Dumping your current cell phone service provider isn’t always as simple as calling up and cancelling.

If you’re still under contract or owe on a phone financing plan, you might find a nasty surprise on your final bill called the Early Termination Fee.

Early Termination Fees (ETF's for short) add up...and they can add up fast. 

Especially if you have an expensive smartphone or multiple lines.

So What Is an Early Termination Fee Exactly?

When a carrier gives you a discount on a phone or allows you to make payments, they often require a contract in exchange.

In most cases, these contracts are two years long. Carriers use this to ensure that they make back the money they gave you for signing up.

According to Wikipedia:
An early termination fee is a charge levied when a party wants to break the term of an agreement or long-term contract. They are stipulated in the contract or agreement itself, and provide an incentive for the party subject to them to abide by the agreement.

Just because the carrier gave you a shiny new smartphone for $10 doesn’t mean it costs $10. The carrier paid the remaining balance.

ETF Marriage Comic
Source: Geek and Poke

If you cancel service before you contract is up, early termination fees reclaim the money they contributed toward the cost of the phone or other discounts offered to you when signing up.

Fees vary depending on your carrier, account features and other factors. However, most carriers have support pages on the topic or spell out the exact steps for calculating your ETF in their terms of service.

Looking to avoid the number crunching? Call customer support. They must provide you with a total should you want to weigh the cost of leaving your carrier early.

When Do I Need to Pay ETF Fees?

ETF fees most often apply in one of two scenarios:

 

You cancel service with your existing provider before you contract is complete.

 

You don’t pay your bill long enough that the carrier ends service and your contract.

It’s hard to accidentally incur an early termination fee. But there are rare occurrences (such as an error porting your number between carriers) that might cause an unexpected termination of your service.

In these instances, you might call customer support and work things out.

However, in most cases, once they issue an early termination fee, you’re stuck paying it.

If you don’t, it might impact your credit.

Worse still, they can also blacklist your phone. Then you’re stuck finding a new phone on top of a new provider.

How Much Is The Early Termination Fee?

Your early termination fee depends on the number of lines you have on your account, the phones on your account and sometimes even your monthly service plan.

The government regulates early termination fees in most regions. But despite these regulations, they can still pile up fast.

This is because termination fees apply to each line on your account.

If you have a family plan with 4 lines, you could end up owing hundreds of dollars should you cancel service early.

Current ETF fees for Canadian Carriers include:

CarrierFee
Bell

The remaining balance on any subsidized devices or the remaining payments on any device payment plans

Bell MTS Equal to the device subsidy multiplied by the number of months remaining in your contract term divided by the total number of months of your term (plus applicable taxes).
Chatr No ETFs
Cityfone

Equal to the device subsidy multiplied by the number of months remaining in your contract term divided by the total number of months of your term (plus applicable taxes).

Eastlink

No ETFs for standard plans

If you're using easyTab to finance a device, the remaining balance is due immediately upon cancellation of service

Fido

Unfortunately, the exact formula to calculate this fee isn’t listed anywhere on their site or forums.

However, our best estimate is that you would owe--at a minimum--the remaining balance for your device financing agreement or subsidy with a possible administrative fee.

Freedom Mobile

No ETFs

Upon cancellation any unpaid MyTab balance is immediately due

Koodo Mobile

No ETFs

Upon cancellation, any unpaid Tab program balances are immediately due

PC Mobile

If you have a device subsidy balance, it is due at the time of cancellation.

If you have less than $5 in credit on your account, you will not receive a refund upon cancellation.

Petro-Canada No ETFs
Primus Mobile Equal to the device subsidy multiplied by the number of months remaining in your contract term divided by the total number of months of your term (plus applicable taxes).
Public Mobile No ETFs
Roam Mobility No ETFs
Rogers The remaining balance on any subsidized devices or the remaining payments on any device payment plans
SaskTel

Upon cancellation any early device upgrade or phone financing balances are immediately due

SpeakOut No ETFs
Telus Any remaining device balances plus a $50 cancellation fee
Videotron Any remaining device subsidy balances are due immediately upon cancellation
Virgin Mobile Any remaining device balances or device subsidies are due immediately upon cancellation

How Can I Avoid ETFs?

The simplest way to avoid ETFs is to avoid contracts.

Instead, buy your phone upfront and choose a SIM-only plan.

It might cost more at first, but by avoiding fees like these, you’ll likely save money over the long term.

If you recently signed up for a new contract, carriers must give you a full refund within 14 days of starting service should you want to cancel for any reason. However, you must return any equipment in like new condition if you received a subsidy or lease agreement.

This means you might still have an easy option to get from ETFs before it’s too late.

However, for most readers, you’re probably already on a contract.

If you don’t want to pay it, you can try lowering your plan to reduce your monthly bill and letting your contract finish.

Be sure to check the terms of your contract. If you lower your bill too much, it might not count toward lowering your ETF anymore.

While most options won’t work overnight, with a little time, you could find yourself free of your contract and fees.

Final Thoughts

Early termination fees might be a hassle, but as long as you fulfill the terms of your legal contract, you won’t need to worry about them.

If you’re looking to avoid ETFs, skip the next upgrade your carrier offers and buy a unlocked phone outright. You can find unlocked options on sites such as Amazon that fit the needs of most users for around $100 to $200.

Should your budget allow, we think the upfront expense is well worth the freedom and lack of fees down the road.

P.S. Unless you’re looking for the latest high-end model available, you can save even more buying a used phone.