Major phone carriers have recently been changing many aspects of their services. In my previous article we discussed how both AT&T and Verizon have switched their family plans over to share data. To no surprise, contracts and fees have changed as well.
Previously, carriers competed a great deal for customers and offered individuals upgrades well before their 24 month contract was up. Verizon had a system in place allowing customers to re-up after just 20 months, with no penalties, fees or extensions. Sprint still allows a customer to upgrade devices after 20 months and sign up for a new 24 month contract for the discounted device. Customers were signing 24 month contracts, but being allowed to upgrade prior to the end of that contract.
However that was the past, and what is important is that they have changed now and moving forward. Both Verizon and AT&T are 24 month contracts, and that’s 24 months until a customer is eligible to upgrade.
Now to maintain a competitive edge, AT&T still offers their early upgrade to those interested in getting a new iPhone one year into their contract. The small catch is you are still signing another two year agreement from that date, and the phone is going to cost you $250. For example, if you desire the iPhone 5 or broke your phone and did not get Geek Squad’s Protection plan, then at 12 months it would cost you $449.99 ($199.99 full upgrade price plus $250) plus any protection and accessories you may want.
Termination Fees
To get out of a contract is where it gets a little tricky. All carriers state some form of early termination fee in their agreements. This is where it gets slightly complicated and even after extensive research I may not have it down to an exact formula or science, but bear with me here. The objective is to help you feel more confident about a big decision you may need to make down the road or are looking to make soon.
Verizon
Verizon smartphones have an early termination fee (Abbreviated ETF for future reference) of $350. However, they start knocking off $10 per month. So for example, after one year (12 months) your ETF to get out would be $250 per line. Basic phones and mobile broadband cards are slightly different, with an ETF starting at $175 minus $5 per month. After a year it would only cost you $115.
Sprint
Sprint structures their ETF slightly differently. For smartphones they multiply $20 by the number of months remaining on your contract (not to exceed $350 and minimum of $100), so after a year it would cost $240. On all other devices they multiply $10 by the number of months (maximum $200 and minimum of $50). So with a Sprint hotspot (broadband card) after a year the ETF becomes $120. Very similar results, just different ways to get to those results.
AT&T
AT&T starts their ETF for smartphones at $325 minus $10 per month and other devices at $150 minus $4 per month. So, if you had an AT&T plan with a smartphone and a basic phone for a year your ETF to cancel out of AT&T would be $205 for the smartphone and $102 for the basic phone.
T-Mobile
The termination fees for T-Mobile Classic Plans are $200 per line, declining by $20 per month until the remaining fee reaches $50.
