Wireless Carriers’ Contracts & Cancellation Fees: What has changed, and what you should know before sign a new agreement.
Your wireless contract has finally run out (well, at least you think it has) and you are on the hunt for new wireless toys phones for you and maybe the family. One question that usually comes up when talking about cell phone contracts is : Why does the wireless carriers make us sign a contract with a cancellation fee? Well according to Marguerite Reardon over at CNet,
” The phone companies say they must charge a fee to recover the cost if a customer quits his or her service early. These fees have angered many customers. Several class action lawsuits have been filed against cell phone carriers and some customers have won. Congress and the Federal Communications Commission have challenged the industry on this practice. While it’s very unlikely these fees will ever go away, as of mid-2008, all four of the major wireless carriers in the U.S. have been prorating their early-termination fees, so that customers near their end of their contracts don’t pay the same fee as those just starting their contracts.”
Jeremy Kessel over at MobileCrunch put together this table of current wireless carriers Early Termination Fee’s. So let’s have a look at how much it might cost you to leave if you’re not happy.
| Carrier | Early Termination Fee (ETF) | More Information |
| AT&T | $175 | ETF decreases by $5/month for duration of contract. |
| Sprint | $200 | ETF begins to reduce in the fifth month of the contract; fee goes down $10/month until it reaches $50. |
| T-Mobile | $200* | * T-Mobile USA’s ETF schedule is not exactly straight forward. As of June 28, customers with a one-year or two-year contract will see their ETF drop from $200 to $100 if they end their contract with 91 to 180 days remaining on their agreement. If they end a contract with fewer than 91 days left on it, they’ll pay an ETF of $50. Customers who terminate service in the last 30 days of their contract will either pay the $50 fee or their standard monthly charge, whichever is cheaper. |
| Verizon Wireless | $350* | * Originally $175, VZW doubled the fee on Nov. 15 for “advanced devices,†which includes smartphones and netbooks. The new ETF only applies to new contracts that started on or after November 15. Customers who signed a contract before November 15 keep the old $175 ETF. For example, new Droid customers who bought their phones the first weekend it launched will not be required to pay the $350 ETF if they terminate service early under these new rules. VZW will continue to prorate the ETF over the life of the contract, decreasing the rate by $10/month. Verizon’s previous prorate rate was $5/month. ** The ETA for non-â€advanced devices†remains $175, and decreases by $5/month during the contract. |
Keep in mind that the Early Termination Fees are per each line on your account. So if you have five lines and wanted to move all five lines to another carrier, then it could mean five cancellation fees. But in the same token, if you cancel one line or renew (upgrade) a line on the account. It generally applies only to that particular line.
Most wireless providers do offer a non contracual or even a one year option, but your dream phone could cost you more than your car payment. I do recommend you check with your current carrier to see if you are indeed eligible to upgrade, out of contract, or at least on a prorated agreement. Note: Being eligible to upgrade does not always mean you are out of contract. Some carriers allow users to upgrade at least 30-60 days before their contract ends. Finally, keep in mind that these terms can change at anytime, so just use this info as a guide to ask detailed questions when signing a new agreement.
So what do you think of the carriers’ termination fees, are they fair? Sound off in the comments and let us know.
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