4. Learn when you can cancel your contract
Question & AnswerI’m going to get a cellphone. What do I need to know?
You can always cancel your cellphone contract. But your service provider may be able to charge you a fee for cancelling. No matter when you cancel, you must pay for all the services you’ve already used before cancelling.
Contact your service provider if you want to cancel your contract. When you cancel, you should make sure the provider gives you something in writing that says the contract has been cancelled.
There are rules about when a service provider can charge a cancellation fee, and how much they can charge. See here for more information about cancellation fees.
These rules depend on whether you have a “fixed-term contract”. They also depend on whether you got a discounted phone with your contract.
A fixed-term contract means a contract with a set end date. If you have a fixed-term contract, your service provider cannot charge a cancellation fee after 2 years.
If you received a discounted phone, your cancellation fee can never be more than the amount of the discount. For example, if the retail value of your phone was $900, and you only paid $200, the discount is $700, and $700 would be the most that you could be charged in cancellation fees.
If you did not receive a discounted phone, then the cancellation fee will be the lesser of:
- $50, or
- 10% of the price for services for the time remaining on your contract
For example, if you have a 36-month contract for $100 a month and you cancel after 20 months, you can be charged 10% of $400 (4 months x $100 a month), or $40.
No fixed-term contract
If your contract does not have a set end-date, then your service provider can only charge a cancellation fee if they gave you a discounted phone. The cancellation fee cannot be more than the discount. The fee must be reduced every month, and must reach $0 after two years.
No cancellation fees
In some situations, your service provider cannot charge you a cancellation fee:
- You can cancel your contract within 30 days of receiving it if you have a fixed-term contract and your service provider doesn’t give you a copy of the contract within the required time.
- You cancel your contract within the trial period.