The True Cost of Early Contract Cancellation

by Brandon Ackroyd - , Last Updated on June 29, 2016, How To Guides

Signing a mobile contract can be a great idea. Generally, a contract gives you cheaper prices than Pay as You Go, and often you get a shiny new mobile phone as well. That’s all very well and good, but what happens if you find that you can’t keep the contract that you signed? We’re here to tell you the true cost of contract cancellation, so if you’re unhappy with your mobile contract, read on!

Contract Cancellation: The Basics

Let’s start by saying that yes, you have the right to cancel your mobile phone contract if you want to. However, there is going to be a price involved, and that might be hefty. In most cases you’ll need to pay a contract cancellation fee (or early termination fee). Why? In order to compensate your mobile operator for lost business. This is standard and very legal, and you’re probably not going to get out of paying it. Fees do vary by operator, and in a moment we’ll get to what individual operators charge to cancel, but first… there’s that phone…

Devices on Contract

If you got yourself a new phone when you signed that mobile contract then you’re going to have to pay for it if you want to cancel your contract. A contract phone is not free, you’re paying for it in instalments that are included in your monthly phone bill. Therefore, if you cancel your contract you’ll need to pay the remaining balance for the phone, and that’s non negotiable (there’s a small exception as you’ll see below). Be warned that if you got some other kind of free gift (maybe a tablet or some “signing bonus”) you may also be required to pay for this if you cancel your contract, you’ll need to contact your operator and ask…

Cancellation Fees with Different Operators

On top of paying the remaining balance for your phone, you’re going to need to pay that early termination fee, and different operators charge different prices. Terms and conditions may vary by contract, so you’ll need to read the fine print to be sure, but in general, here are the rules for the major UK operators.

With O2 you will pay the remaining price left on your contract in whole. This means that if your contract is £15 a month and there are still 8 months, for example, left in your contract you’ll pay £120 (£15 x 8).

With Vodafone you will pay around 82% of the remaining price left on your contract (rather than the 100% you pay with O2). However, if you wish to cancel within the first 30 days then you may do so without penalty. If you got a phone through Vodafone then be aware that the phone remains Vodafone’s property until you have paid 6 bills. If you want to cancel before you’ve paid those 6 bills you’ll need to return your phone and forfeit the amount you’ve already paid.

With EE you will pay 96% of the remaining price left on your contract, and any phone you got will remain the property of EE if you cancel within the first six months of your contract.

With Three you will pay 97% of the remaining price left on your contract if this is your first Three contract. However, if you’ve renewed a contract with Three then you will pay only 90% of the remaining price if you wish to cancel.

With Virgin Mobile you’ll pay 100% of the remaining price left on your contract, no discounts here!

With BT how much you’ll pay depends on which kind of contract you have. If you’re on the low 500 MB data plan you’ll pay £3.75 multiplied by the number of months left remaining in your contract. For the 2 GB plan that goes up to £9.75 for each remaining month, and for the large 20 GB plan it’s £16.75 for each remaining month.

Do I Have Other Options?

Legally, no, not really. Mobile operators are well within their rights to charge you a contract cancellation fee if you wish to go back on what you have signed. There is one exception, which is if you can prove that the operator is not giving you the service that they promised. This is very difficult to prove, however, and nearly no one succeeds in doing so. But say, for example, you have it in writing that the operator definitely provides service and reception at your address, so you sign a contract, but it turns out that you don’t have reception, then you might have a case for free cancellation.

That being said, most mobile operators are fairly reasonable, and they’d rather get some money than no money at all. So if you’re having financial problems and really can’t afford to pay the contract that you signed up for, then call customer service. Many operators will allow you to downgrade to a cheaper contract, and most will let you have a payment plan to pay off debts. Be polite and you’ll find that operators tend to be fairly understanding.

If you can’t prove financial difficulties and just want to cancel your contract to take up a better offer elsewhere, then you’re going to be stuck paying those early cancellation fees. Generally it’s best to stick with the contract as long as possible before cancelling, simply because this makes the cancellation fees that much cheaper. Cancelling a contract with only two months left to go is cheaper than cancelling one with another twelve months left. It’s worth noting that whilst the 24 month contract is fairly standard, not all operators use it, with BT, for example, only offering 12 month contracts (meaning cancellation fees tend to be lower since contract times are shorter).

Cancelling a mobile phone contract is simple, just call customer service for your operator. But it is also costly, and isn’t a decision that should be taken lightly. If there’s no real, serious reason to be cancelling, you’ll be better off sticking with that contract until the bitter end…

Photo Credit: Visual hunt