Advanta Corp.'s decision to cut off new charges on the credit cards it issued to small-business owners came as worries are rising that the nation's nearly $1 trillion in consumer credit-card debt could cause the nation's next financial blow-up.

JPMorgan Chase & Co. chief executive Jamie Dimon last week called his company's credit-card business, which employs 5,000 in Wilmington, its "biggest conundrum."

The federal government said last week that 12 of the nation's 19 biggest banks could experience credit-card losses of $82.4 billion through the end of next year under a "worse-than-expected" economic scenario.

"The credit-card industry is seeing rapidly increasing charge-offs across the board no matter who the cardholder is," Red Gillen, a senior analyst in the San Francisco office of Celent, a financial-services consulting firm, said yesterday.

Advanta is unique in its exclusive focus on small businesses, but not in its problems, though Advanta's woes are at the industry's extreme end, Gillen said.

Chris Wolfe, an analyst with Fitch Ratings in New York, said losses on consumer credit cards could exceed 10 percent of loans outstanding. That would be the worst loss rate since lenders started separately reporting on credit cards in the early 1990s, he said.

The severity of credit-card losses will depend largely on how high the unemployment rate goes. It reached 8.9 percent in April, and some economists expect it to climb past 10 percent.

Analysts said this week that Advanta's suspension of its customers' borrowing as of June 10 was a sign of severe problems at the Spring House, Montgomery County, company.

Advanta said Monday that the move was designed to preserve the capital needed to absorb losses and to allow Advanta to live to see another day in some form.

"We have expected to see credit-card losses accelerate, and they have," Wolfe said. "I think Advanta is a bit more affected because of their niche in small business."

Curtis Arnold, founder of CardRatings.com in Little Rock, an online provider of credit-card information, said Advanta had been a bellwether for small-business credit cards.

"I think the main thing to take away here is that the small-business credit market has taken a significant step backward with this, what I would consider to be, shocking news," Arnold said.

Advanta was adding loans at a faster rate than any of its larger competitors in 2007, according to Fitch. Toward the end of last year, Advanta slammed on the brakes, but not soon enough to prevent life-threatening losses.

Gillen said that Advanta's 20 percent rate of charge-offs - the amount of outstanding debt written off as uncollectable - was about twice what one would expect from a lender concentrated on consumers rather than small businesses.

Standard & Poor's downgraded Advanta yesterday with a negative outlook, reflecting the view that Advanta would be wound down.

Contact staff writer Harold Brubaker at 215-854-4651 or hbrubaker@phillynews.com.