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.
What is an Early Termination Fee?
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.
Sprint’s early termination fee scales down by $10/month after your first 4 months, in line with this chart. 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. The scale-down starts at:
- $350 for smartphones
- $200 for non-advanced devices (dumbphones)
# of days to cancel without early termination fee: Sprint gives you 14 days to return without an early termination fee.
Restocking Fee? None
T-Mobile scales downward. The $200 is low compared to AT&T and Verizon, and it scales down from there. Also, there is a restocking fee.
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 90 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 from your activation to cancel without having to pay early termination fees.
Restocking Fee? The T-Mobile restocking fee is $75 for advanced, data-focused devices that are designed for Web browsing (e.g., tablets, netbooks); the restocking fee is $50 for “smart phone” and “wearable devices” with SIM cards, which are high-end phones and wearable devices that are designed for Web and social media use in addition to standard phone features such as voice and text messaging; and for all other devices, the restocking fee is $25 (e.g., basic phone devices, data sticks). Select the return policy for your state below for specific details.
AT&T brings their ‘A-Game’ by boosting termination fees up to $325. 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 14 days to cancel without incurring an early termination fee.
Restocking Fee? $35 restocking fee, if made within 14 days.
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 14 days from activation to cancel without having to pay early termination fees.
Restocking Fee? $35 for phones or $70 for netbooks or tablets.
How to Avoid Early Termination Fees
If you want to avoid the early termination fees, you have to go with a no-contract, prepaid provider (aka MVNO’s). 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.
- Republic Wireless: If you want a more advanced phone that uses Android, the cheapest unlimited data/text plan with call time is through Republic Wireless. You get unlimited data, text, and voice minutes for $25 per month ($10 if you’re happy with wifi-only data). Republic can do this because they’ve optimized their phones to connect to wi-fi networks, when available, and Sprint’s network when not.
- Virgin Mobile Unlimited Plan: Smartphone offerings (although usually not the top of the line, latest devices).
Early Termination Fee Discussion:
- 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?