Managing credit lines and prices for Bank One credit cards

摘要

The annual percentage rate (APR) and credit line of an account influence card use and bank profitability. Customers always look for low APRs and high credit lines. However, low APRs may reduce bank profitability. The study designs the PORTICO system, using Markov decision processes to select price points and credit lines for each card holder to maximize NPV for the portfolio. In the competitive benchmark test, the new method developed here outperforms the bank's current methods and ensures very high profitability.