Canadian credit card debt performance continued to improve in the third quarter, Moody’s Investors Service reports.

The rating agency said Tuesdaythat the charge-off rate index for Canadian credit cards pulled back to 3.97%, almost a percentage point below its record high of 4.92% in the third quarter of 2009. Moreover, the charge-off rate dropped sharply from 4.61% in the second quarter.

“Canada’s robust recovery has recently moderated, but looking ahead we still expect it to be strong enough to support a stable credit card sector,” says Michael Buzanis, Moody’s vice president and senior credit officer. Moody’s changed its outlook on asset-backed securities based on Canadian credit cards to stable from negative in October.

The firm notes that other measures of card performance also posted improvements in the third quarter. For example, the delinquency rate index, which measures the proportion of account balances for which monthly payment is more than 30 days past due, declined in the third quarter, dropping to 2.63% from 2.79% in the third quarter of 2009. And, the payment rate index, a measure of cardholders’ willingness and ability to pay credit card debt, continued to improve in the third quarter, to 31.92%.

Credit card performance in Canada continues to compare favourably to that in the United States and the United Kingdom, Moody’s said. For example, the charge-off rate in the U.S. for the fourth quarter was 9.46%, while it was 7.55% in the UK.

IE