Running risk-based pricing for a $50B credit card portfolio

Overseeing the risk-based pricing program for a $50B card portfolio, and the segmentation and valuation behind balance-build strategy for 16 million subprime accounts.

$50Bcard portfolio
Up to $350MMannual profit from the pricing program
16MMsubprime accounts in balance-build strategy

Situation

At Capital One, pricing is a credit decision. The risk-based pricing (RBP) program set and reset APRs across a $50B card portfolio, balancing revenue against the risk that higher prices push away the best customers and attract worse ones.

Approach

  • Oversaw the risk-based pricing program, with tactical leadership across credit risk, segmentation, pricing analytics and regulatory compliance.
  • Led product development and management for Balance Build on the US subprime card portfolio (16MM accounts), owning segmentation, account valuation and end-to-end targeting.

Result

The pricing program generated up to $350MM in annual profit.

Relevance for clients

Most lenders price from a rate card set at launch and adjusted by competitors' moves. Treating price as a tested, segment-level decision, with adverse selection measured rather than assumed, is still among the highest-return changes a lender can make.

This case study describes work done by our founder, Gaurav Agarwal, as an employee of the organization named. Figures are as publicly reported.