Moody’s Investors Service reports that the performance of Canadian credit card debt continued to deteriorate in the third quarter of 2009.

The rating agency says that charge-off rates reached a record-high rate of 4.92% in the third quarter, however it notes that this was only slightly higher than the 4.8% rate of the previous quarter, and other performance metrics were mixed.

For example, the delinquency rate index, which measures the proportion of account balances for which monthly payment is more than 30 days past due, for Canada also rose on a year-over-year basis. However, this was unchanged from the second quarter, rising to just 3.14% from 3.10%. This reading is often a harbinger for future trends in charge-offs, Moody’s notes.

“The state of the economy will dictate the pace and timing of any improvement in the credit card sector,” says Moody’s vice president and senior analyst, Sumant Inamdar. “In particular, the unemployment rate and bankruptcy filings — two key drivers of credit card performanc — have demonstrated early signs of stabilization and therefore offer some hope card performance may soon make a turn for the better.”

In Canada the unemployment rate, which correlates well with credit card performance, has recently eased, falling from a high of 8.7% in August to 8.5% in November, Moody’s says, adding that it recently revised its forecast for unemployment in Canada downward and says it will peak at approximately 8.9% in the second quarter of 2010.

The firm also notes that credit card performance in Canada continues to compare favorably to that in the United States and the United Kingdom.

IE