Wednesday, 26 January 2011

Indicators of Credit cards' usage

A quite useful useful credit card usage indicator is the balance to credit limit ratio. It can be used to identify customers that could be benefited from a potential rise in their credit limit .

Another useful indicator which measures the diversity of card usage and the adoption of credit card usage in the every day life is the number of different merchant categories with purchases.

Other measures which can also be considered as core indicators for monitoring the credit card usage include:

· Frequency of purchases & cash advance


· Recency of last purchase (time since the last purchase)

· Monthly average number and amount of purchase & cash advance transactions

· Monthly average balances

· Average purchase amount per transaction 

· Relative spending per merchant categories

· The percentage of total card spending attributable to Cash Advance

· The payment to minimum payment ratio and the payment to statement balance ratio


Source: Data Mining Techniques in CRM. Inside Customer Segmentation, Wiley 2009

1 comment:

Marks Spencer said...

Acquiring a credit card marks a big step in the financial career of every person. It would be wise to learn how to use the card as a tool through which you can create a good credit history for yourself. On the other hand, it also seems to be the easiest way to get into great debt.