Securitized credit card charge offs declined 31 basis points in May 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 the index will continue to fall lower in the coming quarters to reach about 4% by the end of 2012, the rating firm said.

The delinquency rate and payment rate indices also improved in May, underscoring the exceptionally strong credit quality of securitized credit card receivables in the U.S., and the payment rate reached a record high, Moody's said.

“Issuers have charged off accounts of weaker cardholders at record levels in the recent recession, and originators have added few new accounts to securitizations,” Jeffrey Hibbs, a Moody's assistant vice president and analyst said. “The improved credit quality of trusts' receivables will support strong credit performance in credit card trusts throughout the coming year.”

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

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

The charge-off rate measures those credit card account balances written off as uncollectible as an annualized percentage of total outstanding principal balance.

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

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

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

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

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