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Accounts Receivable and Loans | 12 Months Ended
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Dec. 31, 2012
Loans Notes Trade And Other Receivables Disclosure [Abstract] |
Accounts Receivable and Loans | NOTE 4 A ccounts R eceivable and Loans As described below, t he Company's charge and lending payment card products result in the generation of cardmember receivables and cardmember loans, respectively. C ardmember and Other R eceivables Cardmember receivables, represent ing amounts due from charge payment card product customers, are recorded at the time a cardmember enters into a point-of-sa le transaction with a merchant. Each charge card transaction is authorized based on its likely economics reflecting a cardmember's most recent credit information and spend patterns. Additionally, global spend limits are establish ed to limit the maximum exposure for the Company. Charge card customers generally must pay the full amount billed each month. Cardmember receivable balances are presented on the Consolidated Balance Sheets net of reserves for losse s (refer to Note 5), and include principal and any related accrued fees. Accounts receivable as of December 31, 2012 and 2011 were as follows:
(Millions) |  | 2012 |  | 2011
U.S. Card Services(a) |  | $ | 21,124 |  | $ | 20,645
International Card Services |  |  | 7,778 |  |  | 7,222
Global Commercial Services(b) |  |  | 13,671 |  |  | 12,829
Global Network & Merchant Services(c) |  |  | 193 |  |  | 194
Cardmember receivables(d) |  |  | 42,766 |  |  | 40,890
Less: Reserve for losses |  |  | 428 |  |  | 438
Cardmember receivables, net |  | $ | 42,338 |  | $ | 40,452
Other receivables, net(e) |  | $ | 3,576 |  | $ | 3,657
Includes $7.5 billion of gross cardmember receivables available to settle obligations of a consolidated VIE as of both December 31, 2012 and 2011. Includes $476 m illion and $459 m illion of gross cardmember receivables available to settle obligations of a consolidated VIE as of December 31, 2012 and 2011, respectively. Also i ncludes $913 m illion and $563 m illion due from airlines, of which Delta Air Lines (Delta) comprises $676 m illion and $340 m illion as of December 31, 2012 and 2011, respectively. Includes receivables primarily related to the Company's International Currency Card portfolios. Includes approximately $12.9 billion and $12.8 billion of cardmember receivables outside the United States as of December 31, 2012 and 2011, respectively. Other receivables primarily represent amounts related to (i) purchased joint venture receivables, (ii) certain merchants for billed discount revenue, (iii) the Company's travel customers and suppliers, and (iv) other receivables due to the Company in the ordinary course of business. As of December 31, 2011, o ther receivables also include d investments that matured on December 31, 2011, but which did not settle until January 3, 2012. Other receivables are presented ne t of reserves for losses of $86 m illion and $102 m illion as of December 31, 2012 and 2011, respectively. Cardmember and Other Loans Cardmember loans, represent ing amounts due from lending payment card product customers, are recorded at the time a cardmember enters into a point-of-sale transaction with a merchant or when a charge card customer enters into an extended payment arrangement with the Company. The Company's len ding portfolios primarily include revolving loans to cardmembers obta i ned through either their credit card accounts or the lending on charge feature of their charge card accounts. These loans have a range of terms such as credit limits, interest rates, fees and payment structures, which can be revised over time based on new information about cardmembers and in accordance with applicable regulations and the respective product's terms and conditions. Cardmembers holding revolving loans are typically required to make monthly payments based on pre-established amounts. The amounts that cardmembers choose to revolve are subject to f inance c harges. Cardmember loans are presented on the Consolidated Balance Sheets net of reserves for losses (refer to N ote 5), and include principal, accrued interest and fees receivable. The Company's policy generally is to cease accruing interest on a cardmember loan at the time the account is written off, and establish reserves for interest that the Company believes will not be collected. Loans as of December 31, 2012 and 2011 consisted of:
