Fewer Americans fell behind on their credit card bills in May, signaling that consumers are closer to getting their debt levels under control even if the economy remains sluggish.

The lower delinquencies, the fifth straight month of improvement, should translate to banks writing off less debt as uncollectable in the coming months.

Capital One Financial Corp , Discover Financial Services , JPMorgan Chase & Co , American Express Co , Citigroup Inc and Bank of America Corp all said on Tuesday that their 30-day delinquency rates for credit cards fell to their lowest levels this year.

I don't think the trends suggest that we're seeing incredible improvement out there -- we've still got very high unemployment -- but they do suggest that things are slowly and steadily getting better, said Jason Arnold, analyst at RBC Capital Markets.

With unemployment still hovering near 10 percent, credit losses remain high at most U.S. credit card lenders by historical standards.

But losses from uncollectable loans have ebbed from last year's peak, which helped many of the biggest U.S. banks record better-than-expected profits in the first quarter.

Banks may be more willing to spend money to expand their credit card business, after a year of clamping down and trying to shed problem loans. Credit card mailings to U.S. households in the first quarter rose 29 percent from a year earlier, to 481.3 million, according to market researcher Synovate.

Even if credit losses continue to improve, credit card industry revenues may be hit by new laws and regulations.

AMERICAN EXPRESS LEADS

American Express continued to lead its competitors out of recovery, reporting on Tuesday that merely 2.9 percent of its credit card loans were more than 30 days delinquent in May, compared with 3.1 percent in April. Losses declined to 6.3 percent from 6.7 percent.

At the other end of the spectrum, delinquencies also fell at Bank of America, although it continued to post the highest default levels of the major U.S. lenders. The company's delinquencies fell to 6.39 percent in May from 6.73 percent in April, while net charge-offs rose to 13.33 percent from 12.71 percent in April.

Citigroup's 30-day delinquencies fell to 5.59 percent in May, from 5.85 in April. Its net charge-offs inched down to 11.16 percent from 11.23 percent.

Capital One's annualized net charge-off rate for U.S. credit cards fell to 9.48 percent in May from 9.68 percent in April. Its accounts at least 30 days delinquent declined to 4.80 percent from 5.07 percent.

At Discover, 30-day delinquencies fell to 4.95 percent in May from 5.2 percent in April. But after two months of improvement, Discover's net charge-offs edged back up to 8.82 percent from 8.42 percent.

Accounts that were more than 30 days past due at JPMorgan Chase continued to improve, falling to 4.22 percent in May from 4.4 percent in April. The lender's charge-off rate also fell to 8.95 percent from 9.03 percent.

Shares of American Express, JPMorgan, Discover, Capital One, Citigroup and Bank of America all closed higher on Tuesday.

The major U.S. credit card lenders report the performance of their loan portfolios in monthly regulatory filings.

THREATS TO FUTURE REVENUE

A provision in the financial reform bill working its way through Congress would limit the transaction fees that banks earn on debit card purchases. The bill would not directly restrict credit card transaction fees, but industry members fear it could open the door to similar limits on those fees, which account for almost one-fifth of credit card revenue at U.S. lenders.

Credit card banks are also facing more immediate restrictions to their revenue from late fees. Major U.S. banks currently charge their customers up to $39 for every late payment, but after August those fees will be restricted to $25 for the first late payment and $35 for subsequent late payments in a six-month period, according to final rules unveiled by the Federal Reserve on Tuesday.

Some sort of late fee restrictions were expected, but it certainly is going to hurt from a profitability standpoint, said Michael Taiano, analyst at Sandler O'Neill. He added that he expects to see the late fee caps cut in to credit card revenue, especially in the fourth quarter of this year.

(Reporting by Maria Aspan; Editing by Lisa Von Ahn and Matthew Lewis)

American Express Jpmorgan chase Citigroup Fall