Confounding analysts' expectations, credit card chargeoffs declined in July for the second consecutive month. According to Fitch Investors Service's index of securitized credit cards, chargeoffs dropped to 6.71%, off from 6.81% in June and down from a peak of 6.95% in May. A sound economy, a slowdown in personal bankruptcy filings, tighter credit standards, and improved collections efforts prompted the ratings agency to revise its view that chargeoffs would continue to rise this summer. "Fitch was wrong. We thought the rates would keep going up," said Fitch analyst Mike Dean, echoing a view held by most rating agencies. He added that excess spreads for card securities-the profits collected by issuers- rose in July to an average of 4.0% after lingering in the just above 3% for several months. Issuers whose chargeoffs improved most were Chase Manhattan Corp., First USA Inc., and AT&T Corp. The favorable economic conditions, plus tightened lending standards and more selective mailings demonstrates "there is reason or optimism in the industry as a whole," said Michael Urkowitz, executive vice president for card member services at Chase Manhattan. Nevertheless, some big issuers continued to show rising chargeoffs. They include Advanta Corp., Capital One Financial Corp., and Sears. Advanta, which has reported unexpectedly high losses for much of this year, continued to report deterioration in its securitized portfolios.

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