Credit card performance improved in July, Moody's Investors Service Inc. said Friday, with chargeoffs falling for the first time since September as delinquencies continued to improve.

The rating agency said the chargeoff rate for securitized pools it tracks fell to 10.5%, from a record 10.8% in June, though it was up from 6.4% a year earlier.

Moody's said that it still expects chargeoffs to peak in mid-2010 at 12% to 13%, coinciding with its expectation of a peak in the unemployment rate.

But William Black, a senior vice president at the agency, said: "Further and persistent improvement in delinquency and chargeoff rates in the months to come may challenge our macro-driven chargeoff rates forecast."

The overall delinquency rate fell to 5.7%, its lowest level of the year, according to the Moody's index. The rate was 4.5% a year earlier.

However, Moody's, noting that July tends to be the yearly bottom for seasonal reasons, said it expects the rate to rise in the second half, after spending for back-to-school and holiday items.

Payment rates rose sharply for the second straight month, to 17%, their highest point since October.

Last July, the rate was 18%.

All six of the biggest issuers reported increases in their payment rates.

Subscribe Now

Access to authoritative analysis and perspective and our data-driven report series.

14-Day Free Trial

No credit card required. Complete access to articles, breaking news and industry data.