [Line Items]
Financing Receivable, Troubled Debt Restructuring, Postmodification	$ 20		$ 22
Total Other Loans [Member] | Private Student Loans [Member] | InterestRateReductionandPaymentDeferral
Accounts, Notes, Loans and Financing Receivable [Line Items]
Financing Receivable, Troubled Debt Restructuring, Postmodification	21		50
Total Other Loans [Member] | Personal Loans [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Financing Receivable, Troubled Debt Restructuring, Postmodification	$ 35		$ 63
Financing Receivable, Modified in Period, to Total Financing Receivables, Percentage	0.38%		0.69%
Total Other Loans [Member] | Personal Loans [Member] | Payment Deferral
Accounts, Notes, Loans and Financing Receivable [Line Items]
Financing Receivable, Troubled Debt Restructuring, Postmodification	$ 3		$ 4
Total Other Loans [Member] | Personal Loans [Member] | InterestRateReductionandPaymentDeferral
Accounts, Notes, Loans and Financing Receivable [Line Items]
Financing Receivable, Troubled Debt Restructuring, Postmodification	16		29
Total Other Loans [Member] | Personal Loans [Member] | Extended Maturity
Accounts, Notes, Loans and Financing Receivable [Line Items]
Financing Receivable, Troubled Debt Restructuring, Postmodification	8		16
Total Other Loans [Member] | Personal Loans [Member] | Extended Maturity and Interest Rate Reduction
Accounts, Notes, Loans and Financing Receivable [Line Items]
Financing Receivable, Troubled Debt Restructuring, Postmodification	$ 8		$ 14

[1] Accounts that entered a credit card loan modification program include $113 million and $231 million that were converted from revolving line-of-credit arrangements to term loans during the three and six months ended June 30, 2023, respectively.

XML

Loan Receivables (Schedule of Loan Modification Effects) (Details)	3 Months Ended		6 Months Ended
	Jun. 30, 2023 USD ($)	Jun. 30, 2022 USD ($)	Jun. 30, 2023 USD ($) Months	Jun. 30, 2022 USD ($)
Credit Card Loans [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Financing Receivable, Modified, Weighted Average Interest Rate Decrease from Modification	13.80%		13.58%
Interest and fees forgiven due to loan modification program	$ 35,000,000	$ 6,000,000	$ 47,000,000	$ 13,000,000
Credit Card Loans [Member] | Principal Forgiveness
Accounts, Notes, Loans and Financing Receivable [Line Items]
FinancingReceivableExcludingAccruedInterestModifiedPeriod	$ 46,000,000		$ 46,000,000
Total Other Loans [Member] | Private Student Loans [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Financing Receivable, Modified, Weighted Average Interest Rate Decrease from Modification	8.55%		8.26%
Total Other Loans [Member] | Private Student Loans [Member] | Principal Forgiveness
Accounts, Notes, Loans and Financing Receivable [Line Items]
FinancingReceivableExcludingAccruedInterestModifiedPeriod	$ 0		$ 0
Total Other Loans [Member] | Private Student Loans [Member] | Minimum [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Payment delay duration (in months)	6		6
Total Other Loans [Member] | Private Student Loans [Member] | Maximum [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Payment delay duration (in months)	12		12
Total Other Loans [Member] | Personal Loans [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Financing Receivable, Modified, Weighted Average Interest Rate Decrease from Modification	12.01%		11.80%
Financing Receivable, Modified, Weighted Average Term Increase from Modification	39 months		38 months
Total Other Loans [Member] | Personal Loans [Member] | Principal Forgiveness
Accounts, Notes, Loans and Financing Receivable [Line Items]
FinancingReceivableExcludingAccruedInterestModifiedPeriod	$ 0		$ 0
Total Other Loans [Member] | Personal Loans [Member] | Minimum [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Payment delay duration (in months)	6		6
Total Other Loans [Member] | Personal Loans [Member] | Maximum [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Payment delay duration (in months)	12		12

XML

Loan Receivables (Schedule of Delinquent Loans Receivables Aging) (Details) $ in Millions	Jun. 30, 2023 USD ($)
Financial Asset, 1 to 29 Days Past Due
Financing Receivable, Past Due [Line Items]
Financing Receivable, Troubled Debt Restructuring	$ 1,050
30-89 Days Delinquent [Member]
Financing Receivable, Past Due [Line Items]
Financing Receivable, Troubled Debt Restructuring	127
90 or More Days Delinquent [Member]
Financing Receivable, Past Due [Line Items]
Financing Receivable, Troubled Debt Restructuring	116
Credit Card Loans [Member] | Financial Asset, 1 to 29 Days Past Due
Financing Receivable, Past Due [Line Items]
Financing Receivable, Troubled Debt Restructuring	931
Credit Card Loans [Member] | 30-89 Days Delinquent [Member]
Financing Receivable, Past Due [Line Items]
Financing Receivable, Troubled Debt Restructuring	115
Credit Card Loans [Member] | 90 or More Days Delinquent [Member]
Financing Receivable, Past Due [Line Items]
Financing Receivable, Troubled Debt Restructuring	112
Total Other Loans [Member] | Private Student Loans [Member] | Financial Asset, 1 to 29 Days Past Due
Financing Receivable, Past Due [Line Items]
Financing Receivable, Troubled Debt Restructuring	66
Total Other Loans [Member] | Private Student Loans [Member] | 30-89 Days Delinquent [Member]
Financing Receivable, Past Due [Line Items]
Financing Receivable, Troubled Debt Restructuring	5
Total Other Loans [Member] | Private Student Loans [Member] | 90 or More Days Delinquent [Member]
Financing Receivable, Past Due [Line Items]
Financing Receivable, Troubled Debt Restructuring	1
Total Other Loans [Member] | Personal Loans [Member] | Financial Asset, 1 to 29 Days Past Due
Financing Receivable, Past Due [Line Items]
Financing Receivable, Troubled Debt Restructuring	53
Total Other Loans [Member] | Personal Loans [Member] | 30-89 Days Delinquent [Member]
Financing Receivable, Past Due [Line Items]
Financing Receivable, Troubled Debt Restructuring	7
Total Other Loans [Member] | Personal Loans [Member] | 90 or More Days Delinquent [Member]
Financing Receivable, Past Due [Line Items]
Financing Receivable, Troubled Debt Restructuring	$ 3

XML

Loan Receivables (Schedule of Accounts that Entered a Troubled Debt Restructuring Program) (Details) - USD ($)	3 Months Ended		6 Months Ended
	Jun. 30, 2023	Jun. 30, 2022	Jun. 30, 2023	Jun. 30, 2022
Credit Card Loans [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Accounts that entered a TDR program during the period, number of accounts (in accounts)		$ 49,341		$ 103,852
Accounts that entered a TDR program during the period, balances		313,000,000		657,000,000
Financing Receivable, Revolving, Converted to Term Loan During Period	$ 113,000,000	71,000,000	$ 231,000,000	146,000,000
Total Other Loans [Member] | Private Student Loans [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Accounts that entered a TDR program during the period, number of accounts (in accounts)		1,523		3,278
Accounts that entered a TDR program during the period, balances		29,000,000		60,000,000
Total Other Loans [Member] | Personal Loans [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Accounts that entered a TDR program during the period, number of accounts (in accounts)		1,603		2,762
Accounts that entered a TDR program during the period, balances		$ 22,000,000		$ 37,000,000

XML

Loan Receivables (Schedule of Troubled Debt Restructurings That Subsequently Defaulted) (Details)	3 Months Ended			6 Months Ended
	Jun. 30, 2023 USD ($)	Jun. 30, 2022 USD ($) accounts		Jun. 30, 2023 USD ($)	Jun. 30, 2022 USD ($) accounts
Financing Receivable, Troubled Debt Restructuring [Line Items]
Financing Receivable Modifications Subsequent Default Number of Missed Payments				2
Delinquency days to default (in days)				60 days
Credit Card Loans [Member]
Financing Receivable, Troubled Debt Restructuring [Line Items]
TDRs that subsequently defaulted, number of accounts (in accounts) | accounts		5,703	[1],[2]		10,238
TDRs that subsequently defaulted, aggregated outstanding balances upon default	$ 73,000,000	$ 28,000,000	[1],[2]	$ 84,000,000	$ 51,000,000
Total Other Loans [Member] | Private Student Loans [Member]
Financing Receivable, Troubled Debt Restructuring [Line Items]
TDRs that subsequently defaulted, number of accounts (in accounts) | accounts		161	[3]		267
TDRs that subsequently defaulted, aggregated outstanding balances upon default		$ 3,000,000	[3]		$ 5,000,000
Total Other Loans [Member] | Personal Loans [Member]
Financing Receivable, Troubled Debt Restructuring [Line Items]
TDRs that subsequently defaulted, number of accounts (in accounts) | accounts		275	[1]		536
TDRs that subsequently defaulted, aggregated outstanding balances upon default		$ 4,000,000	[1]		$ 7,000,000

[1] For credit card loans and personal loans, a customer defaults from a loan modification program after either two consecutive missed payments or at charge-off, depending on the program. The outstanding balance upon default is generally the loan balance at the end of the month prior to default.

