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T-Mobile announces pro-rating of termination fees

Consumer Reports News: June 25, 2008 04:21 PM

T-Mobile has just weighed in with particulars on how it will pro-rate its early termination fee, the penalty of up to $200 it charges when subscribers cancel their service before the end of a new 12- or 24-month service contract starting June 28.

T-Mobile brings to three the number of major cell carriers who are reducing such fees, which range from $150 to $200, depending on how far subscribers are into their contract. Two other big companies, Alltel (which may soon be swallowed up by Verizon) and Sprint, are not yet making such adjustments, though they've pledged to do so.

So while T-Mobile's announcement is welcome, its pro-rating is in some ways less generous than the schemes for Verizon and AT&T, the other majors who pro-rate their termination fees. T-Mobile's $200 fee, the highest among the three companies, doesn't actually drop at all for the first year-and-a-half of two-year contracts.

When it does, it drops to $100 from the nineteenth through twenty-first months. That's more than you'd get dinged at that point by either Verizon or AT&T. Both those companies have a $175 fee that drops by $5 for every month of service, meaning their fees would slide from $85 to $75 at Verizon and from $90 to $80 at AT&T in that same three-month period, a year-and-a-half and counting into the contract. (Verizon's ETF is slightly lower than AT&T's each month, because its monthly $5 pro-rating begins on the contract start date, while AT&T’s starts after the ETF kicks in in the second month, according to company spokespeople.)

However, T-Mobile's fee is better for consumers during the last three months of two-year contracts, when it drops to $50; that's $10 to $25 lower than the penalty for breaking an AT&T or Verizon contract during that period. And T-Mobile's pro-rating is significantly better on 12-month contracts. Although T-Mobile's fee doesn't drop at all until six months in, it then drops dramatically to $100 for the next three months, $35 to $50 below what the others would levy at that time. And the T-Mobile's fee kicks down to $50 in the last three months of the contract, besting the others by $70 to $85.

For other money-saving tips, see our other post, "Cell plan extra charges: Why and what you can do" and "Seven ways to cut your phone bills" on ConsumerReports.org.

—Jeff Blyskal

How pro-rated early termination fees compare

Boxes marked in green denote the lowest fees available among the three carriers.

For 24-month contracts

If you cancel when you're in this month of your 24-month contract...
You'll pay this early termination fee (ETF) if your wireless service provider is:
 
T-Mobile
AT&T
Verizon
1 st
$200 or 0 *
$0 *
$0 *
2 nd
$200
$175
$170
3 rd
$200
$170
$165
4 th
$200
$165
$160
5 th
$200
$160
$155
6 th
$200
$155
$150
7 th
$200
$150
$145
8 th
$200
$145
$140
9 th
$200
$140
$135
10 th
$200
$135
$130
11 th
$200
$130
$125
12 th
$200
$125
$120
13 th
$200
$120
$115
14 th
$200
$115
$110
15 th
$200
$110
$105
16 th
$200
$105
$100
17 th
$200
$100
$95
18 th
$200
$95
$90
19 th
$100
$90
$85
20 th
$100
$85
$80
21 st
$100
$80
$75
22 nd
$50
$75
$70
23 rd
$50
$70
$65
24 th
The lesser of $50 or monthly plan fee
$65
$60

For 12-month contracts

If you cancel when you're in this month of your 12-month contract...
You'll pay this early termination fee (ETF) if your wireless service provider is:
 
T-Mobile
AT&T
Verizon
1 st
$200 or 0 *
$0 *
$0 *
2 nd
$200
$175
$170
3 rd
$200
$170
$165
4 th
$200
$165
$160
5 th
$200
$160
$155
6 th
$200
$155
$150
7 th
$100
$150
$145
8 th
$100
$145
$140
9 th
$100
$140
$135
10 th
$50
$135
$130
11 th
$50
$130
$125
12 th
The lesser of $50 or monthly plan fee
$125
$120

Note: *AT&T and Verizon provide 30-day trial periods in which you may cancel without incurring termination fees. T-Mobile provides only a 20-day trial period (30 days in California).

Paul Eng

   

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