(Millions) |  |  | 2012 |  |  | 2011
U.S. Card Services(a) |  | $ | 55,953 |  | $ | 53,686
International Card Services |  |  | 9,236 |  |  | 8,901
Global Commercial Services |  |  | 40 |  |  | 34
Cardmember loans |  |  | 65,229 |  |  | 62,621
Less: Reserve for losses |  |  | 1,471 |  |  | 1,874
Cardmember loans, net |  | $ | 63,758 |  | $ | 60,747
Other loans, net(b) |  | $ | 551 |  | $ | 419
Includes approximately $32.7 billion and $33.8 billion of gross cardmember loans available to settle obligations of a consolidated VIE as of December 31, 2012 and 2011, respectively. Other loans primarily represent loans to merchants and a store card loan portfolio whose billed business is not processed on the Company's network. Other loans are presented net of reserves for losses of $20 million and $18 million as of December 31, 2012 and 2011, respectively. C ardmember Loans and Cardmember Receivables A ging Generally, a cardmember account is considered past due if payment is not received within 30 days af ter the billing statement date. T he following table represents the aging of cardmember loans and receivables as of December 31, 2012 and 2011:
|  |  |  |  |  |  | 30-59 |  |  | 60-89 |  |  | 90+ |  |  |
|  |  |  |  |  |  | Days |  |  | Days |  |  | Days |  |  |
|  |  |  |  |  |  | Past |  |  | Past |  |  | Past |  |  |
2012 (Millions) |  |  | Current |  |  | Due |  |  | Due |  |  | Due |  |  | Total
Cardmember |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
| Loans: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
U.S. Card Services |  | $ | 55,281 |  | $ | 200 |  | $ | 147 |  | $ | 325 |  | $ | 55,953
International Card |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
| Services |  |  | 9,099 |  |  | 47 |  |  | 30 |  |  | 60 |  |  | 9,236
Cardmember |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
| Receivables: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
U.S. Card Services |  | $ | 20,748 |  | $ | 116 |  | $ | 76 |  | $ | 184 |  | $ | 21,124
International Card |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
| Services(a) |  |  | (b) |  |  | (b) |  |  | (b) |  |  | 74 |  |  | 7,778
Global Commercial |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
| Services(a) |  |  | (b) |  |  | (b) |  |  | (b) |  |  | 112 |  |  | 13,671
|  |  |  |  |  |  | 30-59 |  |  | 60-89 |  |  | 90+ |  |  |
|  |  |  |  |  |  | Days |  |  | Days |  |  | Days |  |  |
|  |  |  |  |  |  | Past |  |  | Past |  |  | Past |  |  |
2011 (Millions) |  |  | Current |  |  | Due |  |  | Due |  |  | Due |  |  | Total
Cardmember |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
| Loans: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
U.S. Card Services |  | $ | 52,930 |  | $ | 218 |  | $ | 165 |  | $ | 373 |  | $ | 53,686
International Card |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
| Services |  |  | 8,748 |  |  | 52 |  |  | 32 |  |  | 69 |  |  | 8,901
Cardmember |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
| Receivables: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
U.S. Card Services |  | $ | 20,246 |  | $ | 122 |  | $ | 81 |  | $ | 196 |  | $ | 20,645
International Card |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
| Services(a) |  |  | (b) |  |  | (b) |  |  | (b) |  |  | 63 |  |  | 7,222
Global Commercial |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
| Services(a) |  |  | (b) |  |  | (b) |  |  | (b) |  |  | 109 |  |  | 12,829
