These factors indicate that credit quality of the average cardholder continues to weaken, Moody's October 1995 Credit Card Indexes show.

Moody's said the monthly rate of credit card loan principal repayment, the principal payment rate, slowed in October 1995 to 12.65 per cent, from 12.97 per cent in October 1994.

Edward Bankole, Moody's senior analyst responsible for its indexes, said: 'October 1995 was the second consecutive month that the principal payment rate has been lower than in the previous year, and it was the first back-to-back slowdown in the principal payment rate since August 1991.' He said: 'The trend suggests consumers are making smaller payments on their credit card accounts either to conserve their cash resources or to pay for other items.' Moody's November 1995 index is due in the next few weeks, and Mr Bankole said the agency would watch the numbers closely for signs of continued deterioration in these key consumer credit indicators.

For the third consecutive month, more credit card account balances were written off as not collectible in October 1995 compared with the previous year, Moody's said.

The credit card charge-off rate rose to 4.21 per cent from 3.82 per cent in October 1994.

Moody's attributes the upward trend in the charge-off rate to the recent rise in non-business consumer bankruptcy filings.

Moody's Credit Card Indexes are based on credit performance data for 74 of the more than 100 individual credit-card-backed securities rated by Moody's.