Moody's Investors Service said the chargeoff rate for U.S. credit cards fell sharply in September to 8.9%, resuming declines after an August hiccup.
Chargeoffs fell sequentially for the four months leading up to August before increasing in that month — a rise Moody's on Monday said it can now chalk up to seasonality. The company said it expects chargeoffs to move "steadily lower" into the first half of 2011.
A host of credit data in recent months indicates delinquencies likely have peaked.
"Borrowers with relatively weak credit profiles have been charged off over the past couple of years, while issuers have tightened underwriting standards," said Moody's analyst Jeffrey Hibbs. "The borrowers that remain tend to be stronger and more resilient to the ongoing weakness in the labor market."
The 8.9% chargeoff rate for September is down from August's 10%. The peak was at 11.5% in August 2009. The delinquency rate, balances for which a monthly payment is more than 30 days late, fell to 4.65% in September from 4.7% in August.
Early-stage delinquencies, those up to 59 days late, increased in September for the first time since March, to 1.23%, from 1.2% in August.