Securitized credit card charge offs declined 31 basis points inMay to 4.90%, down from 5.21% in April, according to Moody's Credit Card Indices.

The May decline is consistent with Moody's forecast that theindex will continue to fall lower in the coming quarters to reachabout 4% by the end of 2012, the rating firm said.

The delinquency rate and payment rate indices also improved in May, underscoring theexceptionally strong credit quality of securitized credit cardreceivables in the U.S., and the payment rate reached a recordhigh, Moody's said.

“Issuers have charged off accounts of weaker cardholders atrecord levels in the recent recession, and originators have addedfew new accounts to securitizations,” Jeffrey Hibbs, a Moody'sassistant vice president and analyst said. “The improved creditquality of trusts' receivables will support strong creditperformance in credit card trusts throughout the coming year.”

In declining to 4.90%, the charge-off rate index fell to itslowest point since October 2007. The improvement in May more thanoffset a one-month spike in April, owing to an increase in theCitibank trust's monthly charge-off rate.

In May, five of the Big Six trusts posted monthly declines intheir charge-off rates, including Citibank, which recorded adecline of 73 basis points and reversed much of the April jump.

The charge-off rate measures those credit card account balanceswritten off as uncollectible as an annualized percentage of totaloutstanding principal balance.

The delinquency rate continued to improve in May, declining 12basis points to 2.47% from 2.59% in April. Typical for this time ofyear, the improvement led to a fourth consecutive monthly recordlow, Moody's said.

The early-stage delinquency rate also reached an all-timemonthly low of 0.65% in May, down a single basis point from 0.66%in April.

The delinquency rate measures the proportion of account balancesfor which a monthly payment is more than 30 days late as a percentof total outstanding principal balance. The early-stage delinquencyrate measures the proportion of account balances for which amonthly payment is between 30-59 days late as a percent of totaloutstanding principal balance.

The payment rate index more than reversed the seasonal declineit posted in April and increased 98 basis points to 22.47% in Mayfrom 21.49% in April. With the increase, the payment rate indexreached a new record high, surpassing the prior peak it reached inMarch, Moody's said.

Each of the Big Six trusts experienced a monthly increase intheir payment rates during May. The payment rate index continues tobe more than a full percentage point higher than it was a year ago,Moody's said.