Fair Value and Investment Securities (Tables)

9 Months Ended

Sep. 30, 2014

Marketable Securities [Abstract]

Distribution of Financial Instruments, Measured at Fair Value on a Recurring Basis

The distribution of the Company’s financial instruments which are measured at fair value on a recurring basis within the Valuation Hierarchy was as follows:

	September 30, 2014
	Quoted Prices in Active Markets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Fair Value
	(in millions)
Municipal securities	$	—	$	147	$	—	$	147
U.S. government and agency securities1	—		254		—		254
Corporate securities	—		1,006		—		1,006
Asset-backed securities	—		362		—		362
Other 2	11		71		11		93
Total	$	11	$	1,840	$	11	$	1,862
	December 31, 2013
	Quoted Prices in Active Markets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Fair Value
	(in millions)
Municipal securities	$	—	$	267	$	—	$	267
U.S. government and agency securities 1	—		560		—		560
Corporate securities	—		1,426		—		1,426
Asset-backed securities	—		364		—		364
Other 2	—		79		11		90
Total	$	—	$	2,696	$	11	$	2,707

¹ Excludes amounts held in escrow related to the U.S. merchant class litigation settlement of $540 million and $723 million at September 30, 2014 and December 31, 2013, respectively, which would be included in Levels 1 and 2 of the Valuation Hierarchy. See Note 6 (Accrued Expenses and Accrued Litigation) and Note 12 (Legal and Regulatory Proceedings) for further details.

² The amounts classified within Level 3 of the Valuation Hierarchy represent auction rate securities (“ARS”) with values that are not currently observable in the market due to the lack of trading in the securities.

Available-for-Sale Investment Securities, Unrealized Gains and Losses

The major classes of the Company’s available-for-sale investment securities, for which unrealized gains and losses are recorded as a separate component of other comprehensive income on the consolidated statement of comprehensive income, and their respective amortized cost basis and fair values as of September 30, 2014 and December 31, 2013 were as follows:

	September 30, 2014
	Amortized Cost		Gross Unrealized Gain		Gross Unrealized Loss			Fair Value
	(in millions)
Municipal securities	$	147	$	—	$	—		$	147
U.S. government and agency securities	254		—		—			254
Corporate securities	1,005		1		—			1,006
Asset-backed securities	362		—		—			362
Other1	114		—		(15		)	99
Total	$	1,882	$	1	$	(15	)	$	1,868
	December 31, 2013
	Amortized Cost		Gross Unrealized Gain		Gross Unrealized Loss			Fair Value
	(in millions)
Municipal securities	$	267	$	—	$	—		$	267
U.S. government and agency securities	560		—		—			560
Corporate securities	1,425		2		(1		)	1,426
Asset-backed securities	364		—		—			364
Other 1	91		—		(1		)	90
Total	$	2,707	$	2	$	(2	)	$	2,707

¹ Other includes ARS, which are included in other assets on the consolidated balance sheet. The unrealized losses related to ARS have been in an unrealized loss position longer than 12 months, but have not been deemed other-than-temporarily impaired.

Maturity Distribution Based on Contractual Terms of Investment Securities

The maturity distribution based on the contractual terms of the Company’s investment securities at September 30, 2014 was as follows:

	Available-For-Sale
	Amortized Cost		Fair Value
	(in millions)
Due within 1 year	$	1,045	$	1,046
Due after 1 year through 5 years	796		796
Due after 5 years through 10 years	4		4
Due after 10 years	12		11
No contractual maturity	25		11
Total	$	1,882	$	1,868