Credit card losses reached 10.4% in June -- a record level that is quickly eroding bank profits on these products. That's bad news for large card issuers such as Citigroup (NYSE: C), Bank of America (NYSE: BAC), and JPMorgan Chase (NYSE: JPM).

The trend has prodded the banks into action. Citi responded by increasing the rates it charges on approximately 14 million cards by almost three full percentage points, according to analysis by Credit Suisse . Meanwhile, JPMorgan Chase announced on Tuesday that it is raising its minimum required payment on unpaid balances from 2% to 5%, beginning in August.

What's the damage?
When the government stress-tested 19 major financial institutions, it estimated losses on credit card loans for 2009-2010. The following table contains the estimates for seven major card issuers under the government's "more adverse" economic scenario. The numbers are eye-watering:

Bank

Estimated 2009-10 Credit Card Losses

Total Loss Rate

Wells Fargo (NYSE: WFC)

$6.1 billion

26.0%

Bank of America  

$19.1 billion

23.5%

Citigroup  

$19.9 billion

23.0%

JPMorgan Chase  

$21.2 billion

22.4%

US Bancorp (NYSE: USB)

$2.8 billion Continued...