For c ardmember receivables in International Card Services (ICS) and Global Commercial Services (GCS), delinquency data is tracked based on days past billing status rather than days past due. A cardmember account is considered 90 days past billing if payment has not been received within 90 days of the cardmember's billing statement date. In addition, if the Company initiates collection procedures on an account prior to the account becoming 90 days past billing the associated cardmember receivable balance is considered as 90 days past billing. These amounts are shown above as 90+ Days Past Due for presentation purposes. Historically, data for periods prior to 90 days past billing are not available due to financial reporting system constraints. Therefore, it has not been relied upon for risk management purposes. The balances that are current to 89 days past due can be derived as the difference between the T otal and the 90+ Days Past Due balances. C redit Q uality I ndicator s for C ardmember L oans and R eceivables The following table s present the key credit quality indicators as of or for the years ended December 31:
|  | 2012 |  | 2011 |
|  | Net Write-Off Rate |  |  |  | Net Write-Off Rate |  |  |
|  |  |  |  |  | 30 Days |  |  |  |  |  | 30 Days |
|  |  |  | Principal, |  | Past Due |  |  |  | Principal, |  | Past Due |
|  | Principal |  | Interest, & |  | as a % of |  | Principal |  | Interest, & |  | as a % of |
|  | Only | (a) | Fees | (a) | Total |  | Only | (a) | Fees | (a) | Total |
Cardmember Loans: |  |  |  |  |  |  |  |  |  |  |  |  |
U.S. Card Services |  | 2.1 | % | 2.3 | % | 1.2 | % | 2.9 | % | 3.2 | % | 1.4 | %
International Card Services |  | 1.9 | % | 2.4 | % | 1.5 | % | 2.7 | % | 3.3 | % | 1.7 | %
Cardmember Receivables: |  |  |  |  |  |  |  |  |  |  |  |  |
U.S. Card Services |  | 1.9 | % | 2.1 | % | 1.8 | % | 1.7 | % | 1.9 | % | 1.9 | %
|  |  |  |  |  | 2012 |  | 2011 |
|  |  |  |  |  | Net Loss |  |  |  | Net Loss |  |  |
|  |  |  |  |  | Ratio as |  | 90 Days |  | Ratio as |  | 90 Days |
|  |  |  |  |  | a % of |  | Past Billing |  | a % of |  | Past Billing |
|  |  |  |  |  | Charge |  | as a % of |  | Charge |  | as a % of |
|  |  |  |  |  | Volume |  | Receivables |  | Volume |  | Receivables |
Cardmember Receivables: |  |  |  |  |  |  |  |  |  |  |  |  |
International Card Services |  |  |  |  |  | 0.16 | % | 0.9 | % | 0.15 | % | 0.9 | %
Global Commercial Services |  |  |  |  |  | 0.06 | % | 0.8 | % | 0.06 | % | 0.8 | %
The Company presents a net write-off rate based on principal losses only (i.e., excluding interest and/or fees) to be consistent with industry convention. In addition, b ecause the Company's practice is to include uncollectible interest and/or fees as part of its total provision for losses, a net write-off rate including principal, interest and/or fees is also presented. Refer to Note 5 for additional indicators, including external environmental factors, management considers in its monthly evaluation process for reserves for losses. I mpaired C ardmember Loans and R eceivables Impaired loans and receivables are defined by GAAP as individual larger balance or homogeneous pools of smaller balance restructured loans and receivables for which it is probab le that the Company will be unable to collect all amounts due according to the original contractual terms of the loan and receivable agreement. The Company considers impaired loans and receivables to include: (i) loans over 90 days past due still accruing interest, (ii) non-accrual loans and (iii) loans and receivables modified as troubled debt restructuring s (TDR s). The Company may modify, through various company sponsored programs, cardmember loans and receivables in instances where the cardmember is experiencing financial difficulty to minimize losses while providing cardmembers with temporary or permanent financial relief. The Company has classified cardmember loans and receivables in these modification programs as TDRs. Such modifications to the loans and receivables may include (i) reducing the interest rate (as low as zero percent, in which case the loan is characterized as non-accrual in the Company's TDR disclosures), (ii) reducing the