NEW YORK ( TheStreet) -- JPMorgan Chase's ( JPM) credit card arm is currently the lone loss maker from among the parent company's six business lines, but the firm is actively working to retool operations for when the business environment improves. It's no secret that credit cards are treacherous territory for issuers these days with unemployment, a barometer that's historically directly correlated with charge-offs, hovering around 10%. On top of that, new consumer protection laws set to kick in early in 2010 are expected to take a bite out of revenue, while increasing usage of debit cards is already cutting into transaction volumes.
These shifts in industry conditions come against a backdrop of overburdened balance sheets. Most card issuers took on too much risk earlier in the decade, and are now scrambling to clear the record amount of loans that are coming up uncollectible. At the same time, they are also trying to figure out new ways to squeeze profits from their card businesses, including raising interest rates, slapping consumers (even good credit ones) with annual fees, cutting credit lines and simply saying no to new borrowers, particularly before the regulations from the CARD Act become effective in February. JPMorgan, while facing the same challenges and admittedly opting to raise rates and cut the lines of some borrowers, is adopting a strategy of developing tailored products for creditworthy customer segments that it hopes will pay dividends