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Derivative Financial Instruments and Hedging Activities
 12 Months Ended
Dec. 31, 2020
Derivative Instruments and Hedging Activities Disclosure [Abstract]  
Derivative Financial Instruments and Hedging Activities Derivative Financial Instruments and Hedging Activities
We are exposed to certain risks arising from both our business operations and economic conditions. We manage economic risks, including interest rate risk, primarily by managing the amount, sources, and duration of our assets and liabilities and by using derivative financial instruments. Specifically, we enter into derivative financial instruments to manage exposures that arise from business activities that result in the receipt or payment of future known and uncertain cash amounts, the value of which are determined by interest rates. Our derivative financial instruments are used to manage differences in the amount, timing, and duration of our known or expected cash receipts and our known or expected cash payments principally related to our borrowings.
Certain of our foreign operations expose us to fluctuations of foreign interest rates and exchange rates. We primarily finance our earning assets with debt in the same currency to minimize the impact to earnings from our exposure to fluctuations in exchange rates. When we use a different currency, these fluctuations may impact the value of our cash receipts and payments in terms of our functional currency. We enter into derivative financial instruments to protect the value or fix the amount of certain assets and liabilities in terms of the relevant functional currency. The table below presents the gross fair value amounts of our derivative financial instruments and the associated notional amounts:
 December 31, 2020December 31, 2019
Notional
Fair Value of Assets(a)
Fair Value of Liabilities(a)
Notional
Fair Value of Assets(a)
Fair Value of Liabilities(a)
Derivatives designated as hedges
Fair value hedges
Interest rate swaps$10,064 $463 $13 $9,458 $234 $23 
Foreign currency swaps1,958 128 9 1,796 22 71 
Cash flow hedges
Interest rate swaps921 — 27 590 — 6 
Foreign currency swaps5,626 278 47 4,429 40 119 
Derivatives not designated as hedges
Interest rate contracts110,997 954 576 92,400 340 300 
Total(b)
$129,566 $1,823 $672 $108,673 $636 $519 
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(a)The gross fair value amounts of our assets and liabilities are included in other assets and other liabilities, respectively. Amounts accrued for interest payments in a net receivable position are included in other assets. Amounts accrued for interest payments in a net payable position are included in other liabilities. All our derivatives are categorized within Level 2 of the fair value hierarchy. The fair value for Level 2 instruments was derived using the market approach based on observable market inputs including quoted prices of similar instruments and foreign exchange and interest rate forward curves.
(b)We primarily enter into derivative instruments through AmeriCredit Financial Services, Inc. (AFSI); however, our SPEs may also be parties to derivative instruments. Agreements between AFSI and its derivative counterparties include rights of setoff for positions with offsetting values or for collateral held or posted. At December 31, 2020 and 2019, the fair value of assets and liabilities available for offset was $501 million and $302 million. At December 31, 2020 and 2019, we held $728 million and $210 million of collateral from counterparties that is available for netting against our asset positions. At December 31, 2020 and 2019, we posted $139 million and $89 million of collateral to counterparties that is available for netting against our liability positions.
The following amounts were recorded in the consolidated balance sheet related to items designated and qualifying as hedged items in fair value hedging relationships:
Carrying Amount of
Hedged Items
Cumulative Amount of Fair Value
Hedging Adjustments(a)
December 31, 2020December 31, 2019December 31, 2020December 31, 2019
Unsecured debt$23,315 $20,397 $(739)$(77)
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(a)Includes $200 million of unamortized gains and $69 million of unamortized losses remaining on hedged items for which hedge accounting has been discontinued at December 31, 2020 and 2019.
The table below presents the effect of our derivative financial instruments and related hedged items, as applicable, in the consolidated statements of income:
Years Ended December 31,
202020192018
Interest Expense(a)
Operating Expenses(b)
Interest Expense(a)
Operating Expenses(b)
Interest Expense(a)
Operating Expenses(b)
Fair value hedges
Hedged items - interest rate swaps$(500)$— $(569)$— $83 $— 
Interest rate swaps250 — 355 — (102)— 
Hedged items - foreign currency swaps(c)
— (161)— 33 — (17)
Foreign currency swaps(31)167 (59)(28)(5)18 
Cash flow hedges
Interest rate swaps(14)— 5 — 14 — 
Hedged items - foreign currency swaps(c)
— (457)— (3)— 114 
Foreign currency swaps(108)457 (87)3 (49)(114)
Derivatives not designated as hedges
Interest rate contracts237 — 142 — 26 — 
Foreign currency swaps— — — — (44)(142)
Total (losses) income recognized$(166)$6 $(213)$5 $(77)$(141)
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(a)Total interest expense was $3.0 billion, $3.6 billion and $3.2 billion for 2020, 2019 and 2018.
(b)Total operating expenses were $1.5 billion, $1.6 billion and $1.5 billion for 2020, 2019 and 2018.
(c)Transaction activity recorded in operating expenses related to foreign currency-denominated loans.
The tables below present the effect of our derivative financial instruments in the consolidated statements of comprehensive income:
Gains (Losses) Recognized In
Accumulated Other Comprehensive Loss
Years Ended December 31,
 202020192018
Fair value hedges
Foreign currency swaps$(19)$(41)$(3)
Cash flow hedges
Interest rate swaps(18)(6)3 
Foreign currency swaps160 (113)(89)
Total$123 $(160)$(89)
(Gains) Losses Reclassified From
Accumulated Other Comprehensive Loss Into Income(a)(b)
Years Ended December 31,
 202020192018
Fair value hedges
Foreign currency swaps$20 $41 $3 
Cash flow hedges
Interest rate swaps10 (3)(7)
Foreign currency swaps(261)64 86 
Total$(231)$102 $82 
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(a)All amounts reclassified from accumulated other comprehensive loss were recorded to operating expenses or interest expense.
(b)During the next twelve months, we estimate $83 million in losses will be reclassified into pretax earnings from derivatives designated for hedge accounting.