Like the rest of the financial services sector, shares in credit card lenders have staged a spectacular rally since their March nadirs as investors look ahead to a decisive turn in the credit cycle and the ultimate bounty: releases of massive loan-loss reserves.

A number of forecasters have predicted that the industrywide chargeoff rate will peak in the middle of this year or sooner. But it is likely to be a bumpy ride with nearly universal expectations that unemployment will remain painfully high for a long time, uncertainty introduced by aggressive loan forbearance tactics, the possibility of additional shocks from further action by Washington, and a shrinking denominator. (Growth in receivables, conversely, typically suppresses chargeoff percentages, since it usually takes time for new accounts to sour.)

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