The performance of credit cards in Canada softened slightly in the second quarter of 2008, but showed remarkable stability compared to the performance of credit cards in the United Kindom and the United States, says Moody’s Investors Service in a new report.

During the second quarter, the charge-off rate in Canada rose to 3.07%, up from 2.89% a year ago, a figure that is less than half the rate in either the U.S. (6.38%) or the UK (6.57%). The charge-off rate in Canada is rising, says Moody’s, but the trend is moderate.

Moody’s says the charge-off rate could move above its 3.32% historic high, reached in September 2003, if the unemployment rate and personal bankruptcy filings in Canada continue to rise.

The second quarter 2008 delinquency rate, which measures the proportion of account balances for which monthly payment is more than 30 days past due and is often a harbinger of movements in the charge-off rate, rose to 2.29%, from 2.13% a year ago, but fell from 2.53% in the first quarter.

During the second quarter Canadian cardholders paid back, on average, 32.22% of their credit card debts, which is actually about 3.3% higher than last year’s second quarter rate of 31.18%. Second quarter payment rates, as measured by Moody’s U.S. and UK Indices, were 18% in the U.S. and 17.24% in the UK, by comparison.

“Historically, the top Canadian banks have maintained relatively conservative credit underwriting standards, thereby creating a legacy of well seasoned, high quality obligors that comprise the vast majority of their respective credit card loan portfolios,” explains Moody’s vice president/senior analyst Sumant Inamdar. “On average, these obligors exhibit very low charge-off rates and very high payment rates compared to typical obligors in either the UK or U.S. market.”

Canada’s less volatile economic environment and relatively low number of bankruptcy filings may also have contributed to the flatter delinquency and charge-off rates, says Inamdar.