outstanding balance (in the event of a settlement), (iii) suspending delinquency fees until the cardmember exits the modification program and (iv) placing the cardmember on a fixed payment plan not to exceed 60 months. Upon entering the modification program, the cardmember's ability to make future purchase s is either cancelled, or in certain cases suspended until the cardmember successfully exits the modification program. In accordance with the modification agreement with the cardmember, loans r evert back to the original contractual terms (including the contractual interest rate) when the cardmember exits the modification program, either (i) when all payments have been made in accordance with the modification agreement or (ii) the cardmember defaults out of the modification program. In either case, the Company establishes a reserve for cardmember interest charges considered to be un collect ible. The performance of a loan or a receivable modified as a TDR is closely monitored to understa nd its impact on the Company's reserve for losses. Though the ultimate success of m odification programs remains unce rtain, the Company believes the programs improve the cumulative loss performance of such loans and receivables. Reserves for cardmember loans and receivables modified as TDR s are determined by the difference between the cash flows expected to be received from the cardmember (taking into consideration the prob ability of subsequent defaults), discounted at the original effective interest rates, and the carrying value of the cardmember loan or receivable balance. The Company determines the original effective interest rate as the interest rate in effect prior to the imposition of any penalty interest rate. All changes in the impairment measurement, including the component due to the passage of time, are included in the provision for losses in the Consolidated Statements of Income. The following table provide s additional information with respect to th e Company's impaired cardmember loans and receivables, which are not significant for ICS and GCS, as of December 31:
|  |  | Loans over |  |  |  |  |  |  |  |  |  |  |  |
|  |  | 90 Days |  |  |  |  |  | Loans & |  |  | Total |  |  |
|  |  | Past Due |  |  | Non- |  |  | Receivables |  |  | Impaired |  |  | Unpaid |  |  |  |
|  | & Accruing |  |  | Accrual |  |  | Modified |  |  | Loans & |  |  | Principal |  |  | Allowance |
2012 (Millions) |  |  | Interest | (a) |  | Loans | (b) |  | as a TDR | (c) |  | Receivables |  |  | Balance | (d) |  | for TDRs | (e)
Cardmember Loans: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
U.S. Card Services |  | $ | 73 |  | $ | 426 |  | $ | 627 |  | $ | 1,126 |  | $ | 1,073 |  | $ | 152 |
International Card Services |  |  | 59 |  |  | 5 |  |  | 6 |  |  | 70 |  |  | 69 |  |  | 1 |
Cardmember Receivables: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
U.S. Card Services |  |  | ― |  |  | ― |  |  | 117 |  |  | 117 |  |  | 111 |  |  | 91 |
Total |  | $ | 132 |  | $ | 431 |  | $ | 750 |  | $ | 1,313 |  | $ | 1,253 |  | $ | 244 |
|  |  | Loans over |  |  |  |  |  |  |  |  |  |  |  |
|  |  | 90 Days |  |  |  |  |  | Loans & |  |  | Total |  |  |
|  |  | Past Due |  |  | Non- |  |  | Receivables |  |  | Impaired |  |  | Unpaid |  |  |  |
|  | & Accruing |  |  | Accrual |  |  | Modified |  |  | Loans & |  |  | Principal |  |  | Allowance |
2011 (Millions) |  |  | Interest | (a) |  | Loans | (b) |  | as a TDR | (c) |  | Receivables |  |  | Balance | (d) | for TDRs | (e)
Cardmember Loans: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
U.S. Card Services |  | $ | 64 |  | $ | 529 |  | $ | 736 |  | $ | 1,329 |  | $ | 1,268 |  | $ | 174 |
International Card Services |  |  | 67 |  |  | 6 |  |  | 8 |  |  | 81 |  |  | 80 |  |  | 2 |
Cardmember Receivables: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
U.S. Card Services |  |  | ― |  |  | ― |  |  | 174 |  |  | 174 |  |  | 165 |  |  | 118 |
Total |  | $ | 131 |  | $ | 535 |  | $ | 918 |  | $ | 1,584 |  | $ | 1,513 |  | $ | 294 |