[2] For credit card loans that default from a temporary loan modification program, accounts revert back to the pre-modification terms and charging privileges remain suspended in most cases.

[3] For student loans, a customer defaults from a loan modification after they are 60 or more days delinquent. The outstanding balance upon default is generally the loan balance at the end of the month prior to default.

XML

Credit Card and Private Student Loan Securitization Activities (Narrative) (Details)	6 Months Ended
	Jun. 30, 2023 classes
Variable Interest Entity, Primary Beneficiary [Member] | Discover Card Execution Note Trust [Member] | Credit Card Securitization Trusts [Member]
Variable Interest Entity [Line Items]
Number of classes of securities in debt structure (in classes)	4

XML

Credit Card and Private Student Loan Securitization Activities (Schedule of Restricted Credit Card Securitized Assets) (Details) - USD ($) $ in Millions		Jun. 30, 2023	Mar. 31, 2023	Dec. 31, 2022	Jun. 30, 2022	Mar. 31, 2022	Dec. 31, 2021
Variable Interest Entity [Line Items]
Restricted cash		$ 39		$ 41	$ 32
Loan receivables		117,906		112,120
Allowance for credit losses allocated to securitized loan receivables		(8,064)	$ (7,691)	(7,374)	$ (6,757)	$ (6,647)	$ (6,822)
Net loan receivables		109,842		104,746
Other assets		4,822	4,461	4,597
Assets		138,082	$ 133,141	131,706
Variable Interest Entity, Primary Beneficiary [Member]
Variable Interest Entity [Line Items]
Restricted cash		39		41
Loan receivables		25,165		25,937
Allowance for credit losses allocated to securitized loan receivables		(1,109)		(1,152)
Other assets		3		3
Variable Interest Entity, Primary Beneficiary [Member] | Credit Card Securitization Trusts [Member]
Variable Interest Entity [Line Items]
Restricted cash		31		33
Investors' interests held by third-party investors		11,275		10,200
Investors' interests held by wholly-owned subsidiaries of Discover Bank		2,997		3,341
Seller's interest		10,732		12,220
Loan receivables	[1]	25,004		25,761
Allowance for credit losses allocated to securitized loan receivables	[1]	(1,109)		(1,152)
Net loan receivables		23,895		24,609
Other assets		2		2
Assets		$ 23,928		$ 24,644

[1] The Company maintains its allowance for credit losses at an amount equal to lifetime expected credit losses associated with all loan receivables, which includes all loan receivables in the trusts. Therefore, the credit risk associated with the transferred receivables is fully reflected on the Company's statements of financial condition in accordance with GAAP.

XML

Deposits (Narrative) (Details) - USD ($) $ in Billions	Jun. 30, 2023	Dec. 31, 2022
Deposits [Abstract]
Deposit Liability, Uninsured	$ 5.3	$ 8.9

XML

Deposits (Schedule of Certificates of Deposit Maturities) (Details) $ in Millions	Jun. 30, 2023 USD ($)
Deposits [Abstract]
2023	$ 10,661
2024	15,578
2025	4,097
2026	2,951
2027	3,871
Thereafter	2,174
Total	$ 39,332

XML

Long-Term Borrowings (Narrative) (Details) - USD ($) $ in Millions	Jun. 30, 2023	Dec. 31, 2022
Debt Instrument [Line Items]
Federal Home Loan Bank, advances, general debt obligations, maximum amount available	$ 2,900	$ 2,200
Federal Home Loan Bank advances	525	525
Discover Card Master Trust I and Discover Card Execution Note Trust [Member] | Securitized Debt [Member]
Debt Instrument [Line Items]
Total commitment of secured credit facilities	3,500	3,500
Total used commitment of secured credit facilities	$ 0	$ 0

XML

Long-Term Borrowings (Schedule of Long-Term Borrowings and Weighted Average Interest Rates) (Details) - USD ($) $ in Millions		6 Months Ended
		Jun. 30, 2023	Dec. 31, 2022
Debt Instrument [Line Items]
Long-term borrowings (in dollars)		$ 20,276	$ 20,108
Variable Interest Entity, Primary Beneficiary [Member]
Debt Instrument [Line Items]
Long-term borrowings (in dollars)		11,216	10,259
Securitized Debt [Member] | Discover Card Master Trust I and Discover Card Execution Note Trust [Member]
Debt Instrument [Line Items]
Long-term borrowings (in dollars)		$ 11,142	10,175
Securitized Debt [Member] | Discover Card Master Trust I and Discover Card Execution Note Trust [Member] | Fixed-Rate Asset-Backed Securities [Member]
Debt Instrument [Line Items]
Weighted-average interest rate	[1]	3.17%
Long-term borrowings (in dollars)	[1]	$ 9,917	8,401
Securitized Debt [Member] | Discover Card Master Trust I and Discover Card Execution Note Trust [Member] | Fixed-Rate Asset-Backed Securities [Member] | Minimum [Member]
Debt Instrument [Line Items]
Interest rate	[1]	0.58%
Securitized Debt [Member] | Discover Card Master Trust I and Discover Card Execution Note Trust [Member] | Fixed-Rate Asset-Backed Securities [Member] | Maximum [Member]
Debt Instrument [Line Items]
Interest rate	[1]	5.03%
Securitized Debt [Member] | Discover Card Master Trust I and Discover Card Execution Note Trust [Member] | Floating-Rate Asset-Backed Securities [Member]
Debt Instrument [Line Items]
Weighted-average interest rate	[2]	5.74%
Long-term borrowings (in dollars)	[2]	$ 1,225	1,774
Securitized Debt [Member] | Discover Card Master Trust I and Discover Card Execution Note Trust [Member] | Floating-Rate Asset-Backed Securities [Member] | Minimum [Member]
Debt Instrument [Line Items]
Interest rate	[2]	5.58%
Securitized Debt [Member] | Discover Card Master Trust I and Discover Card Execution Note Trust [Member] | Floating-Rate Asset-Backed Securities [Member] | Maximum [Member]
Debt Instrument [Line Items]
Interest rate	[2]	5.79%
Securitized Debt [Member] | Discover Card Master Trust I and Discover Card Execution Note Trust [Member] | Floating-Rate Asset-Backed Securities [Member] | 1-Month LIBOR [Member]
Debt Instrument [Line Items]
Interest rate terms		1-month LIBOR + 39 to 60 basis points
Securitized Debt [Member] | Discover Card Master Trust I and Discover Card Execution Note Trust [Member] | Floating-Rate Asset-Backed Securities [Member] | 1-Month LIBOR [Member] | Minimum [Member]
Debt Instrument [Line Items]
Basis spread on variable rate		0.39%
Securitized Debt [Member] | Discover Card Master Trust I and Discover Card Execution Note Trust [Member] | Floating-Rate Asset-Backed Securities [Member] | 1-Month LIBOR [Member] | Maximum [Member]
Debt Instrument [Line Items]
Basis spread on variable rate		0.60%
Securitized Debt [Member] | Student Loan Trust [Member]
Debt Instrument [Line Items]
Long-term borrowings (in dollars)		$ 74	84
Securitized Debt [Member] | Student Loan Trust [Member] | Floating-Rate Asset-Backed Securities [Member]
Debt Instrument [Line Items]
Weighted-average interest rate	[3],[4]	9.25%
Long-term borrowings (in dollars)	[3],[4]	$ 74	84
Securitized Debt [Member] | Student Loan Trust [Member] | Floating-Rate Asset-Backed Securities [Member] | Minimum [Member]
Debt Instrument [Line Items]
Interest rate		9.25%
Securitized Debt [Member] | Student Loan Trust [Member] | Floating-Rate Asset-Backed Securities [Member] | Maximum [Member]
Debt Instrument [Line Items]
Interest rate	[3],[4]	9.25%
Securitized Debt [Member] | Student Loan Trust [Member] | Floating-Rate Asset-Backed Securities [Member] | Prime Rate [Member]
Debt Instrument [Line Items]
Interest rate terms		Prime rate + 100 basis points
Basis spread on variable rate		1.00%
Securitized Debt [Member] | Variable Interest Entity, Primary Beneficiary [Member]
Debt Instrument [Line Items]
Long-term borrowings (in dollars)		$ 11,216	10,259
Securitized Debt [Member] | Discover Bank [Member] | Floating-Rate Asset-Backed Securities [Member] | Secured Overnight Financing Rate (SOFR) Overnight Index Swap Rate [Member]
Debt Instrument [Line Items]
Interest rate terms		SOFR + 23 basis points
Securitized Debt [Member] | Discover Bank [Member] | Fixed-RateSubordinatedBankNotes | Secured Overnight Financing Rate (SOFR) Overnight Index Swap Rate [Member]
Debt Instrument [Line Items]
Interest rate terms		SOFR spread-adjusted swap rate + 173 basis points
Corporate Debt Securities [Member] | Parent Company [Member] | Fixed-Rate Senior Notes [Member]
Debt Instrument [Line Items]
Weighted-average interest rate		4.68%
Long-term borrowings (in dollars)		$ 3,334	3,333
Corporate Debt Securities [Member] | Parent Company [Member] | Fixed-Rate Senior Notes [Member] | Minimum [Member]
Debt Instrument [Line Items]
Interest rate		3.75%
Corporate Debt Securities [Member] | Parent Company [Member] | Fixed-Rate Senior Notes [Member] | Maximum [Member]
Debt Instrument [Line Items]
Interest rate		6.70%
Corporate Debt Securities [Member] | Parent Company [Member] | Fixed-Rate Retail Notes [Member]
Debt Instrument [Line Items]
Weighted-average interest rate		3.77%
Long-term borrowings (in dollars)		$ 152	154
Corporate Debt Securities [Member] | Parent Company [Member] | Fixed-Rate Retail Notes [Member] | Minimum [Member]
Debt Instrument [Line Items]
Interest rate		2.85%
Corporate Debt Securities [Member] | Parent Company [Member] | Fixed-Rate Retail Notes [Member] | Maximum [Member]
Debt Instrument [Line Items]
Interest rate		4.40%
Senior Notes [Member] | Discover Bank [Member] | Fixed-Rate Senior Bank Notes [Member]
Debt Instrument [Line Items]
Weighted-average interest rate	[1]	3.68%
Long-term borrowings (in dollars)	[1]	$ 4,552	5,348
Senior Notes [Member] | Discover Bank [Member] | Fixed-Rate Senior Bank Notes [Member] | Minimum [Member]
Debt Instrument [Line Items]
Interest rate	[1]	2.45%
Senior Notes [Member] | Discover Bank [Member] | Fixed-Rate Senior Bank Notes [Member] | Maximum [Member]
Debt Instrument [Line Items]
Interest rate	[1]	4.65%
Subordinated Debt [Member] | Discover Bank [Member] | Fixed-Rate Subordinated Bank Notes [Member]
Debt Instrument [Line Items]
Weighted-average interest rate	[1]	4.68%
Long-term borrowings (in dollars)	[1]	$ 497	489
Subordinated Debt [Member] | Discover Bank [Member] | Fixed-Rate Subordinated Bank Notes [Member] | Minimum [Member]
Debt Instrument [Line Items]
Interest rate		4.68%
Subordinated Debt [Member] | Discover Bank [Member] | Fixed-Rate Subordinated Bank Notes [Member] | Maximum [Member]
Debt Instrument [Line Items]
Interest rate	[1]	4.68%
Federal Home Loan Bank Advances | Discover Bank [Member] | Secured Overnight Financing Rate (SOFR) Overnight Index Swap Rate [Member]
Debt Instrument [Line Items]
Basis spread on variable rate		0.23%
Federal Home Loan Bank Advances | Discover Bank [Member] | Federal Home Loan Bank Certificates and Obligations (FHLB)
Debt Instrument [Line Items]
Weighted-average interest rate		5.29%
Long-term borrowings (in dollars)		$ 525	$ 525
Federal Home Loan Bank Advances | Discover Bank [Member] | Federal Home Loan Bank Certificates and Obligations (FHLB) | Minimum [Member]
Debt Instrument [Line Items]
Interest rate		5.29%
Federal Home Loan Bank Advances | Discover Bank [Member] | Federal Home Loan Bank Certificates and Obligations (FHLB) | Maximum [Member]
Debt Instrument [Line Items]
Interest rate		5.29%

