Research On Annual Fee Pricing Theory Of Credit Card In China

Why and how to price and charge of annual fee on credit card has been an important issue recently. The basic functions and pricing methods of the credit card are discussed based on financial engineering in the beginning of the thesis. Basically, this thesis includes five chapters.Chapter one mainly introduces the research background and significance of this issue. The related literatures are surveyed and the research methods, basic framework and main innovative points of this thesis is discussed in this part.An operating model and pricing system of the credit card industry are analyzed based on the related literatures in chapter two. It puts forward the theoretical foundations for the annual fee charging and pricing of the credit card.The pricing of loan commitment of the credit card is discussed based on the option pricing theoretical model and it is simulated in Matlab to test the effects of the input data.Some different fees such as the loan commitment fee, interests during the free-interest period, servicing fee and other additional service fees are discussed in chapter four. Furthermore, an integrated pricing model is presented and some pricing strategies are discussed.Chapter five summarizes the thesis and puts forward some valuable issues for further research in the future.There are two main innovative points in this thesis. The first one is the theoretical foundations for the annual fee charging based on the two basic functions of the credit card. The research methods based on some new financial engineering theories is another one. What has done in this thesis will benefit and offer some guidance to the further research and financial industries.