Updated to reflect closing stock prices

New York (


) -- Credit card firms

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American Express

(AXP) - Get Report


Capital One Financial

(COF) - Get Report


Discover Financial Services

(DFS) - Get Report

received a fresh vote of confidence Monday after Barclays Capital upgraded the stocks to buy-equivalent ratings.

"After five straight months of declining card delinquencies, it appears that the improvement has been more than seasonal and that the industry has reached an inflection point in credit," Barclays analyst Bruce Harting wrote in an industry note and company-specific research notes Monday. He upgraded each credit card firm to overweight from equal weight.

Harting wrote that while delinquencies will still rise in the second half of the year as a result of "normal seasonal weakness" and incremental unemployment increases, "it seems clear to us that the rapid pace of deterioration in which delinquencies increased considerably more than would be explained by seasonal factors is now behind us."

"Moreover because the cycle of early stage delinquency to charge-off is relatively short, and because unemployed customers tend to charge-off shortly after losing their new jobs, we expect

net charge-offs to peak in the next few quarters and begin to head lower provided unemployment doesn't' take a second leg higher," the industry note says.

Harting predicts that the firms will post positive earnings in 2010 and that by the end of 2011, the card companies will return to "normalized" earnings results.

Big credit card issuers including American Express, Capital One and Discover have been pressured by the recession and spiking unemployment. Loans that the companies were forced to deem uncollectible have risen to record levels as many consumers have become unable to pay their bills, while others have begun paying bills on time. As a result, card firms have collected fewer overdraft and late payment fees.

President Obama's credit card legislation will also bring significant change. Not only will credit card companies be affected, but banks with large credit card operations, such as

Bank of America

(BAC) - Get Report



(C) - Get Report


JPMorgan Chase

(JPM) - Get Report

, will also feel the pinch.

Shares of American Express closed down 0.6% to $32.67. Capital One shares dipped 0.1% to $36.45, and Discover rose 1.6% to $13.72.

Written by Laurie Kulikowski in New York.