[1] The Company uses interest rate swaps to hedge portions of these long-term borrowings against changes in fair value attributable to changes in the applicable benchmark interest rates. The use of these interest rate swaps impacts the carrying value of the debt. See Note 15: Derivatives and Hedging Activities.

[2] DCENT floating-rate asset-backed securities include issuances with the following interest rate terms: 1-month LIBOR + 39 to 60 basis points as of June 30, 2023.

[3] Repayment of this debt is dependent upon the timing of principal and interest payments on the underlying private student loans. The date shown represents the final maturity date. (5)The fixed-rate subordinated bank notes include a rate reset on August 9, 2023, to the 5-year SOFR spread-adjusted swap rate + 173 basis points. (6)The floating-rate Federal Home Loan Bank (“FHLB”) advance includes the following interest rate term: SOFR + 23 basis points as of June 30, 2023.

[4] The private student loan securitization trust floating-rate asset-backed security includes an issuance with the following interest rate term: Prime rate + 100 basis points as of June 30, 2023.

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Long-Term Borrowings (Schedule of Long-Term Borrowings Maturities) (Details) - USD ($) $ in Millions	Jun. 30, 2023	Dec. 31, 2022
Debt Disclosure [Abstract]
2023	$ 1,837
2024	3,727
2025	6,098
2026	4,867
2027	1,000
Thereafter	2,747
Total	$ 20,276	$ 20,108

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Preferred Stock (Schedule of Stock by Class) (Details) - USD ($) $ / shares in Units, $ in Millions				6 Months Ended
		Jun. 22, 2020	Oct. 31, 2017	Jun. 30, 2023	Dec. 31, 2022
Class of Stock [Line Items]
Preferred stock, par value $0.01 per share; 200,000,000 shares authorized; 10,700 shares issued and outstanding at June 30, 2023 and December 31, 2022, respectively				$ 1,056	$ 1,056
Preferred stock, par or stated value per share				$ 0.01	$ 0.01
Series C Preferred Stock [Member]
Class of Stock [Line Items]
Preferred stock, initial issue date	[1]		Oct. 31, 2017
Preferred stock, earliest redemption date				Oct. 30, 2027
Series D Preferred Stock
Class of Stock [Line Items]
Preferred stock, initial issue date	[1]	Jun. 22, 2020
Dividend rate reset				5 years
Preferred Stock [Member]
Class of Stock [Line Items]
Preferred stock, depositary shares issued (in number of depositary shares)				1,070,000	1,070,000
Proceeds from issuance of preferred stock, net				$ 1,056	$ 1,056
Preferred Stock [Member] | Series C Preferred Stock [Member]
Class of Stock [Line Items]
Preferred stock, liquidation preference per share	[1],[2],[3]			$ 1,000
Preferred stock, redemption price per share	[1],[2],[3]			$ 1,000
Preferred Stock, Dividend Rate, Percentage	[1],[4]			5.50%
Preferred stock, depositary shares issued (in number of depositary shares)	[1]			570,000	570,000
Preferred stock, par value $0.01 per share; 200,000,000 shares authorized; 10,700 shares issued and outstanding at June 30, 2023 and December 31, 2022, respectively	[1]			$ 563	$ 563
Depositary shares represented by one preferred share				100
Preferred stock, par or stated value per share				$ 0.01
Redemption period of preferred stock following regulatory capital treatment event				90 days
Preferred stock dividend payment rate variable, rate to be used in future periods				3.00%
Preferred Stock [Member] | Series C Preferred Stock [Member] | Three-Month London Interbank Offered Rate (LIBOR)
Class of Stock [Line Items]
Preferred stock dividend payment rate variable, rate to be used in future periods				0.03076
Preferred Stock [Member] | Series D Preferred Stock
Class of Stock [Line Items]
Preferred stock, liquidation preference per share	[1],[3],[5]			$ 1,000
Preferred stock, redemption price per share	[1],[3],[5]			$ 1,000
Preferred Stock, Dividend Rate, Percentage	[1],[6]			6.125%
Preferred stock, depositary shares issued (in number of depositary shares)	[1]			500,000	500,000
Preferred stock, par value $0.01 per share; 200,000,000 shares authorized; 10,700 shares issued and outstanding at June 30, 2023 and December 31, 2022, respectively	[1]			$ 493	$ 493
Depositary shares represented by one preferred share				100
Preferred stock, par or stated value per share				$ 0.01
Redemption period of preferred stock following regulatory capital treatment event				90 days
Preferred stock dividend payment rate variable, rate to be used in future periods				5.00%
Preferred Stock [Member] | Series D Preferred Stock | Five-Year Treasury Rate
Class of Stock [Line Items]
Preferred stock dividend payment rate variable, rate to be used in future periods				0.05783

[1] Issued as depositary shares, each representing 1/100th interest in a share of the corresponding series of preferred stock. Each preferred share has a par value of $0.01.

[2] Redeemable at the Company’s option, subject to regulatory approval, either (i) in whole or in part on any dividend payment date on or after October 30, 2027, or (ii) in whole but not in part, at any time within 90 days following a regulatory capital treatment event (as defined in the certificate of designations for the Series C preferred stock).

[3] Redeemable at the redemption price plus declared and unpaid dividends.

[4] Any dividends declared are payable semi-annually in arrears at a rate of 5.500% per annum until October 30, 2027. Thereafter, dividends declared will be payable quarterly in arrears at a floating rate equal to 3-month LIBOR plus a spread of 3.076% per annum.

[5] Redeemable at the Company’s option, subject to regulatory approval, either (i) in whole or in part during the three-month period prior to, and including, each reset date (as defined in the certificate of designations for the Series D preferred stock) or (ii) in whole but not in part, at any time within 90 days following a regulatory capital treatment event (as defined in the certificate of designations for the Series D Preferred Stock).

