Is credit binge tapped out?

Americans could be letting go of the "buy now, pay later" mind-set that has pushed outstanding credit card balances to record levels.

Balances grew in 2006 and 2007 as home values sank, reducing access to home equity as a financing option, says UBS analyst Eric E. Wasserstrom. Not surprisingly, card delinquencies — payments late by at least 30 days — spiked in the fourth quarter as the mortgage crisis spread to other types of consumer credit.

But Wasserstrom thinks new transactions will come down, as card issuers tighten credit standards and consumer spending slows amid an uncertain job market and high gas and food prices.

Consumers who are behind on bills might be forced to use cards for necessities like food and gas, which could exacerbate delinquencies. Yet card spending overall will still slow, analysts say.

"Are people borrowing because that's their only option available?" asks James Chessen, chief economist for the American Bankers Association. "It's not a great financial strategy."

This scenario is bleak for consumer spending, which drives most economic activity, and for much of the financial sector. American Express (AXP), Capital One Financial (COF) and Discover Financial Services (DFS) recently raised provisions for loan losses.

Wasserstrom cut his rating on all three stocks to "sell." He had previously rated Amex a "buy" and the others "neutral."

Banks that issue cards, such as Washington Mutual (WM), JP Morgan Chase (JPM) and Wells Fargo. (WFC) could also suffer, says Citi Investment Research analyst Bradley Ball.

"In our view, the increased likelihood of a recession suggests that future losses and provisioning expense levels are likely to rise," he writes.

Consumer credit, which includes cards, auto loans and other nonmortgage debt, is expected to rise by $7.4 billion, when the Federal Reserve reports December figures today, according to IFR Markets. That's below the $12.3 billion monthly average since May, says IFR analyst Jeoff Hall.