As if we needed one more problem in the financial market. Unfortunately it’s very predictable as credit has expanded well beyond the norm in recent years. Having lived both in America and more recently in France, the difference in attitude towards credit is stark. For the most part, people in France spend if and when they have the cash. They may use a debit card with the VISA sign but it’s almost always paid off at the end of the month. Carrying credit as we do (and I did) in America is much less common which is perhaps why shopping is less of a national sport as it often is (or was) in the US.

The deterioration in consumer credit, the latest downturn to whack Americans after the housing slump and mortgage meltdown, threatens one of the linchpins of the U.S. economy. Over the past 10 years, credit card debt has gone up 75 percent as Americans’ real wages and savings rate have stayed flat. That means Americans have been spending beyond their means — and fueling economic growth with borrowed money.

Now, the housing crash, financial downturn and contracting economy have made it more difficult for Americans to settle their bills, setting off a downward spiral. As people fail to pay off their credit card bills and other loans, banks must put away money to cover expected losses. So banks lend less. Americans who tended to rely on loans to fuel their spending must cut back, readjusting their spending habits to conform with what they earn.

“Given that the savings rate has been minuscule, there’s no reserves in the tank for the consumer to tap his savings to support his spending,” said Scott Valentin, a financial services analyst at Arlington investment bank Friedman Billings Ramsey. But consumers have been driving about two-thirds of the U.S. economy.

Overall, the rate of credit card loans going bad increased 54 percent in the second quarter of 2008 from the same period in 2007, according to Federal Reserve data, the latest available.

A report this week from Innovest, a research firm, said banks and other credit card lenders could record nearly $100 billion in losses because of bad loans through the end of next year. Innovest said financial firms could be reaching a “tipping point” at which years of growth in credit card debt starts to decline.