[6] Any dividends declared are payable semi-annually in arrears at a rate of 6.125% per annum until September 23, 2025, after which the dividend rate will reset every 5 years to a fixed annual rate equal to the 5-year Treasury plus a spread of 5.783%.

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Accumulated Other Comprehensive Income (Schedule of Changes in Accumulated Other Comprehensive Income (Loss)) (Details) - USD ($) $ in Millions	3 Months Ended		6 Months Ended
	Jun. 30, 2023	Jun. 30, 2022	Jun. 30, 2023	Jun. 30, 2022
Accumulated Other Comprehensive Income (Loss) [Line Items]
Accumulated other comprehensive income (loss), net of tax, balance at beginning of period			$ (339)
Net change in accumulated other comprehensive income (loss), net of tax	$ (235)	$ (38)	(131)	$ (157)
Accumulated other comprehensive income (loss), net of tax, balance at end of period	(470)		(470)
Accumulated Other Comprehensive (Loss) Income [Member]
Accumulated Other Comprehensive Income (Loss) [Line Items]
Accumulated other comprehensive income (loss), net of tax, balance at beginning of period	(235)	(213)	(339)	(94)
Net change in accumulated other comprehensive income (loss), net of tax	(235)	(38)	(131)	(157)
Accumulated other comprehensive income (loss), net of tax, balance at end of period	(470)	(251)	(470)	(251)
Unrealized Gains (Losses) on Available-for-Sale Investment Securities, Net of Tax [Member]
Accumulated Other Comprehensive Income (Loss) [Line Items]
Accumulated other comprehensive income (loss), net of tax, balance at beginning of period	(44)	(7)	(136)	114
Net change in accumulated other comprehensive income (loss), net of tax	(151)	(41)	(59)	(162)
Accumulated other comprehensive income (loss), net of tax, balance at end of period	(195)	(48)	(195)	(48)
Gains (Losses) on Cash Flow Hedges, Net of Tax [Member]
Accumulated Other Comprehensive Income (Loss) [Line Items]
Accumulated other comprehensive income (loss), net of tax, balance at beginning of period	(2)	(7)	(14)	(9)
Net change in accumulated other comprehensive income (loss), net of tax	(84)	3	(72)	5
Accumulated other comprehensive income (loss), net of tax, balance at end of period	(86)	(4)	(86)	(4)
Gains (Losses) on Pension Plan, Net of Tax [Member]
Accumulated Other Comprehensive Income (Loss) [Line Items]
Accumulated other comprehensive income (loss), net of tax, balance at beginning of period	(189)	(199)	(189)	(199)
Net change in accumulated other comprehensive income (loss), net of tax	0	0	0	0
Accumulated other comprehensive income (loss), net of tax, balance at end of period	$ (189)	$ (199)	$ (189)	$ (199)

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Accumulated Other Comprehensive Income (Schedule of Other Comprehensive Income Before Reclassifications and Amounts Reclassified from AOCI) (Details) - USD ($) $ in Millions	3 Months Ended		6 Months Ended
	Jun. 30, 2023	Jun. 30, 2022	Jun. 30, 2023	Jun. 30, 2022
Accumulated Other Comprehensive Income (Loss), Net of Tax [Abstract]
Available-for-sale investment securities, net unrealized holding gains (losses) arising during the period, before tax	$ (199)	$ (53)	$ (77)	$ (213)
Available-for-sale investment securities, net unrealized holding gains (losses) arising during the period, tax benefit (expense)	48	12	18	51
Available-for-sale investment securities, net unrealized holding gains (losses) arising during the period, net of tax	(151)	(41)	(59)	(162)
Available-for-sale investment securities, net change, before tax	(199)	(53)	(77)	(213)
Available-for-sale investment securities, net change, tax benefit (expense)	48	12	18	51
Available-for-sale investment securities, net change, net of tax	(151)	(41)	(59)	(162)
Cash flow hedges, net unrealized gains (losses) arising during the period, before tax	(127)	3	(117)	2
Cash flow hedges, net unrealized gains (losses) arising during the period, tax benefit (expense)	31	(1)	29	(1)
Cash flow hedges, net unrealized gains (losses) arising during the period, net of tax	(96)	2	(88)	1
Cash flow hedges, amounts reclassified from AOCI, before tax	16	1	21	2
Cash flow hedges, amounts reclassified from AOCI, tax benefit (expense)	(4)	0	(5)	2
Cash flow hedges, amounts reclassified from AOCI, net of tax	12	1	16	4
Cash flow hedges, net change, before tax	(111)	4	(96)	4
Cash flow hedges, net change, tax benefit (expense)	27	(1)	24	1
Cash flow hedges, net change, net of tax	$ (84)	$ 3	$ (72)	$ 5

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Income Taxes (Schedule of Effective Income Tax Rate Calculation) (Details) - USD ($) $ in Millions	3 Months Ended			6 Months Ended
	Jun. 30, 2023	Mar. 31, 2023	Jun. 30, 2022	Jun. 30, 2023	Jun. 30, 2022
Income Tax Disclosure [Abstract]
Income before income taxes	$ 1,169	$ 1,257	$ 1,441	$ 2,426	$ 3,048
Income tax expense	$ 268	$ 289	$ 338	$ 557	$ 712
Effective income tax rate (in percent)	23.00%		23.50%	23.00%	23.40%

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Earnings Per Share (Schedule of Basic and Diluted EPS ) (Details) - USD ($) $ / shares in Units, shares in Millions, $ in Millions	3 Months Ended			6 Months Ended
	Jun. 30, 2023	Mar. 31, 2023	Jun. 30, 2022	Jun. 30, 2023	Jun. 30, 2022
Numerator:
Net income	$ 901	$ 968	$ 1,103	$ 1,869	$ 2,336
Preferred stock dividends, income statement impact	0		0	(31)	(31)
Net income available to common stockholders	901		1,103	1,838	2,305
Undistributed Earnings (Loss) Allocated to Participating Securities, Basic	(6)		(6)	(12)	(12)
Net income allocated to common stockholders	895	$ 931	1,097	1,826	2,293
Net income (loss) available to common stockholders, diluted	$ 895		$ 1,097	$ 1,826	$ 2,293
Denominator:
Weighted-average shares of common stock outstanding	253		279	257	282
Weighted-average shares of common stock outstanding and common stock equivalents	253		279	257	282
Basic earnings per common share (in dollars per share)	$ 3.54	$ 3.55	$ 3.93	$ 7.09	$ 8.13
Diluted earnings per common share (in dollars per share)	$ 3.54	$ 3.55	$ 3.93	$ 7.09	$ 8.12

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Capital Adequacy (Schedule of Minimum and Well-Capitalized Requirements) (Details) $ in Millions		Jun. 30, 2023 USD ($)	Dec. 31, 2022 USD ($)
Parent Company [Member]
Compliance with Regulatory Capital Requirements [Line Items]
Total capital to risk-weighted assets, actual amount		$ 17,215	$ 18,004
Total capital to risk-weighted assets, actual ratio (in percent)	[1]	0.143	0.158
Total capital to risk-weighted assets, minimum capital requirements, amount		$ 9,659	$ 9,139
Total capital to risk-weighted assets, minimum capital requirements, ratio (in percent)		0.080	0.080
Total capital to risk-weighted assets, capital requirements to be classified as well-capitalized, amount	[2]	$ 12,073	$ 11,424
Total capital to risk-weighted assets, capital requirements to be classified as well-capitalized, ratio (in percent)	[2]	0.100	0.100
Tier I capital to risk-weighted assets, actual amount		$ 15,144	$ 16,039
Tier I capital to risk-weighted assets, actual ratio (in percent)	[1]	0.125	0.140
Tier I capital to risk-weighted assets, minimum capital requirements, amount		$ 7,244	$ 6,854
Tier I capital to risk-weighted assets, minimum capital requirements, ratio (in percent)		0.060	0.060
Tier I capital to risk-weighted assets, capital requirements to be classified as well-capitalized, amount	[2]	$ 7,244	$ 6,854
Tier I capital to risk-weighted assets, capital requirements to be classified as well-capitalized, ratio (in percent)	[2]	0.060	0.060
Tier I capital to average assets, actual amount		$ 15,144	$ 16,039
Tier I capital to average assets, actual ratio (in percent)	[1]	0.111	0.125
Tier I capital to average assets, minimum capital requirements, amount		$ 5,458	$ 5,147
Tier I capital to average assets, minimum capital requirements, ratio (in percent)		0.040	0.040
CET1 capital to risk-weighted assets, actual amount		$ 14,088	$ 14,983
CET1 capital to risk-weighted assets, actual ratio (in percent)	[1]	0.117	0.131
CET1 capital to risk-weighted assets, minimum capital requirements, amount		$ 5,433	$ 5,141
CET1 capital to risk-weighted assets, minimum capital requirements, ratio (in percent)		4.50%	4.50%
Discover Bank [Member]
Compliance with Regulatory Capital Requirements [Line Items]
Total capital to risk-weighted assets, actual amount		$ 16,444	$ 16,579
Total capital to risk-weighted assets, actual ratio (in percent)	[1]	0.138	0.147
Total capital to risk-weighted assets, minimum capital requirements, amount		$ 9,532	$ 9,015
Total capital to risk-weighted assets, minimum capital requirements, ratio (in percent)		0.080	0.080
Total capital to risk-weighted assets, capital requirements to be classified as well-capitalized, amount	[2]	$ 11,915	$ 11,268
Total capital to risk-weighted assets, capital requirements to be classified as well-capitalized, ratio (in percent)	[2]	0.100	0.100
Tier I capital to risk-weighted assets, actual amount		$ 13,543	$ 13,683
Tier I capital to risk-weighted assets, actual ratio (in percent)	[1]	0.114	0.121
Tier I capital to risk-weighted assets, minimum capital requirements, amount		$ 7,149	$ 6,761
Tier I capital to risk-weighted assets, minimum capital requirements, ratio (in percent)		0.060	0.060
Tier I capital to risk-weighted assets, capital requirements to be classified as well-capitalized, amount	[2]	$ 9,532	$ 9,015
Tier I capital to risk-weighted assets, capital requirements to be classified as well-capitalized, ratio (in percent)	[2]	0.080	0.080
Tier I capital to average assets, actual amount		$ 13,543	$ 13,683
Tier I capital to average assets, actual ratio (in percent)	[1]	0.101	0.108
Tier I capital to average assets, minimum capital requirements, amount		$ 5,377	$ 5,086
Tier I capital to average assets, minimum capital requirements, ratio (in percent)		0.040	0.040
Tier I capital to average assets, capital requirements to be classified as well-capitalized, amount	[2]	$ 6,722	$ 6,357
Tier I capital to average assets, capital requirements to be classified as well-capitalized, ratio (in percent)	[2]	0.050	0.050
CET1 capital to risk-weighted assets, actual amount		$ 13,543	$ 13,683
CET1 capital to risk-weighted assets, actual ratio (in percent)	[1]	0.114	0.121
CET1 capital to risk-weighted assets, minimum capital requirements, amount		$ 5,362	$ 5,071
CET1 capital to risk-weighted assets, minimum capital requirements, ratio (in percent)		4.50%	4.50%
CET1 capital to risk-weighted assets, capital requirements to be classified as well-capitalized, amount	[2]	$ 7,745	$ 7,324
CET1 capital to risk-weighted assets, capital requirements to be classified as well-capitalized, ratio (in percent)	[2]	6.50%	6.50%

