How to Switch Phone Carriers and Avoid Early Termination Fees

One benefit of there being a variety of mobile phone carriers is the ability to switch companies if you’re unhappy with your current provider. But while switching carriers is an option, it can also be costly depending on when you decide to jump ship.

What are Early Termination Fees?

Most people who sign a long-term service agreement are familiar with early termination fees. When you sign these agreements, you’re essentially agreeing to stay with the network for a certain period of time, usually two years. If you end your relationship with the carrier early, you must pay the early termination fee before you’re released from the agreement.

The problem with these fees, however, is that they aren’t cheap. Early termination fees vary depending on the mobile carrier. But on average, these fees run about $250 to $650 based on the type of phone and the installment plan.

While these fees might seem excessive, they protect mobile carriers who allow customers to purchase smartphones with little upfront cash, and then pay off their balance over two years with an installment plan. If a customer leaves the company, the early termination fees help cover any remaining balance on the phone.

These fees make sense from a financial standpoint, but they’re still annoying and burdensome. The good news is that there are ways to avoid early termination fees.

Skip Long-Term Mobile Contracts

One of the best ways to avoid early termination fees is not to get into a long-term contract with a mobile carrier. Of course, this is easier said than done.

Smartphones can be expensive, costing as little as a couple hundred dollars up to $1,000. Some who want the newest phones are unable to pay the cost upfront and need an installment plan.

But while an installment plan is convenient and breaks up the cost of a phone over a couple of years, it becomes a headache if you need to switch carriers while paying off the phone.

If you skip a long-term contract to avoid early termination fees, it may take longer to buy a phone since you’ll need to save up and pay for the phone outright. Even so, there’s peace of mind in knowing you can switch carriers without having to fork over hundreds of dollars.

Look for Early Termination Deals

You can also avoid early termination fees by looking for deals offered through other mobile carriers. These deals vary but often involve a new carrier paying all or a portion of your early termination fee to get your business.

If you find a deal, make sure you understand the fine print. For example, for some carriers, you must get a new smartphone pay for this phone through the company’s installment plan. This is an excellent way to get out of your current contract, but you’re essentially jumping from one service agreement to another.

Bottom Line

Early termination fees are how mobile carriers keep customers locked into long-term agreements. From a business standpoint, these fees make sense. But they can be a hassle from a consumer standpoint.

If you’re in a mobile phone contract and need to switch carriers, your best bet is switching to a company that will pay your early termination fee, and then buy your new phone outright to avoid this fee in the future.