The Company's policy is generally to accrue inte rest through the date of write-off (at 180 days past due). The Company establishes reserves for interest that the Company believes will not be collected. Excludes loans modified as a TDR. Non-accrual loans not in modification programs include certain cardmember loans placed with outside collection agencies for which the Company has ceased accruing interest. The Company's policy is generally not to resume the accrual of interest on these loans. Payments received are applied against the recorded loan balance. Interest income is recognized on a cash basis for any payments received after the loan balance has been paid in full. Excludes loans modified as a TDR. T otal loans and receivable s modified as a TDR include s $320 million and $410 mil lion that are non-accrual and $6 million and $4 million that are past due 90 days and still accruing interest as of December 31, 2012 and 2011, respectively. Unpaid principal balance consists of cardmember charges billed and excludes other amounts charged directly by the Company such as int erest and fees. R epresents the reserve for losses for TDRs, which are evaluated separately for impairment. The Company records a reserve for losses for all impaired loans. Refer to Cardmember Loans Evaluated Separately and Collectively for Impairment in Note 5 for further discussion of the reserve for losses on loans over 90 days past due and accruing interest and non-accrual loans, which are evaluated collectively for impairment. The following table provides information with respect to the Company's interest income recognized and average balances of impaired cardmember loans and receivables, which are not significant for ICS and GCS, for the years ended December 31:
|  | 2012
|  |  | Interest |  |  |
|  |  | Income |  |  | Average
(Millions) |  |  | Recognized |  |  | Balance
Cardmember Loans: |  |  |  |  |  |
U.S. Card Services |  | $ | 60 |  | $ | 1,221
International Card Services |  |  | 16 |  |  | 75
Cardmember Receivables: |  |  |  |  |  |
U.S. Card Services |  |  | ― |  |  | 135
Total |  | $ | 76 |  | $ | 1,431
|  | 2011
|  |  | Interest |  |  |
|  |  | Income |  |  | Average
(Millions) |  |  | Recognized |  |  | Balance
Cardmember Loans: |  |  |  |  |  |
U.S. Card Services |  | $ | 67 |  | $ | 1,498
International Card Services |  |  | 26 |  |  | 98
Cardmember Receivables: |  |  |  |  |  |
U.S. Card Services |  |  | ― |  |  | 145
Total |  | $ | 93 |  | $ | 1,741
Cardmember Loans and Receivables Modified as TDRs The following table provides additional information with respect to the cardmember loans and receivables modified as TDRs, which are not significant for ICS, for the year s ended December 31:
|  |  |  |  | Aggregated |  |  | Aggregated
|  |  |  |  |  | Pre- |  |  | Post-
2012 |  |  |  | Modification |  | Modification
(Accounts in thousands, |  | Number of |  | Outstanding |  | Outstanding
Dollars in millions) |  | Accounts |  |  | Balances(a) |  |  | Balances(a)
Troubled Debt |  |  |  |  |  |  |  |
Restructurings: |  |  |  |  |  |  |  |
U.S. Card Services ― |  |  |  |  |  |  |  |
| Cardmember Loans |  | 106 |  | $ | 779 |  | $ | 762
U.S. Card Services ― |  |  |  |  |  |  |  |
| Cardmember Receivables |  | 37 |  |  | 425 |  |  | 418
Total(b) |  | 143 |  | $ | 1,204 |  | $ | 1,180
|  |  |  |  | Aggregated |  |  | Aggregated
|  |  |  |  |  | Pre- |  |  | Post-
2011 |  |  |  | Modification |  | Modification
(Accounts in thousands, |  | Number of |  | Outstanding |  | Outstanding
Dollars in millions) |  | Accounts |  |  | Balances(a) |  |  | Balances(a)
Troubled Debt |  |  |  |  |  |  |  |
Restructurings: |  |  |  |  |  |  |  |
U.S. Card Services ― |  |  |  |  |  |  |  |
| Cardmember Loans |  | 147 |  | $ | 1,110 |  | $ | 1,064
U.S. Card Services ― |  |  |  |  |  |  |  |
| Cardmember Receivables |  | 50 |  |  | 402 |  |  | 388
Total(b) |  | 197 |  | $ | 1,512 |  | $ | 1,452