[1] Capital ratios are calculated based on the Basel III standardized approach rules, subject to applicable transition provisions, including CECL transition provisions.

[2] The Basel III rules do not establish well-capitalized thresholds for these measures for bank holding companies. Existing well-capitalized thresholds established in the Federal Reserve's Regulation Y have been included where available.

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Commitments, Contingencies and Guarantees (Narrative) (Details) - USD ($) $ in Millions	Jun. 30, 2023	Dec. 31, 2022
Commitments, Contingencies and Guarantees [Line Items]
Off-Balance-Sheet, Credit Loss, Liability	$ 0
Guarantor obligations, maximum exposure, undiscounted	90
Contingent liabilities related to equity method investments	0	$ 0
Escrow deposits and settlement withholdings	10	$ 11
Commitments to Extend Credit [Member]
Commitments, Contingencies and Guarantees [Line Items]
Unused commitments to extend credit for loans	$ 229,900

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Commitments, Contingencies and Guarantees (Schedule of Maximum Potential Counterparty Exposures Related to Settlement Guarantees and Merchant Chargeback Guarantee) (Details) - USD ($) $ in Millions		3 Months Ended		6 Months Ended
		Jun. 30, 2023	Jun. 30, 2022	Jun. 30, 2023	Jun. 30, 2022
Merchant Chargeback Guarantees [Member]
Loss Contingencies [Line Items]
Aggregate sales transaction volume	[1]	$ 65,850	$ 65,586	$ 126,683	$ 122,739

[1] Represents transactions processed on the Discover Network for which a potential liability exists that, in aggregate, can differ from credit card sales volume.

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Litigation and Regulatory Matters (Narrative) (Details) - USD ($) $ in Millions	Dec. 22, 2020	Jun. 30, 2023
Revision of Prior Period, Adjustment
Loss Contingencies [Line Items]
Error Correction, Previously Immaterial [true false]		1
Revision of Prior Period, Adjustment
Loss Contingencies [Line Items]
Accrued Liabilities and Other Liabilities		$ 365
Unfavorable Regulatory Action [Member] | Consumer Financial Protection Bureau Consent Order [Member]
Loss Contingencies [Line Items]
Amount of civil money penalty for consent order	$ 25
Maximum [Member] | Pending and Threatened Litigation [Member]
Loss Contingencies [Line Items]
Loss contingency, range of possible loss, portion not accrued		$ 160
Minimum [Member] | Unfavorable Regulatory Action [Member] | Consumer Financial Protection Bureau Consent Order [Member]
Loss Contingencies [Line Items]
Loss contingency, estimate of possible loss	$ 10

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Fair Value Measurements (Narrative) (Details) - USD ($) $ in Millions	6 Months Ended
	Jun. 30, 2023	Jun. 30, 2022
Fair Value, Nonrecurring [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Goodwill and Intangible Asset Impairment	$ 0	$ 0
Residential Mortgage-Backed Securities - Agency [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Available for sale securities, par value	$ 531
Available for sale securities, weighted average coupon rate (in percent)	4.07%
Available for sale securities, weighted average remaining maturity (in years)	4 years

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Fair Value Measurements (Schedule of Assets and Liabilities Measured at Fair Value on a Recurring Basis) (Details) - USD ($) $ in Millions		Jun. 30, 2023		Dec. 31, 2022
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Available-for-sale investment securities, fair value	[1]	$ 13,221		$ 11,987
US Treasury and Government
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Available-for-sale investment securities, fair value	[1]	12,714		11,423
Residential Mortgage-Backed Securities - Agency [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Available-for-sale investment securities, fair value	[1]	507	[2]	564
Fair Value, Recurring [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Available-for-sale investment securities, fair value		13,221		11,987
Fair value of payment services equity investments with readily determinable fair values		33		41
Fair Value, Recurring [Member] | Interest Rate Swaps [Member] | Cash Flow Hedging [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Derivative asset		2	[3]	1
Derivative financial instruments, liabilities, fair value				3
Fair Value, Recurring [Member] | Interest Rate Swaps [Member] | Fair Value Hedging [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Derivative asset	[3]	2
Derivative financial instruments, liabilities, fair value				2
Fair Value, Recurring [Member] | US Treasury and Government
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Available-for-sale investment securities, fair value		12,714		11,423
Fair Value, Recurring [Member] | Residential Mortgage-Backed Securities - Agency [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Available-for-sale investment securities, fair value		507		564
Fair Value, Recurring [Member] | Level 1 [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Available-for-sale investment securities, fair value		12,706		11,416
Fair value of payment services equity investments with readily determinable fair values		33		41
Fair Value, Recurring [Member] | Level 1 [Member] | Interest Rate Swaps [Member] | Cash Flow Hedging [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Derivative asset		0	[3]	0
Derivative financial instruments, liabilities, fair value				0
Fair Value, Recurring [Member] | Level 1 [Member] | Interest Rate Swaps [Member] | Fair Value Hedging [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Derivative asset	[3]	0
Derivative financial instruments, liabilities, fair value				0
Fair Value, Recurring [Member] | Level 1 [Member] | US Treasury and Government
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Available-for-sale investment securities, fair value		12,706		11,416
Fair Value, Recurring [Member] | Level 1 [Member] | Residential Mortgage-Backed Securities - Agency [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Available-for-sale investment securities, fair value		0		0
Fair Value, Recurring [Member] | Level 2 [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Available-for-sale investment securities, fair value		515		571
Fair value of payment services equity investments with readily determinable fair values		0		0
Fair Value, Recurring [Member] | Level 2 [Member] | Interest Rate Swaps [Member] | Cash Flow Hedging [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Derivative asset		2	[3]	1
Derivative financial instruments, liabilities, fair value				3
Fair Value, Recurring [Member] | Level 2 [Member] | Interest Rate Swaps [Member] | Fair Value Hedging [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Derivative asset	[3]	2
Derivative financial instruments, liabilities, fair value				2
Fair Value, Recurring [Member] | Level 2 [Member] | US Treasury and Government
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Available-for-sale investment securities, fair value		8		7
Fair Value, Recurring [Member] | Level 2 [Member] | Residential Mortgage-Backed Securities - Agency [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Available-for-sale investment securities, fair value		507		564
Fair Value, Recurring [Member] | Level 3 [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Available-for-sale investment securities, fair value		0		0
Fair value of payment services equity investments with readily determinable fair values		0		0
Fair Value, Recurring [Member] | Level 3 [Member] | Interest Rate Swaps [Member] | Cash Flow Hedging [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Derivative asset		0	[3]	0
Derivative financial instruments, liabilities, fair value				0
Fair Value, Recurring [Member] | Level 3 [Member] | Interest Rate Swaps [Member] | Fair Value Hedging [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Derivative asset	[3]	0
Derivative financial instruments, liabilities, fair value				0
Fair Value, Recurring [Member] | Level 3 [Member] | US Treasury and Government
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Available-for-sale investment securities, fair value		0		0
Fair Value, Recurring [Member] | Level 3 [Member] | Residential Mortgage-Backed Securities - Agency [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Available-for-sale investment securities, fair value		$ 0		$ 0

[1] Available-for-sale investment securities are reported at fair value.

