Credit-Card Business Optimization Case

Context

You are evaluating a new credit-card product. You have (or will estimate) per-segment cost, revenue, and risk inputs such as acquisition cost, APR options, credit-limit options, interchange and rewards rates, servicing and funding costs, default risk, and churn/retention. Your goal is to choose an optimal go-to-market strategy.

Task

1. Define the objective and the core unit-economics model (e.g., CLV/NPV or risk-adjusted return) that links pricing (APR), credit limit, and target segment to expected profitability.
2. Show how you would use the provided figures to select:
   • Pricing (APR tier)
   • Initial credit limit
   • Target segment(s) Include constraints (risk appetite, regulatory caps, fairness) and how you’d solve the optimization.
3. If concrete numbers are missing, illustrate with a small numeric example using plausible inputs to demonstrate the method.
4. List the key metrics you would track post-launch to measure success and to guard against risk or compliance issues.

Hints

• Consider acquisition cost (CAC), lifetime value (CLV), default risk (PD/LGD), churn, utilization, revolve behavior, interchange and rewards, funding and servicing costs.