Bank of America Corp's credit card loss rate may have peaked in the third quarter, but it will remain elevated for a substantial number of quarters, the bank's head of consumer banking said on Thursday.

Bank of America, the largest U.S. bank, has shown the highest credit card loss rate among the biggest lenders, given its high exposure to subprime borrowers. Last month, it posted a $1 billion quarterly loss.

The bank reported its credit card charge-off rate -- loans the bank does not expect to be repaid -- fell to 14.25 percent in September from 14.54 percent in the previous month.

But Bank of America's default rate is still above the 10 percent average of the industry.

This is going to be hard work for the next several quarters, Brian Moynihan, the bank's head of consumer banking said at the BancAnalysts Association of Boston conference.

Most U.S. credit card companies reported defaults fell in September from record highs as consumers used tax refunds and other economic stimulus proceeds to lower debts, but late payments rose, suggesting more troubles ahead in an already battered industry.

Bank of America is the second largest issuer of Visa branded credit cards and the third largest issuer of MasterCard branded credit cards in the United States.

Moynihan said the business will ultimately be smaller than it once was, and the industry will not see the profits it once did as credit card issuers become pickier about their customers.

We were giving too many cards to too many people, he said. Now we can be more selective.

(Reporting by Joe Rauch, additional reporting by Juan Lagorio in New York, editing by Leslie Gevirtz)