How Much Does It Cost to Get Out of Your Cell Phone Contract? Examining Four Carriers' Early Termination Fees

If you're shopping for a new cell phone contract, you should know before you sign up what will happen if you want to cancel your contract early.

How Expensive Will It Be?

Early termination fees vary from carrier to carrier. ATT, Verizon, Sprint, and T-Mobile all pro-rate their termination fees, so the amount you’ll have to pay will depend on the remaining length of your contract. The highest fee applies to advanced devices like the iPhone. Verizon’s full fee is $350; ATT’s is a close second at $325.

Here's an overview of what the major carriers are charging these days (it's nice to see that they've started pro-rating the fees).

ATT: For advanced devices, such as iPhones and Blackberries, “$325 minus $10 for each full month of your Service Commitment that you complete.” For standard devices, “$150 minus $4 for each full month of your Service Commitment that you complete.” Visit ATT’s Early Termination Fees webpage to see which category your phone falls into

Verizon: “If you cancel a line of Service, or if we cancel it for good cause, during its contract term, you'll have to pay an early termination fee. If your contract term results from your purchase of an Advanced Device after November 14, 2009, your early termination fee will be $350 minus $10 for each full month of your contract term that you complete. (For a complete list of Advanced Devices, check verizonwireless.com/advanceddevices.) Otherwise, your early termination fee will be $175 minus $5 for each full month of your contract term that you complete. Cancellations will become effective on the last day of that month's billing cycle, and you are responsible for all charges incurred until then. Also, if you bought your wireless device from an authorized agent or third–party vendor, you should check whether they charge a separate termination fee.

Sprint: “Subscriber Agreements are subject to Sprint's prorated policy ($200 through month 5 of term, decreasing $10 a month until $50 minimum applies to remaining terms).”

T-Mobile: “The early termination fee is: $200 if termination occurs with more than 180 days remaining on your term; $100 if termination occurs with 91 to 180 days remaining on your term; $50 if termination occurs with 31 to 91 days remaining on your term; and the lesser of $50 or your monthly recurring charges (including any applicable taxes and fees) if termination occurs in the last 30 days of your term."

These fees do sound really high, but Consider the Company’s Perspective on Cell Phone Contract Cancellation. In some cases, you can try Getting Out of Your Cell Phone Contract Early with Materially Adverse Changes. But sometimes it makes sense to just pay the fee, get out and move on.

Also, if you're concerned that you might want or need to exit a contract early, you might consider Avoiding Early Termination Fees Forever With Prepaid Cell Phone Service.

Don’t Ignore The Fee
If you think you will avoid paying the early termination fee by simply refusing to pay it, think again. The unpaid charge could go to collections and end up as a negative mark on your credit report.

Try Prepaid Service
Personally, I've been using prepaid service for years and I'm extremely happy with it. I've also saved a ton of money. Skype and Google Voice provide far superior service, call quality, and pricing for most of my phone needs.

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