It’s now official.

Up to now there have been lots of rumors and gossip but for many consumers it is fast becoming make or break time as major credit card companies begin following the federal guidelines of the Office of the Comptroller of the Currency. Bank of America, Citibank, and MBNA announced last week that they will raise the required minimum payments for their credit cards from 2 percent to 4 percent of the balance. In addition, JPMorgan Chase announced at an investor conference last month that they will introduce the change progressively through the end of 2005 and be completed by the end of the first quarter of 2006. COO Jamie Dimon, of JPMorgan Chase, also stated that the organization expects to see account default rates rise with this change.

Originally resulting from concerns that the low payments created high risk portfolios and make for risky customers, the changes are now being touted as an effective way to ensure consumers are able to pay interest, fees, and a portion of principal with each minimum payment. Such changes will be effective in lowering balances for some, but there are concerns for the approximately 40 percent of cardholders who carry on-going balances from month to month.

Of special concern, of course, are the many consumers who are living paycheck to paycheck. If you have a balance of $8,000 on your card with a current minimum payment of $160, just how difficult is it going to be to balance your budget when that minimum payment grows to $320 a month? And what if you have four or five different credit cards that all double your payments? Does that mean late payment fees, potential over limit fees, and possible jumps in interest rates to default levels? It sure does.

So what can you do?

1. Don’t ignore the situation. The fastest way to create more difficulties will be to ignore the problem and your creditor.
2. Attempt to negotiate an acceptable payment arrangement and lower interest rate. The lower interest rate will allow your balance to reduce at a faster rate, thus reducing the required minimum payment to fit back into your budget. This will not, however, be a quick fix. It will take time for the balance to reduce to a level that will allow you breathing room.
3. Review your options. If you are unsuccessful yourself in negotiating with your creditor, your smartest decision may be to enlist the aid of a professional, certified credit counselor. If nothing else, the credit counselor should be able to review with you your available options, such as, adjusting your budget, assisting you in examining your spending behaviors, or referring you to others who may be able to assist you.