T-Mobile announces pro-rating of termination fees

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
1st	$200 or 0*	$0*	$0*
2nd	$200	$175	$170
3rd	$200	$170	$165
4th	$200	$165	$160
5th	$200	$160	$155
6th	$200	$155	$150
7th	$200	$150	$145
8th	$200	$145	$140
9th	$200	$140	$135
10th	$200	$135	$130
11th	$200	$130	$125
12th	$200	$125	$120
13th	$200	$120	$115
14th	$200	$115	$110
15th	$200	$110	$105
16th	$200	$105	$100
17th	$200	$100	$95
18th	$200	$95	$90
19th	$100	$90	$85
20th	$100	$85	$80
21st	$100	$80	$75
22nd	$50	$75	$70
23rd	$50	$70	$65
24th	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
1st	$200 or 0*	$0*	$0*
2nd	$200	$175	$170
3rd	$200	$170	$165
4th	$200	$165	$160
5th	$200	$160	$155
6th	$200	$155	$150
7th	$100	$150	$145
8th	$100	$145	$140
9th	$100	$140	$135
10th	$50	$135	$130
11th	$50	$130	$125
12th	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).

Comments

[robin]

BE CAREFUL:

I just called TMobile and they told me that the prorating does not apply to anyone that signed a contract prior to the date the prorating started. I said then what is the point of that??? I said that i do not get service in my house. They want me to upgrade my phones. I dont want a new phone. I want out. I complained before and they said they would look into it. They dont. How do I get out?????? By the way.. if you have a text bundle then the text plan out does not work for you. They said it does not apply.. There is not a way out.. They get you no matter what.

[nicki]

I just got off the phone with T-Mobile regarding an issue that has been going on for over 2 months. I initially reported the problem of nonconnecting calls (both receiving and making) two months ago. Last month befor paying the bill I called and complained until they gave me a credit for half of my monthly fee. A few weeks later (today) I went to myTmobile to check my minute usuage to find retro fees for overage on this same line (you know, the one that I can bearly receive or make calls on)..... what?!!! I called and after being transferred from one person to the next I was told by a manager that although the problem still existed I will not receive any further credits to my account until THEY (T-Mobile)are able to fix the problem (huh?). I pointed out that they would not be fulfilling their end of the contract if this is done and questioned if it seemed fair that I should pay the full monthly fee (as well as overages) in hopes of maybe one-day receiving a partial credit for my interrupted service. The manager expressed no remorse and asked if she could do anything else for me. I then asked what were my options on getting out of the contract to which she replied .. pay us $200 per line and we'll be glad to let you go. Now, I ask you, is this fair? Something to make you say hmmmmmmm

Signed, Unhappy T-mobile customer.

[David Reimer]

I just spoke to a T-Mobile customer rep and explained I was unhappy with the text charges I incurred and inquired as to my contract end date. She said my contract ends on 11-22-08 BUT that the pro-rating ETF doesn't apply to me. I have a 2 year contract and she is telling me that it is only good for new customers this pro-rating. So I would have to pay $200.00 obviously or let my contract run out.

[Ben Popken]

You can't call it pro-rating because it doesn't decline by the same amount each month. It's "ETFs that decline over time" or "ETFs that decline in intervals." None of the other carriers are really pro-rating either because the ETF never goes to zero within the contract period.

[Marge K.]

I had a two year contract with Cingular (now AT&T)which just expired. I was told on day one and a few days after it expired that the early termination fee was $175. There was never any mention of a sliding scale.

[C Henry]

My Sprint contract expires in Sept 08. The connection is only fair where I live since Sprint acquired Nextel, therefore I keep getting dropped on calls. I called Sprint and asked them if I could cancel early and prorate the remaining 3 months. They said No. They would charge me $200 for EACH (2) phone I have! I have had Sprint for over 10 years and the only reason I'd cancel is that I work from home and the calls keep getting dropped. Sprint said I have free roaming and that is true, but that doesn't improve the service at all. So add Sprint to those wonderful companies that do NOT offer a prorated reduction!

[BHacker]

Does this apply to current T-Mobile customers, or just ones who enter into a new contract after June 28th?