Moody's Investors Service reported U.S. credit-card delinquencies rose for a third consecutive month in October from the prior month, though charge-off levels continued to ease for a second straight month from a record in August.

Payment rates also improved after two months of declines.

The delinquencies, which give a glimpse of credit-card issuers' potential losses and how much they may need to set aside in reserves, rose to 6.12% in October from 5.97% in September and 5.79% in August, driven by increases in 60-day and 90-day delinquencies.

So-called early stage delinquencies were little changed from September but up 11% from a year ago, Moody's said. The credit rating company expects early stage delinquencies to creep up over the next several months.

Charge-offs — credit-card loans it doesn't think it will be able to collect — fell to 10% last month from 10.7% in September and 11.5% in August. Moody's said the October decline benefited from a big drop at Citigroup Inc., largely owing to the bank's policy change that increased the amount of time between an account holder's bankruptcy filing and when the account is considered a charge-off.

Moody's still expects the charge-off rate to turn up again and to peak at 12% to 13% in mid-2010.

The payment rate, or percentage of the principal balance cardholders repay each month, rose to 17.3% in October after falling to 16.8% in September and 16.9% in August.

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