Negotiate a payoff on a closed card

Chase recently closed my credit card with them. The account was in good standing with no lates. Is it a good idea to contact them and try to get them to make me a lower payoff offer?

How would it affect my credit?

If the account is in good standing (even if closed) they're probably not going to negotiate a payoff. Usually credit card issuer's will only do this if you're already showing signs of not being able to pay the account and are currently delinquent.

If the issuer does allow you to negotiate a payoff for a lower amount it will be considered a 'settlement' - which means that you 'settled' for less than you originally agreed to in the terms of the agreement on the account. This is considered as a 'severe' derogatory indicator by your FICO scores so you should be prepared for the hit. It'll also remain in your credit reports for 7 years. You should also be prepared to pay taxes on the 'forgiven' portion of the debt.

The only time it's a good idea to settle is if the account has already become severely delinquent or has made it to collection status. By that time the damage has already been done to your credit and credit scores so settling won't hurt like it would if you were current.

Our resident debt expert, Gerri Detweiler talked about this trend in a recent blog post over at Creditbloggers. There are two sides to the argument but it's an interesting post to say the least. You can read what she had to say about topic here: So Why Pay Debts Anyway?