Unearned Discount

See: Unearned interest.

You're 35 years old and still using your college ID to get into movies at half price. After the show, you head out for an early-bird special, using a stolen AARP card to get 10% off your open-faced meatloaf sandwich. Unearned discounts.

The term also applies to the accounting that banks do for fees and interest payments which they receive for outstanding loans.

Banks can't book these payments as income immediately when they receive them. Initially, there's still a chance the borrower will repay the loan early, and some of the money would have to be returned. These funds stay on the books as unearned discounts. Eventually, though, the time passes when the money could possibly get returned. When that happens, it's safe for the bank to recognize the payment as income.