Calculate Annual Profit of Credit Card Portfolio

Quick Overview

Evaluates annual profit calculation for a credit-card portfolio with monthly and annual revenue and cost components. Strong answers annualize figures, compute per-card profit, and scale to portfolio profit.

Calculate Annual Profit of Credit Card Portfolio

Company: Capital One

Role: Data Scientist

Category: Statistics & Math

Difficulty: easy

Interview Round: HR Screen

##### Scenario Existing portfolio of 500,000 active credit-card customers with multiple revenue and cost streams. ##### Question Given 500,000 active cards that each generate $79 annual fee, $2 other revenue per card per year, $15 interest revenue per card per month, and incur $5 fraud-prevention cost per card per month, calculate the portfolio’s annual profit. ##### Hints Convert monthly figures to annual, sum revenues, subtract costs.

Quick Answer: Evaluates annual profit calculation for a credit-card portfolio with monthly and annual revenue and cost components. Strong answers annualize figures, compute per-card profit, and scale to portfolio profit.

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Jul 12, 2025
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Credit Card Portfolio Annual Profit

You manage a portfolio of 500,000 active credit-card accounts. Each active card generates multiple revenue streams and incurs a cost.

Given:

  • Annual fee: $79 per year
  • Other revenue: $2 per year
  • Interest revenue: $15 per month
  • Fraud-prevention cost: $5 per month

Calculate the portfolio's total annual profit. Show your steps and assumptions.

Constraints & Assumptions

  • Monthly figures must be annualized before summing.
  • Treat all 500,000 accounts as active for the full year.
  • Ignore taxes, charge-offs, rewards, servicing, funding costs, and acquisition costs unless stated.
  • Report both per-card annual profit and total portfolio profit.

Clarifying Questions to Ask Guidance

  • Are all accounts active for the full 12 months?
  • Are fraud-prevention costs the only costs included?
  • Should expected losses, rewards, servicing, and funding costs be excluded?
  • Are the revenue figures averages per active card?

What a Strong Answer Covers Guidance

  • Annualizes monthly interest revenue and monthly fraud-prevention cost.
  • Adds annual fee, other revenue, and annualized interest to get annual revenue per card.
  • Subtracts annualized cost to get per-card profit.
  • Multiplies per-card profit by 500,000 active accounts.
  • Presents the final answer clearly in dollars and notes excluded cost categories.

Follow-up Questions Guidance

  • How would the answer change if only 90% of cards are active all year?
  • What costs would you add for a full profitability model?
  • How would expected credit losses affect the calculation?
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