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Reserves for Losses | 6 Months Ended
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Jun. 30, 2013
Reserves For Losses Cardmember Receivables And Loans Disclosure [Abstract] |
Reserve for Losses | 4. Reserves for L osses Reserves for losses relating to cardmember loans and receivables represent management's best estimate of the probable inherent losses in the Company's outstanding portfolio of loans and recei vables, as of the balance sheet date. Management's evaluation process requires certain estimates and judgments. Reserves for losses are primarily based upon statistical models that analyze portfolio per formance and reflect management's judgment regarding the quantitative components of the reserve adequacy. The models take into account several factors, including loss migration rates and average losses and recoveries over an appropriate historical period. Management consider s whether to adjust the models for specific qualitative factors such as increased risk in certain portfolios, impact of risk management initiatives on portfolio performance and concentration of credit risk based on factors such as vintage, industry or geographic regions. In addition, management may increase or decrease the reserves for losses on cardmember loans for other external envir onmental qualitative factors, including various indicators related to employment, spend, sentiment, housing and credit, as well as the legal and regulatory environment. Generally, d ue to the short-term nature of cardmember receivables, the impact of additional external qualitative factors on the probable losses inherent within the cardmember receivable s portfolio is not significant. As part of this evaluation process, management also considers various reserve coverage metrics, such as r eserves as a percentage of past due amounts, reserves as a percentage of cardmember receivables or loans and net write-off coverage. Cardmember loans and r eceivables balances are written off when management considers amounts to be uncollectible, which is generally determined b y the number of days past due and is typically no later than 180 days past due. Cardmember loans and r eceivables in bankruptcy or owed by deceased individuals are generally written off upon notification and r ecoveries are recognized as they are collected. Changes in Cardmember Receivables Reserve for Losses The following table presents changes in the cardmember receivables reserve for losses for the six months ended June 30:
(Millions) |  | 2013 |  | 2012
Balance, January 1 |  | $ | 428 |  | $ | 438
Additions: |  |  |  |  |  |
| Provisions(a) |  |  | 314 |  |  | 283
| Other(b) |  |  | 82 |  |  | 58
|  | Total provision |  |  | 396 |  |  | 341
Deductions: |  |  |  |  |  |
| Net write-offs(c) |  |  | (358) |  |  | (346)
| Other(d) |  |  | (80) |  |  | (41)
Balance, June 30 |  | $ | 386 |  | $ | 392
P rovisions for principal (resulting from authorized transactions) and fee reserve components. Provisions for unauthorized transactions. Consists of principal (resulting from authorized transactions) and fee components, less recoveries of $200 million and $193 million for the six months ended June 30, 2013 and 2012, respectively. Includes net write-offs resulting from unauthorized transactions of $(80) million and $(63) million for the six months ended June 30, 2013 and 2012, respectively; foreign currency translation adjustments of $(6) million a nd $(2) million for the six months ended June 30, 2013 and 2012, respectively; reclassified cardmember bankruptcy reserves of $18 million for the six months ended June 30, 2012 only (cardmember bankruptcy reserves were classified as other liabilities in periods prior to March 31, 2012); and other items of $6 million for both the six months ended June 30, 2013 and 2012. Cardmember Receivables Evaluated Individually and Collectively for Impairment The following table presents cardmember receivables evaluated individually and collectively for impair ment and related reserves as of June 30, 2013 and December 31, 2012:
(Millions) |  | 2013 |  | 2012
Cardmember receivables evaluated individually for impairment(a) |  | $ | 69 |  | $ | 117
Related reserves (a) |  | $ | 68 |  | $ | 91
Cardmember receivables evaluated collectively for impairment |  | $ | 44,028 |  | $ | 42,649
Related reserves |  | $ | 318 |  | $ | 337
Represents receivables modified in a TDR and related reserves. Refer to the Impaired Cardmember Loans and Receivables dis cussion in N ote 3 for further information. Changes in Cardmember Loans Reserve for Losses The following table presents changes in the cardmember loans reserve for losses for the six months ended June 30:
(Millions) |  | 2013 |  | 2012
Balance, January 1 |  | $ | 1,471 |  | $ | 1,874
Additions: |  |  |  |  |  |
| Provisions(a) |  |  | 577 |  |  | 438
| Other(b) |  |  | 62 |  |  | 51
|  | Total provision |  |  | 639 |  |  | 489
Deductions: |  |  |  |  |  |
| Net write-offs |  |  |  |  |  |
|  | Principal(c) |  |  | (613) |  |  | (678)
|  | Interest and fees(c) |  |  | (77) |  |  | (85)
| Other(d) |  |  | (78) |  |  | (53)
Balance, June 30 |  | $ | 1,342 |  | $ | 1,547
P rovisions for principal (resulting from authorized transacti ons), interest and fee reserve s components. P rovisions for unauthorized transactions. Consists of principal write-offs (resulting from authorized transactions), less recoveries of $230 million and $258 million for the six months ended June 30, 2013 and 2012, respectively. Recoveries of interest and fees were de minimis. I nclude s net write-offs resulting from unauthorized transactions of $(62) million and $(53) million for the six months ended June 30, 2013 and 2012, respectively; foreign currency translation adjustments of $(11) million and $(1) million for the six months ended June 30, 2013 and 2012, respectively; reclassified cardmember bankruptcy reserves of $4 million for the six months ended June 30, 2012 only (cardmember bankruptcy reserves were classified as other liabilities in periods prior to March 31, 2012); and other item s of $(5) million and $(3) million for the six months ended June 30, 2013 and 2012, respectivel y. Cardm ember Loans Evaluated Individually and Collectively for Impairment The following table presents cardmember loans evaluated individually and collectively for impairment and related reserves as of June 30, 2013 and December 31, 2012:
(Millions) |  | 2013 |  | 2012
Cardmember loans evaluated individually for impairment(a) |  | $ | 474 |  | $ | 633
Related reserves (a) |  | $ | 119 |  | $ | 153
Cardmember loans evaluated collectively for impairment(b) |  | $ | 62,600 |  | $ | 64,596
Related reserves (b) |  | $ | 1,223 |  | $ | 1,318
Represents loans modified in a TDR and related reserves. Refer to the Impaired Cardmember Loans and Receivables d iscussion in Note 3 for further information. Represents current loans and loans less than 90 days past due, loans over 90 days past due and accruing interest, and non-accrual loans and related reserves. The reserves include the quantitative results of analytical models that are specific to individual pools of loans and reserves for external environmental qualitative factors that apply to loans in geographic markets that are collectively evaluated for impairment and are not specific to any individual pool of loans.

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