Early Termination Fees
Consumers commonly see advertisements for basic cell phones that cost $0.50 and smart phones for almost as little as $49.99. Phone companies are able to sell expensive equipment at such reduced prices by requiring consumers to sign contracts for service. If you purchase one of these discounted phones, you will be required to sign a contract with the service provider promising to use their service for a specific length of time, usually one to two years. If you terminate your cell phone contract prior to the end of the contract term, you will likely be charged an Early Termination Fee (ETF) or an Early Cancellation Fee (ECF). ETFs can reach into the hundreds of dollars depending upon your service provider and the type of phone you purchased.
- Ask about the cost of the ETF prior to signing any contract.
- Research the reputation and service of the service provider to ensure that their service will meet your mobile phone needs.
- Be prepared to commit to the service provider for one to two years.
- Ask the service provider if they have a policy of pro-rating ETFs. Pro-rating refers to reducing the amount of the ETF based upon the length of time remaining in the contract term. Not every service provider allows pro-rating of ETFs.
- Ask the service provider if they allow risk-free trials. Some providers allow customers to take their new phone for a “test drive” of 14 to 30 days to review the phone and the services provided. Keep in mind that although you may avoid an ETF with a trial period, other fees may apply.
To avoid ETFs, purchase the phone at its full retail price and request month-to-month service from your preferred provider.