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A new report from Fitch Ratings indicates that household finances were in solid shape to begin the year.

The rating agency reported that Canadian credit card performance improved once again at the end of 2021, following two quarters of improving results.

Overall, Fitch said that four out of five basic credit card metrics improved in Q4.

In particular, monthly payment rates hit a record high of 62.5% in November, pushing the quarterly average up to 60.5% from 56.8% in the prior quarter, and up from 52.1% in the same quarter a year ago.

Similarly, net chargeoffs reached a record low of 1.40% in October, Fitch reported. This was down from 1.58% in the third quarter.

However, delinquencies edged up in November and December, leaving average quarterly net chargeoffs slightly lower than in Q3 at 1.51%.

“Canadians continue to benefit from improved household finances, including higher net wealth and household savings,” Fitch said, “though higher debt levels pose a risk with inflation at a 30-year high and borrowing costs increasing as interest rates rise.”

Indeed, looking ahead, the rating agency expects credit card performance to trend toward more normal levels in the months ahead.

Specifically, Fitch said that delinquencies are expected to rise moderately toward pre-pandemic levels “as the consumers return to more normal spending behaviour as pandemic-related restrictions ease, while at the same time, potentially pressured given higher household debt levels, higher prices due to inflation and expected interest rate increases.”

Monthly payment rates are also seen declining toward more familiar levels amid increased spending and higher debt levels.

However, Fitch said that payment rates “are likely to remain elevated compared to pre-pandemic levels.”