American Express Co. (AXP) said Tuesday that U.S. borrowers at least a month behind their card payments decreased modestly to 4.1% in August from 4.2% in July.

This continued decline in delinquencies, a key gauge of future losses, is important because higher delinquencies force issuers to squirrel away capital to reserve for potential losses; ultimately, companies must write off loans if customers can't pay up. The slowing pace of delinquencies is also noteworthy because it comes at a time when seasonal factors - such as good behavior on the part of borrowers fueled by tax refund checks - are behind the card industry.

This monthly report card on the performance of credit card loans, including those packaged into bonds, comes amid heightened scrutiny around credit as losses stemming from souring card loans pile up.

AmEx wrote off in August 9% of its card loans, including those packaged into bonds. In July, the company wrote off 9.2% of its U.S. card loans.

The company said last month that better-than-expected bankruptcy trends contributed to the decline in write-offs.

AmEx shares traded recently at $34.26, up 34 cents or 1%. Its shares are up more than 84% this year.

Like other card issuers, AmEx is being hurt by cutbacks in spending and customers who are falling behind on their bills in the current economic slump. Unlike other card companies, AmEx both issues cards and processes transactions. It issues both charge cards requiring a monthly payoff and credit cards on which customers can carry a balance.

An AmEx spokeswoman wasn't immediately available to comment on the company's August credit card loans performance.

-By Aparajita Saha-Bubna, Dow Jones Newswires; 617-654-6729; aparajita.saha-bubna@dowjones.com