Behavioural models of credit card usage

Behavioural models characterize the way customers behave in their use of a credit product. In this paper, we examine repayment and transaction behaviour with credit cards. In particular, we describe the development of Markov chain models for late repayment, investigate the extent to which there are different classes of behaviour pattern, and explore the extent to which distinct behaviours can be predicted. We also develop overall models for transaction time distributions. Once such models have been built to summarize the data, they can be used to predict likely future behaviour, and can also serve as the basis of predictions of what one might expect when economic circumstances change.