How to Cancel Your Cell Phone Contract

celltrapYou want out! There are a myriad of different reasons why someone would want to cancel their wireless service before the contract period has expired, so we don’t have to go there. But for whatever reason, you want to put an end to your association with a wireless carrier but you didn’t read my other blogs extolling the virtues of pre-paid cell service and you’ve got to deal with that very inconvenient two-year contract.  Most recently, T-Mobile challenged the two-year contract rule with an “upgrade” option and other carriers have followed suit.  This is an option worth your consideration, as is discussed below.

But let’s assume that you signed a 2-year contract and it didn’t include the “upgrade” option.  OK, you’ve still got a few options. The best one: seize upon any change that the carrier makes to your plan. By law, almost any new fee or new charge imposed during your contract period is your opportunity to break the contract. Why? Because they can’t change any part of the contract without your permission. They used to do it all of the time because they know that you DON’T know that you can use that change as a basis for canceling your contract. Recently, AT&T announced a $.61 administrative fee. AT&T customers groused about it but the savvy ones saw this as an opportunity to break free from AT&T and, by law, they could!

Here are the steps you must take when you call the carrier to announce your intent to cancel the contract.

  • Have the notice of the contract change/increase on hand
  • Call the carrier
  • Confirm that the change/increase applies to you
  • Read the “Material Adverse” section of your contract to the CSR
  • State that the change/notice has a material adverse affect on you and that you want to cancel your contract without being charged a termination fee
  • Escalate to a supervisor when the CSR tells you that you can’t cancel without paying an early termination fee
  • Be persistent and don’t back off your position that the change/increase has a materially adverse affect on you and that the carrier’s own contract entitles you to cancel without penalty.

You’ve only got 30-days in which to use this strategy and the company will fight you, but you are on strong legal ground if you stand strong.

Another option is to sell the remainder of your cell phone contract to someone else. The concept has been around for a number of years. Most of the carriers have a process that allows you to transfer your contract, which can help to avoid activation fees, or perhaps find a deal. The contract “swapping” sites are OK for Plan B, but clearly the better option is to get out of the contract entirely. See a list of carrier activation fees. Check out sites like: CellswapperCelltradeusa, and TradeMyCellular. However, this means giving up your phone and your phone number. You just have to find a trade that fits your needs, which could take months for one to happen, and by then you could have paid the ETF and been done with it. Here is a short list of drawbacks:

    • There are a lot of outlandish sales to be found like $4/month plans and $5000/month plans.
    • Typical internet field of potentially sketchy anonymous buyers.
    • Not usually an instant process, can take up to 7 days, and buyer must pass a credit check.
    • Cost of plans do not generally differ widely from carriers’ rates
    • Still a relatively little used process after many years of the concept being around

A third option is to log the number of dropped calls and other service inadequacies. You’ll likely need to complain a few times to the carrier. But if you’ve developed a record of bad service, you can then demand to cancel the contract on the basis that the service that they’d advertised has not been provided. It’ll be a battle and it may require you to file a complaint with file a complaint with the Better Business Bureau or Federal Trade Commission as backup. But if you persevere and you have a documented record of dropped calls, it could pay off.

As for the newly announced “upgrade options”,   the deal here is that the carrier will charge full retail price for the phone, but allow customers pay for the phone over 20 to 24 months.  Moreover, customers are free to pay the remaining balance due on a phone and switch carriers at any time and can trade in their phones for newer models after 6 or 12 months. The new monthly payment for the new phone depends on the model chosen.    The deals still require relatively high monthly payments:  usually between $90-$120 per month.   So they aren’t great bargain.  (Compare my pre-paid option that cost me less than $40 per month over two years)    Here’s a summary of three such programs announced so far:

T-Mobile Jump –  demands a $150 down payment on a smartphone, with the rest of the hardware balance spread out over 24 months. There’s also a $10 up-front charge for a SIM card.  But there are even more conditions: a $10 monthly charge that is essentially a mandatory  insurance plan (a lot more than the usual $7 rip-off).  Allegedly, the $10/month also buys you the privilege of upgrading to a newer phone after six months – provided at least 50 percent of your current phone’s price is paid off.

AT&T Next –  the good news is that is doesn’t require a down payment, “insurance,” or SIM card fee. You are given 20 months to pay it off instead of T-Mobile’s 24 months.   AT&T apparently won’t let you  trade in the phone until after twelve months after which you will have paid more than 50 percent of the phone’s price.   Still, the notion of getting a new smart phone after six months is pretty extreme — 12 months may be more reasonable in light of how much time it takes to set-up and master a new smartphone.

Verizon’s Edge program – is supposed to commence on August 25.   Like AT&T it requires no down payment, “insurance,” or SIM card fee.  Like T-Mobile, Verizon spreads payment out over 24 months.  And like AT&T, an upgrade is available only if more than 50 percent of your current phone’s price is paid.

Depending upon the phones and plans purchase, the “upgrade options” being offered by carriers may be preferable to the status quo.   There is no service contract for these plans — and that’s a good development.     We recommend them largely because if you do want a new phone in less than two years, you have an option of selling your current phone to recoup some of the upfront cost.    But keep in mind that my strong suggestion is to buy smartphones  that have been on the market for about a year or so — all of the bugs have been worked out — and then sign-up to a pre-paid plan.    The pre-paid plans still appear to be less expensive than the “upgrade option” plans being offered by the carriers.

2 replies
  1. Trina
    Trina says:

    Thanks for taking the time to let us know about this. One cool thing about the Internet is that knowledgeable people like you give us this information — for free — so that we can protect ourselves. It is appreciated.


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