[2] Maturities of RMBS are reflective of the contractual maturities of the investment.

[3] Derivative instrument carrying values in an asset or liability position are presented as part of other assets or accrued expenses and other liabilities, respectively, in the Company's condensed consolidated statements of financial condition.

XML

Fair Value Measurements (Schedule of Financial Instruments Measured at Other Than Fair Value) (Details) - USD ($) $ in Millions		Jun. 30, 2023		Dec. 31, 2022
Estimated Fair Value [Member]
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Held-to-maturity investment securities		$ 224		$ 199
Net loan receivables		116,379		110,796
Cash and cash equivalents	[1]	8,605		8,856
Restricted cash	[1]	39		41
Accrued interest receivables	[1],[2]	1,289		1,211
Time deposits	[3]	39,075		32,710
Long-term borrowings		19,590		19,414
Accrued interest payables	[1],[2]	361		308
Estimated Fair Value [Member] | Variable Interest Entity, Primary Beneficiary [Member]
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Long-term borrowings		10,977		9,946
Estimated Fair Value [Member] | Consolidated Entity Excluding Variable Interest Entities (VIE) [Member]
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Long-term borrowings		8,613		9,468
Estimated Fair Value [Member] | Residential Mortgage-Backed Securities - Agency [Member]
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Held-to-maturity investment securities		224		199
Estimated Fair Value [Member] | Level 1 [Member]
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Held-to-maturity investment securities		0		0
Net loan receivables		0		0
Cash and cash equivalents	[1]	8,605		8,856
Restricted cash	[1]	39		41
Accrued interest receivables	[1],[2]	0		0
Time deposits	[3]	0		0
Long-term borrowings		0		0
Accrued interest payables	[1],[2]	0		0
Estimated Fair Value [Member] | Level 1 [Member] | Variable Interest Entity, Primary Beneficiary [Member]
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Long-term borrowings		0		0
Estimated Fair Value [Member] | Level 1 [Member] | Consolidated Entity Excluding Variable Interest Entities (VIE) [Member]
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Long-term borrowings		0		0
Estimated Fair Value [Member] | Level 1 [Member] | Residential Mortgage-Backed Securities - Agency [Member]
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Held-to-maturity investment securities		0		0
Estimated Fair Value [Member] | Level 2 [Member]
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Held-to-maturity investment securities		224		199
Net loan receivables		0		0
Cash and cash equivalents	[1]	0		0
Restricted cash	[1]	0		0
Accrued interest receivables	[1],[2]	1,289		1,211
Time deposits	[3]	39,075		32,710
Long-term borrowings		19,516		19,330
Accrued interest payables	[1],[2]	361		308
Estimated Fair Value [Member] | Level 2 [Member] | Variable Interest Entity, Primary Beneficiary [Member]
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Long-term borrowings		10,903		9,862
Estimated Fair Value [Member] | Level 2 [Member] | Consolidated Entity Excluding Variable Interest Entities (VIE) [Member]
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Long-term borrowings		8,613		9,468
Estimated Fair Value [Member] | Level 2 [Member] | Residential Mortgage-Backed Securities - Agency [Member]
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Held-to-maturity investment securities		224		199
Estimated Fair Value [Member] | Level 3 [Member]
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Held-to-maturity investment securities		0		0
Net loan receivables		116,379		110,796
Cash and cash equivalents	[1]	0		0
Restricted cash	[1]	0		0
Accrued interest receivables	[1],[2]	0		0
Time deposits	[3]	0		0
Long-term borrowings		74		84
Accrued interest payables	[1],[2]	0		0
Estimated Fair Value [Member] | Level 3 [Member] | Variable Interest Entity, Primary Beneficiary [Member]
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Long-term borrowings		74		84
Estimated Fair Value [Member] | Level 3 [Member] | Consolidated Entity Excluding Variable Interest Entities (VIE) [Member]
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Long-term borrowings		0		0
Estimated Fair Value [Member] | Level 3 [Member] | Residential Mortgage-Backed Securities - Agency [Member]
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Held-to-maturity investment securities		0		0
Carrying Value [Member]
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Held-to-maturity investment securities		245		221
Net loan receivables		109,842		104,746
Cash and cash equivalents	[1]	8,605		8,856
Restricted cash	[1]	39		41
Accrued interest receivables	[1],[2]	1,289		1,211
Time deposits	[3]	39,332		33,070
Long-term borrowings		20,276		20,108
Accrued interest payables	[1],[2]	361		308
Carrying Value [Member] | Variable Interest Entity, Primary Beneficiary [Member]
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Long-term borrowings		11,216		10,259
Carrying Value [Member] | Consolidated Entity Excluding Variable Interest Entities (VIE) [Member]
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Long-term borrowings		9,060		9,849
Carrying Value [Member] | Residential Mortgage-Backed Securities - Agency [Member]
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Held-to-maturity investment securities		245		221
Held-to-maturity investment securities	[4]	224		199
Residential Mortgage-Backed Securities - Agency [Member]
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Held-to-maturity investment securities	[4],[5]	$ 224	[6]	$ 199

[1] The carrying values of these assets and liabilities approximate fair value due to their short-term nature.

[2] Accrued interest receivable and payable carrying values are presented as part of other assets and accrued expenses and other liabilities, respectively, in the Company's condensed consolidated statements of financial condition.

[3] Excludes deposits without contractually defined maturities for all periods presented.

[4] Held-to-maturity investment securities are reported at amortized cost.

[5] Amounts represent residential mortgage-backed securities ("RMBS") that were classified as held-to-maturity as they were entered into as a part of the Company's community reinvestment initiatives.

[6] Maturities of RMBS are reflective of the contractual maturities of the investment.

XML

Derivatives and Hedging Activities (Narrative) (Details) - USD ($) $ in Millions	6 Months Ended	12 Months Ended
	Jun. 30, 2023	Dec. 31, 2022
Interest Income
Derivative [Line Items]
Cash flow hedge gain (loss) to be reclassified within twelve months	$ 110
Financing Receivable [Member]
Derivative [Line Items]
Initial maximum period for cash flow hedges (in years)	4 years	3 years

XML

Derivatives and Hedging Activities (Schedule of Fair Value and Outstanding Notional Amounts of Derivative Instruments and Related Collateral Balances) (Details) € in Millions, ₨ in Millions, £ in Millions, $ in Millions, $ in Millions, $ in Millions		Jun. 30, 2023 USD ($) transactions	Jun. 30, 2023 EUR (€) transactions	Jun. 30, 2023 GBP (£) transactions	Jun. 30, 2023 SGD ($) transactions	Jun. 30, 2023 INR (₨) transactions	Jun. 30, 2023 AUD ($) transactions	Dec. 31, 2022 USD ($) transactions		Dec. 31, 2022 EUR (€) transactions	Dec. 31, 2022 GBP (£) transactions	Dec. 31, 2022 SGD ($) transactions	Dec. 31, 2022 INR (₨) transactions	Dec. 31, 2022 AUD ($) transactions
Derivatives, Fair Value [Line Items]
Derivative assets	[1]	$ 4						$ 1	[2]
Derivative liabilities	[1]	0						5	[2]
Collateral held, derivative assets	[3]	0						0	[2]
Collateral posted, derivative liabilities	[3]	0						(5)	[2]
Total net derivative assets		4						1	[2]
Derivative Liability, Fair Value, Amount Offset Against Collateral, Total		0						0	[2]
Designated as Hedges [Member] | Cash Flow Hedging [Member] | Interest Rate Swaps [Member]
Derivatives, Fair Value [Line Items]
Derivative, notional amount		$ 8,900						5,000
Derivative, number of outstanding derivative contracts (in transactions) | transactions		15	15	15	15	15	15
Derivative assets		$ 2						1	[2]
Derivative liabilities		0						3	[2]
Designated as Hedges [Member] | Fair Value Hedging [Member] | Interest Rate Swaps [Member]
Derivatives, Fair Value [Line Items]
Derivative, notional amount		$ 7,750						4,425
Derivative, number of outstanding derivative contracts (in transactions) | transactions		9	9	9	9	9	9
Derivative assets		$ 2						0	[2]
Derivative liabilities		0						2	[2]
Not Designated as Hedges [Member] | Foreign Exchange Forward [Member]
Derivatives, Fair Value [Line Items]
Derivative, notional amount	[4]	$ 26						25
Derivative, number of outstanding derivative contracts (in transactions) | transactions		7	7	7	7	7	7
Derivative assets		$ 0						0	[2]
Derivative liabilities		0						0	[2]
Not Designated as Hedges [Member] | Foreign Exchange Forward [Member] | Euro Member Countries, Euro
Derivatives, Fair Value [Line Items]
Derivative, notional amount | €			€ 6							€ 6
Not Designated as Hedges [Member] | Foreign Exchange Forward [Member] | United Kingdom, Pounds
Derivatives, Fair Value [Line Items]
Derivative, notional amount | £				£ 6							£ 6
Not Designated as Hedges [Member] | Foreign Exchange Forward [Member] | Singapore, Dollars
Derivatives, Fair Value [Line Items]
Derivative, notional amount					$ 1							$ 1
Not Designated as Hedges [Member] | Foreign Exchange Forward [Member] | India, Rupees
Derivatives, Fair Value [Line Items]
Derivative, notional amount | ₨						₨ 788							₨ 788
Not Designated as Hedges [Member] | Foreign Exchange Forward [Member] | Australia, Dollars
Derivatives, Fair Value [Line Items]
Derivative, notional amount							$ 2							$ 2
Not Designated as Hedges [Member] | When-Issued Forward Contracts [Member]
Derivatives, Fair Value [Line Items]
Derivative, notional amount		$ 16						$ 48
Derivative, number of outstanding derivative contracts (in transactions) | transactions		1	1	1	1	1	1	1		1	1	1	1	1

[1] In addition to the derivatives disclosed in the table, the Company enters into forward contracts to purchase when-issued mortgage-backed securities as part of its community reinvestment initiatives. At June 30, 2023 and December 31, 2022, the Company had one outstanding contract with a total notional amount of $16 million and $48 million, respectively, and immaterial fair values.

