Net income was $258.2 million, or 47 cents cents per share. That compares with $552.9 million, or $1.07 per share, last year, which included a $287 million settlement of antitrust litigation involving Visa and MasterCard.
Revenue fell 7 percent to $1.71 billion.
Wall Street expected the Riverwoods, Ill., company to post earnings of 38 cents per share on $1.66 billion in revenue.
Card sales volume rose 5 percent. Loans over 30 days past due fell, and Discover wrote off fewer uncollectable balances.
Shares rose 83 cents, or 5.3 percent, to $16.40 in premarket trading.