Definition: When you sign a contract with a cell phone carrier, you often agree to pay an early termination fee (ETF) in order to cancel service before a common two-year time period.
ETF fees, which are most commonly used by the major cell phone carriers (AT&T, Sprint, T-Mobile and Verizon Wireless), range from $175 to $350. As of Jan. 2010, the ETFs at the four major carriers are listed below.
The major cell phone carriers justify their early termination fees because they subsidize the cost of your cell phone once you agree to pay for monthly service for two years.
If you don’t agree to an ETF within a contract at these carriers, you can often purchase no-contract, prepaid wireless service.
While prepaid wireless service does not require a contract or ETFs, you can end up paying more for a cell phone and it’s likely you won’t have as much of a handset selection.
ETF Criticism
In the United States, many consumer advocacy groups have criticized the major cell phone carriers for using ETFs and claim they are anti-competitive. While various cases have been heard by U.S. courts to abolish the ETF, they still remain today.
With the rise of widespread prepaid wireless carriers and plans, though, consumers have more choices than ever before to avoid contracts and ETFs. More information about how to affordably cancel a cell phone contract can be found here.
ETF fees, which are most commonly used by the major cell phone carriers (AT&T, Sprint, T-Mobile and Verizon Wireless), range from $175 to $350. As of Jan. 2010, the ETFs at the four major carriers are listed below.
- AT&T: $175 per phone line
- Sprint: $200 per phone line
- T-Mobile: $200 per phone line
- Verizon Wireless: $175 or $350 based on your phone; prorated so it drops $5 per month
The major cell phone carriers justify their early termination fees because they subsidize the cost of your cell phone once you agree to pay for monthly service for two years.
If you don’t agree to an ETF within a contract at these carriers, you can often purchase no-contract, prepaid wireless service.
While prepaid wireless service does not require a contract or ETFs, you can end up paying more for a cell phone and it’s likely you won’t have as much of a handset selection.
ETF Criticism
In the United States, many consumer advocacy groups have criticized the major cell phone carriers for using ETFs and claim they are anti-competitive. While various cases have been heard by U.S. courts to abolish the ETF, they still remain today.
With the rise of widespread prepaid wireless carriers and plans, though, consumers have more choices than ever before to avoid contracts and ETFs. More information about how to affordably cancel a cell phone contract can be found here.
Examples:
Sprint charges a $200 early termination fee on a two-year service contract.