The credit-card business is becoming an increasing burden for Bank of America, which has seen its default rate rise to almost 75 percent higher than its largest competitor, JPMorgan Chase.

The largest bank in the United States saw its credit-card default rate hit 13.81 percent compared with Chase’s 7.92 percent.

While BofA hasn’t discussed profitability of its card business, Chase CEO Jamie Dimon recently told his shareholders that even with its lower default rate, he expects his bank’s credit-card business to lose money through 2010.

“The losses being absorbed on credit-card portfolios are simply unprecedented. They reached 10.01 percent in the second quarter” for banks overall, said analyst Dick Bove with Rochdale Securities. In response, credit-card issuers are raising rates, cutting credit lines, and calling in loans through higher minimum payments.

Wells Fargo, a smaller player in the credit-card business, wrote off credit-card loans at an annualized rate of 11.59 percent in the second quarter.

“While late-stage delinquencies and loss rates continue to be challenged by the high levels of unemployment and bankruptcies, we are beginning to see some stabilization in early-stage delinquency in the unsecured consumer-loan portfolios,” said Mike Loughlin, the San Francisco bank’s chief credit officer.

A BofA spokeswoman referred a reporter inquiring about the bank’s credit-card defaults to the company’s second-quarter earnings report.

“Consumers remained under significant stress as unemployment and underemployment increased and individuals spent longer periods without work,” BofA said in that report. “These conditions led to higher losses in almost all consumer portfolios compared with the prior quarter.”

BofA’s decision to purchase credit-card giant MBNA in mid-2005—at the height of the credit bubble—is coming back to haunt the Charlotte, North Carolina-based bank. At the time, BofA CEO Ken Lewis said the bank was forking over $35 billion for MBNA’s marketing prowess and risk-management capabilities.

Don’t expect a rebound soon.

“Difficult challenges lie ahead from continued weakness in the global economy, rising unemployment, and deteriorating credit quality that will affect our performance for the rest of the year and into 2010,” Lewis said. “However, we are convinced that Bank of America will weather the storm.”

The MBNA purchase is, of course, not the only recent acquisition to haunt BofA, nor even the most prominent. That distinction goes to the purchase of Merrill Lynch.

New York Attorney General Andrew Cuomo is investigating whether the bank or any of its officers should face charges for failing to disclose massive losses at Merrill before a shareholder vote to buy the troubled firm. On Tuesday, Cuomo's office urged BofA officials to disclose the advice their lawyers gave them prior to the vote.

BofA has argued that advice was covered by attorney-client privilege.

In a seven-page letter dated Tuesday, David Markowitz, chief of Cuomo’s Investor Protection Bureau, said investigators “cannot simply accept Bank of America’s officers’ naked assertions that they sought and relied on advice of counsel in good faith, and that, therefore, they should not be charged.”