Moody's Investors Service has lowered its outlook on Discover Financial Services to negative, citing concerns about the U.S. economic slowdown, but affirmed the company's ratings because of its market position in the general-purpose credit card market.

Moody's ratings on Discover also reflect a recent $2.75 billion settlement agreement with competitors Visa Inc. and MasterCard Inc. that is expected to boost Discover's earnings and capital position.

Moody's reaffirmed Discover's senior unsecured credit rating and Discover Bank's financial strength, deposits, and senior unsecured ratings.

Still, the rating agency said Discover's exposure from its U.S. card operations, which generate more than 90% of its earnings, were problematic given the credit crunch and the fact that more consumers are shifting to using cash and debit cards for purchases.

Subscribe Now

Access to authoritative analysis and perspective and our data-driven report series.

14-Day Free Trial

No credit card required. Complete access to articles, breaking news and industry data.