Back when I was writing my post on the worst return policies, I almost lumped in every contractual wireless service provider due to their pesky early termination fee penalties that are enforced in order to lock you into false brand loyalty. However, EVERY ONE of the four national carriers make early termination fees a central part of their contractual agreements.
I understand the business reason behind early termination fees. However, if my service or device is awful and you’re a customer focused company, you will try to make things right and not add insult to injury by stinging me with hundreds of dollars in early termination fees. For that reason (and lower costs elsewhere), I decided a few years ago to make the move to prepaid, no-contract cell plans. A few of the BIG 4 carriers offer prepaid plans now, but the cost is usually prohibitively high (either by service cost or device) to entice you into jumping into a contract.
It is quite possible that you have never had to pay an early termination fee. If you have, you know how painful they are. If you have not, they essentially serve the dual purpose of:
- Allowing the service provider to recoup any discounts they may have given you on equipment so that they don’t lose money on any customer.
- Acting as a barrier of exit if you find a better offer elsewhere or simply want to end your service before your contract is up.
Often times, when you receive a discounted phone for being a loyal customer, your contractual agreement renews, and most do this without mention.
I’ll rank order the four national cellular service providers early termination fee policies from best to worst, and then offer up a few alternatives if you want to avoid them altogether.
Of the four major nationwide cellular providers who offer contractual agreements, Sprint has the least painful early termination fee. It has a comparatively low termination fee that scales down by $10/month after your first 4 months. It is also the only one of the four that does not charge a restocking fee. The fairness of early termination fee policies outside of Sprint’s is apparent, as you will see. Here is the policy:
- $200 if you have 20-23 months remaining in your contract.
- If you have 5-19 months remaining, multiple the # of remaining months by $10 (i.e. 15 months = $150).
- $50 if you have 1-5 months remaining.
# of days to cancel without early termination fee: Sprint gives you 30 days to cancel without an early termination fee.
Restocking Fee? None
T-Mobile, like Sprint, starts out at $200, and then scales downward. The $200 is low compared to AT&T and Verizon, but it is a flat $200 for all the months up until you only have 6 months left! So you could technically be 17 months into a two-year contract and still have to pay $200 to terminate, which is fairly ridiculous. Another ding against T-Mobile is that they are the only one of the four to give only 14 days (vs. 30) to cancel without the termination fee (excluding California). Also, there restocking fee warning is very ambiguous.
For all phones:
- $200 if you terminate with over 180 days remaining on your contract.
- $100 if between 91 to 180 days remaining on your contract.
- $50 if between 31 and 91 days remaining on your contract.
- The lesser of $50 or your monthly recurring charges if 30 days or less remaining on your contract.
# of days to cancel without early termination fee: T-Mobile gives you 14 days (30 in California) from your activation to cancel without having to pay early termination fees.
Restocking Fee? You ‘may be’ hit with a restocking fee, but T-Mobile’s T’s & C’s don’t specify what it might be.
AT&T brings their ‘A-Game’ by boosting termination fees up to $325, versus Sprint and T-Mobile’s $200. They also have a restocking fee for all devices.
- Smartphones: $325 (minus $10/mo. you had service)
- Dumbphones: $150 (minus $4/mo. you had service).
# of days to cancel without early termination fee: AT&T gives you 30 days to cancel without incurring an early termination fee.
Restocking Fee? $35 restocking fee, or 10% on iPhone, iPad, or other tablets.
Verizon is the worst of the worst with the highest early termination fees, ZERO pro-ration based on how many months of service you’ve already paid for, and a restocking fee to boot. Customer beware.
- $350 for smartphones
- $175 for dumbphones
# of days to cancel without early termination fee: Verizon gives you 30 days from activation to cancel without having to pay early termination fees.
Restocking Fee? $35 for phones or $70 for netbooks or tablets.
If you want to avoid the early termination fees, you have to go with a no-contract, prepaid provider. You’ve heard me talk about a few of these before, but they are worth mentioning again. The problem with some of these plans is that if you do want a top of the line device, you are going to have a significant up-front cost to buy that phone, as they are usually not discounted. Factor in the cost of the phones into the monthly service costs to get a true comparison to a contractual offer. Older, or less advanced models, on the other hand, are usually dirt cheap.
- Net10: Zero ‘smart phone’ offerings, but many phones come with free minutes, which essentially make the phone free.
- Tracfone: Very similar to Net10, and even cheaper.
- Virgin Mobile Beyond Talk: Smartphone offerings (although usually not the top of the line, latest devices). High price of entry.
- StraightTalk: Offers no-contract monthly unlimited plans.
- MetroPCS: Nationwide network, claims to be launching 4G.
- Boost Mobile: No contract and prepaid offerings.
- ATT GoPhone: No contract, some nice phone offerings, but high price. Monthly plans are pricey.
- TMobile: Offers both prepaid w/refill and monthly plans with no contract.
- I’ve never heard of an example of someone getting their early termination fee waived unless it was within the introductory month. If you were able to avoid early termination fees, let us know how!
- Have you abandoned contractual agreements because of early termination fees?
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