Credit one Bank: Credit Card Status Analysis

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De La Salle University-Dasmariñas

College of Business Administration and Accountancy

Dasmariñas DBB-B, Dasmariñas, Cavite

CREDIT ONE BANK: CREDIT CARD STATUS ANALYSIS

In requirement to BANA104L

(Predictive Analytics)

Submitted by:

Cabrera, Veronica Danielle

Diaz, Genuel

Jasmin, Rheanne Marie

Limqueco, Kristel

Raymundo, Shekainah Joy

Sanchez, Precious Anne

Submitted to:

Prof. Danilo Dumantay

College of Business Administration and Accountancy

July 20, 2017

EXECUTIVE SUMMARY

Credit cards offer enormous advantages over other methods of payment. However, issuing credit cards for banks are becoming riskier due to economic instability of its holders which leads to increase of consumers’ credit card debt and default payments. In this paper, Credit One Bank’s data was used to analyze the causes and probabilities of different credit card problems. Some important attributes that were used are age, savings account, job, and credit amount. The provided data enabled the researchers to determine attributes that are related to predicting the occurrence of the following problems:

1.     Default Payment - This is a great problem of credit card providers since their initial fund in processing for these credit card holders were not put into a good investment. After using the chosen attributes, it was determined that 1880 holders tend to default. This represents 38% of 5000 holders at Credit One. A way to solve this is to have a less burdensome credit policy among the credit card holders. It can be done by granting a grace period, providing easy settlement schemes, or notice to card holders.

2.     Delayed Payment - Past due payments are subject to late fee, increase in interest rate, or lose of ability to make purchases on one’s account. Delayed payment is prone to be a default payment and base on the analysis, at least one-third of holders are delayed credit holders. To give rewards to on-time payments is highly recommended to prevent delays. Some rewards might include lower interest rate, travel miles reward, customization of credit cards, and credit counseling.

3.     Declined Credit Card- High spending, fraud warning, expiration, or purchase in an unfamiliar city or country are some causes why there are declined credit cards. This might cause less revenue because of less purchase of holders or less customer satisfaction. Using an appropriate decision tree, it is predicted that 28% are most likely to have a declined credit card. Holders must always be reminded regarding their limit and other policies. This can also improve customer satisfaction and good feedback.