Americans charge it as Bank of Subprime closes: James Saft

By James Saft

LONDON (Reuters) - The automated teller for home loans is empty and Americans are relying increasingly on credit cards to pay their living costs, indicating tough hurdles ahead for U.S. consumer spending and markets.

Federal Reserve data released on Friday showed U.S. consumer borrowing rising by $12.18 billion in August, more than 20 percent more than economists had forecast.

Most striking was an 8.1 percent increase in borrowing on revolving credit lines, mostly credit cards, to a record $909 billion.

Credit card borrowings rose at the sharpest rate since early 2002.

So what was it that persuaded consumers to rack up more debt during the month?

Was it the increasing press coverage, no doubt reinforced by friends and family, that their houses were worth less than a month or a year ago?

Or was it the near meltdown in financial and credit markets that prompted a surge in speculation about an upcoming recession?

Quite possibly, it wasn't because they felt better, but because things had gotten suddenly worse.