If present trends continue, the stars may be aligning for a gradual return to profitability for U.S. credit card issuers.

U.S. credit card charge-offs are at record-low levels and likely will hit bottom within the next three to six months, Fitch Ratings Inc. said in a May 8 report.

And outstanding credit card debt, which has generally contracted during the last two years, ticked up in March, reversing two consecutive months of declines, according to the Federal Reserve Board's monthly G.19 report released May 7.

Revolving consumer debt, 98% of which is credit card borrowing, rose in March by $5.1 billion to $803.6 billion, up 0.6% from $798.5 billion in February, the Fed said.

The combined effects of extremely low loss rates plus a modest return to growth of revolving debt, which drives credit card industry profits, are a positive sign for major bankcard issuers, Fitch suggested.

The firm now "believes revolving credit will continue to tick upward relative to 2011 levels, as economic indicators demonstrate some stabilization and improvement."

But any growth will be incremental, Fitch suggested. Credit card portfolio loan balances may have reached the bottom, but based on recent trends, issuers may expect to see portfolio growth this year in the low single digits, the firm said.

Fitch noted that major card issuers saw stronger credit card purchase volume growth during the first quarter of 2012 compared with a year ago, driven partly by an increase in activity by "transactors," or consumers that pay their balances off in full each month.

But "card revolvers are starting to be more active, which is expected to support modest portfolio growth in 2012," Fitch said.

Fitch data show the average charge-off rate on bankcard outstanding receivables fell to 4.02% during the quarter ended March 31, down 237 basis points from 6.39% a year earlier.

Fitch said it expects the average credit card charge-off rate to fall further during the second quarter, but by yearend it may begin to rise again.

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