[2] T

[3] Collateral amounts, which consist of cash and investment securities, are limited to the related derivative asset/liability balance and do not include excess collateral received/pledged.

[4] he foreign exchange forward contracts have notional amounts of EUR 6 million, GBP 6 million, SGD 1 million, INR 788 million and AUD 2 million as of June 30, 2023, and notional amounts of EUR 6 million, GBP 6 million, SGD 1 million, INR 788 million and AUD 2 million as of December 31, 2022.

XML

Derivatives and Hedging Activities Derivatives and Hedging Activities (Schedule of Hedged Items in a Fair Value Hedging Relationship) (Details) - Long-term Debt [Member] - USD ($) $ in Millions		Jun. 30, 2023	Dec. 31, 2022
Schedule of Hedged Items in Fair Value Hedging Relationship [Line Items]
Carrying amount of hedged assets/liabilities		$ 7,615	$ 4,386
Hedged Liability, Fair Value Hedge, Cumulative Increase (Decrease)	[1]	(100)	(3)
Hedged Liability, Discontinued Fair Value Hedge, Cumulative Increase (Decrease)		$ 18	$ 28

[1] The balance includes $18 million and $28 million of cumulative hedging adjustments related to discontinued hedging relationships as of June 30, 2023 and December 31, 2022, respectively.

XML

Derivatives and Hedging Activities (Schedule of Impact of the Derivative Instruments on Income) (Details) - USD ($) $ in Millions	3 Months Ended		6 Months Ended
	Jun. 30, 2023	Jun. 30, 2022	Jun. 30, 2023	Jun. 30, 2022
Derivative Instruments, Gain (Loss) [Line Items]
Amounts reclassified from OCI into earnings, cash flow hedges	$ (16)	$ (1)	$ (21)	$ (2)
Interest Expense [Member] | Long-term Debt [Member] | Designated as Hedges [Member]
Derivative Instruments, Gain (Loss) [Line Items]
Total amounts of income and expense line items presented in the condensed consolidated statements of income, where the effects of fair value or cash flow hedges are recorded	(208)	(131)	(397)	(248)
Interest Expense [Member] | Long-term Debt [Member] | Designated as Hedges [Member] | Interest Rate Swaps [Member]
Derivative Instruments, Gain (Loss) [Line Items]
Amounts reclassified from OCI into earnings, cash flow hedges	2	(1)	4	(2)
Gains on hedged items, fair value hedges	122	22	87	69
Losses on interest rate swaps, fair value hedges	(149)	(18)	(128)	(50)
Total gains on fair value hedges	(27)	4	(41)	19
Interest Expense [Member] | Long-term Debt [Member] | Not Designated as Hedges [Member]
Derivative Instruments, Gain (Loss) [Line Items]
Derivative Instruments Not Designated as Hedging Instruments, Gain (Loss), Net		0		0
Interest Income | Credit Card Loans [Member] | Designated as Hedges [Member]
Derivative Instruments, Gain (Loss) [Line Items]
Total amounts of income and expense line items presented in the condensed consolidated statements of income, where the effects of fair value or cash flow hedges are recorded	3,466	2,424	6,787	4,692
Interest Income | Credit Card Loans [Member] | Designated as Hedges [Member] | Interest Rate Swaps [Member]
Derivative Instruments, Gain (Loss) [Line Items]
Amounts reclassified from OCI into earnings, cash flow hedges	(18)	0	(25)	0
Gains on hedged items, fair value hedges	0	0	0	0
Losses on interest rate swaps, fair value hedges	0	0	0	0
Total gains on fair value hedges	0	0	0	0
Interest Income | Credit Card Loans [Member] | Not Designated as Hedges [Member]
Derivative Instruments, Gain (Loss) [Line Items]
Derivative Instruments Not Designated as Hedging Instruments, Gain (Loss), Net		0		0
Other Income [Member] | Designated as Hedges [Member]
Derivative Instruments, Gain (Loss) [Line Items]
Total amounts of income and expense line items presented in the condensed consolidated statements of income, where the effects of fair value or cash flow hedges are recorded	28	21	50	45
Other Income [Member] | Designated as Hedges [Member] | Interest Rate Swaps [Member]
Derivative Instruments, Gain (Loss) [Line Items]
Amounts reclassified from OCI into earnings, cash flow hedges	0	0	0	0
Gains on hedged items, fair value hedges	0	0	0	0
Losses on interest rate swaps, fair value hedges	0	0	0	0
Total gains on fair value hedges	$ 0	0	$ 0	0
Other Income [Member] | Not Designated as Hedges [Member]
Derivative Instruments, Gain (Loss) [Line Items]
Derivative Instruments Not Designated as Hedging Instruments, Gain (Loss), Net		$ 1		$ 1

XML

Segment Disclosures (Narrative) (Details)	6 Months Ended
	Jun. 30, 2023 segment
Segment Reporting [Abstract]
Number of reportable segments (in number of segments)	2

XML

Segment Disclosures (Schedule of Segment Disclosures) (Details) - USD ($) $ in Millions	3 Months Ended			6 Months Ended
	Jun. 30, 2023	Mar. 31, 2023	Jun. 30, 2022	Jun. 30, 2023	Jun. 30, 2022
Segment Reporting Information [Line Items]
Interest income	$ 4,290		$ 2,915	$ 8,367	$ 5,651
Interest expense	1,113		305	2,058	562
Net interest income	3,177		2,610	6,309	5,089
Provision for credit losses	1,305		549	2,407	703
Other income	701	$ 610	603	1,311	1,015
Other expense	1,404		1,223	2,787	2,353
Income before income taxes	1,169	$ 1,257	1,441	2,426	3,048
Credit Card Loans [Member]
Segment Reporting Information [Line Items]
Interest income	3,466		2,424	6,787	4,692
Total Other Loans [Member] | Private Student Loans [Member]
Segment Reporting Information [Line Items]
Interest income	255		196	507	386
Total Other Loans [Member] | Personal Loans [Member]
Segment Reporting Information [Line Items]
Interest income	278		206	526	412
Total Other Loans [Member] | Other Loans [Member]
Segment Reporting Information [Line Items]
Interest income	73		37	137	69
Unallocated Financing Receivables | Other [Member]
Segment Reporting Information [Line Items]
Interest income	218		52	410	92
Operating Segments [Member] | Digital Banking [Member]
Segment Reporting Information [Line Items]
Interest income	4,290		2,915	8,367	5,651
Interest expense	1,113		305	2,058	562
Net interest income	3,177		2,610	6,309	5,089
Provision for credit losses	1,305		549	2,407	703
Other income	586		546	1,108	1,021
Other expense	1,359		1,186	2,701	2,278
Income before income taxes	1,099		1,421	2,309	3,129
Operating Segments [Member] | Digital Banking [Member] | Credit Card Loans [Member]
Segment Reporting Information [Line Items]
Interest income	3,466		2,424	6,787	4,692
Operating Segments [Member] | Digital Banking [Member] | Total Other Loans [Member] | Private Student Loans [Member]
Segment Reporting Information [Line Items]
Interest income	255		196	507	386
Operating Segments [Member] | Digital Banking [Member] | Total Other Loans [Member] | Personal Loans [Member]
Segment Reporting Information [Line Items]
Interest income	278		206	526	412
Operating Segments [Member] | Digital Banking [Member] | Total Other Loans [Member] | Other Loans [Member]
Segment Reporting Information [Line Items]
Interest income	73		37	137	69
Operating Segments [Member] | Digital Banking [Member] | Unallocated Financing Receivables | Other [Member]
Segment Reporting Information [Line Items]
Interest income	218		52	410	92
Operating Segments [Member] | Payment Services [Member]
Segment Reporting Information [Line Items]
Interest income	0		0	0	0
Interest expense	0		0	0	0
Net interest income	0		0	0	0
Provision for credit losses	0		0	0	0
Other income	115		57	203	(6)
Other expense	45		37	86	75
Income before income taxes	70		20	117	(81)
Operating Segments [Member] | Payment Services [Member] | Credit Card Loans [Member]
Segment Reporting Information [Line Items]
Interest income	0		0	0	0
Operating Segments [Member] | Payment Services [Member] | Total Other Loans [Member] | Private Student Loans [Member]
Segment Reporting Information [Line Items]
Interest income	0		0	0	0
Operating Segments [Member] | Payment Services [Member] | Total Other Loans [Member] | Personal Loans [Member]
Segment Reporting Information [Line Items]
Interest income	0		0	0	0
Operating Segments [Member] | Payment Services [Member] | Total Other Loans [Member] | Other Loans [Member]
Segment Reporting Information [Line Items]
Interest income	0		0	0	0
Operating Segments [Member] | Payment Services [Member] | Unallocated Financing Receivables | Other [Member]
Segment Reporting Information [Line Items]
Interest income	$ 0		$ 0	$ 0	$ 0