I ncludes principal and accrued interest. The difference between the pre- and post-modification outstanding balances is attributable to amounts charged off for cardmember loans and receivables being resolved through the Company's short-term settlement programs. As described previously, the Company's cardmember loans and receivables modification programs may include (i) reducing the interest rate, (ii) reducing the outstanding balance, (iii) suspending delinquency fees and (iv) placing the cardmember on a fixed payment plan not exceeding 60 months. Upon entering the modification program, the cardmember's ability to make future purchases is either cancelled, or in certain cases suspended until successfully exiting the modification program. The Company has evaluated the primary financial effects of the impact of the changes to an account upon modification as follows: Interest Rate Reduction: For the year s ended December 31, 2012 and 2011, the average interest rate reduction was 12 percent age points and 11 percentage points, respectively. None of these interest rate reductions had a significant impact on interest on loans in the Consolidated Statements of Income. The Company does not offer interest rate reduction programs for U.S. Card Services (USCS) cardmember receivables as these receivables are non-interest bearing. Outstanding Balance Reduction: The table above presents the financial effects to the Company as a result of reducing the outstanding balance for s hort-t erm s ettlement p rograms. The difference between the pre- and post-modification outstanding balances represents the amou nt that either has been written off or will be written off upon successful completion of the settlement program. Payment Term Extension: For the year s ended December 31, 2012 and 2011, the average payment term extension was approximately 13 months and 15 months, respectively, for USCS cardmember receivables. For USCS cardmember loans, there have been no payment term extensions. The following table provides information for the years ended December 31, 2012 and 2011, with respect to the cardmember loans and receivables modified as TDRs that subsequently defaulted within 12 months of modification. A cardmember will default from a modification program after one and up to three consecutive missed payments, depending on the terms of the modification program. The defaulted ICS cardmember loan modifications were not significant.
|  |  |  |  |  | Aggregated
2012 |  |  |  |  | Outstanding
(Accounts in thousands, |  |  | Number of |  |  | Balances
Dollars in millions) |  |  | Accounts |  | Upon Default(a)
Troubled Debt Restructurings |  |  |  |  |  |
That Subsequently Defaulted: |  |  |  |  |  |
U.S. Card Services ― |  |  |  |  |  |
| Cardmember Loans |  |  | 23 |  | $ | 182
U.S. Card Services ― |  |  |  |  |  |
| Cardmember Receivables |  |  | 1 |  |  | 37
Total |  |  | 24 |  | $ | 219
|  |  |  |  |  | Aggregated
2011 |  |  |  |  | Outstanding
(Accounts in thousands, |  |  | Number of |  |  | Balances
Dollars in millions) |  |  | Accounts |  | Upon Default(a)
Troubled Debt Restructurings |  |  |  |  |  |
That Subsequently Defaulted: |  |  |  |  |  |
U.S. Card Services ― |  |  |  |  |  |
| Cardmember Loans |  |  | 46 |  | $ | 343
U.S. Card Services ― |  |  |  |  |  |
| Cardmember Receivables |  |  | 6 |  |  | 45
Total |  |  | 52 |  | $ | 388
The outstanding balance includes principal and accrued interest.

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- Definition The entire disclosure for financing receivables. Examples of financing receivables include, but are not limited to, loans, trade accounts receivables, notes receivable, credit cards, and receivables relating to a lessor's right(s) to payment(s) from a lease other than an operating lease that is recognized as assets. + References Reference 1: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 310 -SubTopic 10 -URI http://asc.fasb.org/subtopic&trid=2196772 Reference 2: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 310 -SubTopic 10 -Section 55 -Paragraph 14 -URI http://asc.fasb.org/extlink&oid=7880640&loc=SL6953791-111525 + Details
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