XML

Revenue from Contracts with Customers (Schedule of Revenue from Contracts with Customers Disaggregated by Business Segment) (Details) - USD ($) $ in Millions		3 Months Ended			6 Months Ended
		Jun. 30, 2023	Mar. 31, 2023	Jun. 30, 2022	Jun. 30, 2023	Jun. 30, 2022
Disaggregation of Revenue [Line Items]
Discount and interchange revenue, net		$ 370	$ 330	$ 379	$ 700	$ 688
Protection products revenue		44		42	87	86
Transaction processing revenue		72		61	139	118
Other income		28		21	50	45
Loan fee income		186		142	352	282
Gains (losses) on equity investments		1		(42)	(17)	(204)
Total other income not subject to ASC 606		187		100	335	78
Total other income		701	$ 610	603	1,311	1,015
Customer rewards included in discount and interchange revenue		788		743	1,500	1,400
Deposit product fees reported in net interest income and excluded from other income subject to ASC 606		3			10
Accounting Standards Update 2014-09 [Member]
Disaggregation of Revenue [Line Items]
Discount and interchange revenue, net	[1]	370		379	700	688
Protection products revenue		44		42	87	86
Transaction processing revenue		72		61	139	118
Other income		28		21	50	45
Total other income subject to ASC 606	[2]	514		503	976	937
Operating Segments [Member] | Digital Banking [Member]
Disaggregation of Revenue [Line Items]
Loan fee income		186		142	352	282
Gains (losses) on equity investments				0	0	1
Total other income not subject to ASC 606		186		142	352	283
Total other income		586		546	1,108	1,021
Operating Segments [Member] | Digital Banking [Member] | Accounting Standards Update 2014-09 [Member]
Disaggregation of Revenue [Line Items]
Discount and interchange revenue, net	[1]	349		359	659	646
Protection products revenue		44		42	87	86
Transaction processing revenue		0		0	0	0
Other income		7		3	10	6
Total other income subject to ASC 606	[2]	400		404	756	738
Operating Segments [Member] | Payment Services [Member]
Disaggregation of Revenue [Line Items]
Loan fee income		0		0	0	0
Gains (losses) on equity investments		1		(42)	(17)	(205)
Total other income not subject to ASC 606		1		(42)	(17)	(205)
Total other income		115		57	203	(6)
Operating Segments [Member] | Payment Services [Member] | Accounting Standards Update 2014-09 [Member]
Disaggregation of Revenue [Line Items]
Discount and interchange revenue, net	[1]	21		20	41	42
Protection products revenue		0		0	0	0
Transaction processing revenue		72		61	139	118
Other income		21		18	40	39
Total other income subject to ASC 606	[2]	$ 114		$ 99	$ 220	$ 199

[1] Net of rewards, including Cashback Bonus rewards, of $788 million and $743 million for the three months ended June 30, 2023 and 2022, respectively, and $1.5 billion and $1.4 billion for the six months ended June 30, 2023 and 2022. respectively.

[2] Excludes $3 million and $10 million of deposit product fees that are reported within net interest income for the three and six months ended June 30, 2023, respectively. Deposit product fees were immaterial for the three and six months ended June 30, 2022.

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Immaterial Restatement of Prior Period Items (Details) - USD ($) $ / shares in Units, $ in Millions	3 Months Ended			6 Months Ended
	Jun. 30, 2023	Mar. 31, 2023	Jun. 30, 2022	Jun. 30, 2023	Jun. 30, 2022	Dec. 31, 2022	Mar. 31, 2022	Dec. 31, 2021
Error Corrections and Prior Period Adjustments Restatement [Line Items]
Other assets	$ 4,822	$ 4,461		$ 4,822		$ 4,597
Assets	138,082	133,141		138,082		131,706
Accrued expenses and other liabilities	4,963	5,178		4,963		5,618
Total liabilities	124,226	119,081		124,226		117,362
Retained Earnings (Accumulated Deficit)	29,761	29,037		29,761		28,207
Stockholders' Equity Attributable to Parent	13,856	14,060	$ 13,519	13,856	$ 13,519	14,344	$ 13,196	$ 13,180
Liabilities and Equity	138,082	133,141		138,082		131,706
Discount and interchange revenue, net	370	330	379	700	688
Other income	701	610	603	1,311	1,015
Income before income taxes	1,169	1,257	1,441	2,426	3,048
Income tax expense	268	289	338	557	712
Net income	901	968	1,103	1,869	2,336
Net income allocated to common stockholders	$ 895	$ 931	$ 1,097	$ 1,826	$ 2,293
Basic earnings per common share (in dollars per share)	$ 3.54	$ 3.55	$ 3.93	$ 7.09	$ 8.13
Diluted earnings per common share (in dollars per share)	$ 3.54	$ 3.55	$ 3.93	$ 7.09	$ 8.12
Deferred income taxes		$ (115)		$ (269)	$ (145)
(Decrease) increase in accrued expenses and other liabilities		(376)		(812)	323
Net Cash Provided by (Used in) Operating Activities		1,791		3,298	3,346
Retained Earnings [Member]
Error Corrections and Prior Period Adjustments Restatement [Line Items]
Stockholders' Equity Attributable to Parent	$ 29,761	29,037	$ 26,531	29,761	26,531	28,207	25,596	24,538
Net income	$ 901		1,103	$ 1,869	2,336
Revision of Prior Period, Adjustment
Error Corrections and Prior Period Adjustments Restatement [Line Items]
Other assets		80				78
Assets		80				78
Accrued expenses and other liabilities		335				324
Total liabilities		335				324
Retained Earnings (Accumulated Deficit)						(246)
Stockholders' Equity Attributable to Parent		(255)	(245)		(245)	(246)	(237)	(228)
Liabilities and Equity		80				78
Discount and interchange revenue, net		(11)	(11)		(22)
Other income		(11)	(11)		(22)
Income before income taxes		(11)	(11)		(22)
Income tax expense		(3)	(3)		(5)
Net income		(8)	(8)		(17)
Net income allocated to common stockholders		$ (8)	$ (8)		$ (16)
Basic earnings per common share (in dollars per share)		$ (0.03)	$ (0.03)		$ (0.06)
Diluted earnings per common share (in dollars per share)		$ (0.03)	$ (0.03)		$ (0.06)
Deferred income taxes		$ (3)			$ (5)
(Decrease) increase in accrued expenses and other liabilities		11			22
Net Cash Provided by (Used in) Operating Activities		0			0
Revision of Prior Period, Adjustment | Retained Earnings [Member]
Error Corrections and Prior Period Adjustments Restatement [Line Items]
Stockholders' Equity Attributable to Parent			$ (245)		(245)		(237)	(228)
Previously Reported
Error Corrections and Prior Period Adjustments Restatement [Line Items]
Other assets		4,381				4,519
Assets		133,061				131,628
Accrued expenses and other liabilities		4,843				5,294
Total liabilities		118,746				117,038
Retained Earnings (Accumulated Deficit)		29,292				28,453
Stockholders' Equity Attributable to Parent		14,315	13,764		13,764	14,590	13,433	13,408
Liabilities and Equity		133,061				$ 131,628
Discount and interchange revenue, net		341	390		710
Other income		621	614		1,037
Income before income taxes		1,268	1,452		3,070
Income tax expense		292	341		717
Net income		976	1,111		2,353
Net income allocated to common stockholders		$ 939	$ 1,105		$ 2,309
Basic earnings per common share (in dollars per share)		$ 3.58	$ 3.96		$ 8.19
Diluted earnings per common share (in dollars per share)		$ 3.58	$ 3.96		$ 8.18
Deferred income taxes		$ (112)			$ (140)
(Decrease) increase in accrued expenses and other liabilities		(387)			301
Net Cash Provided by (Used in) Operating Activities		$ 1,791			3,346
Previously Reported | Retained Earnings [Member]
Error Corrections and Prior Period Adjustments Restatement [Line Items]
Stockholders' Equity Attributable to Parent			$ 26,776		26,776		$ 25,833	$ 24,766
Net income			$ 1,111		$ 2,353