Understanding contract cancellation fees in Canada
In Canada, many people sign contracts without being fully aware of the fees associated with breaking that contract. These fees can be staggering, in some instances more than $50o if you have a smartphone contract and you cancel within the first year.
So, to shed some light on early cancellation fees or TLCs (Termination Liability Charges) here is the low down on these fees:
For Rogers here are the key items you need to know if you are going to cancel your contract early:
- There is a $20 per month fee for each month remaining on your contract to a max of $400, with a minimum of $100 if you break your contract with less than 5 months. This is called the ECF or Early Cancellation Fee.
- If you purchased a Smartphone, however, you would be required to commit to a data term as well, and the data early cancellation fee (DECF) is $5 for every month remaining to a maximum of $100 or a minimum of $25.
- And to top it off 30 days’ notice is required for every cancellation, so be prepared for another 30 days of charges on your phone bill.
Bell and TELUS also have similar terms in their TLCs:
- Both have the $20 per month fee for each remaining month on your contract to a maximum of $400.
- If you have a smartphone with TELUS then there is a $100 fee for cancelling within the first year of your contract, Bell has a “data Service Price Adjustment” charge of $200 for early cancellations of data devices like smartphones.
- Each one has a minimum of $100 to cancel your cell phone contracts
If you bought a smartphone on a 3 year contract with a $45 monthly plan and wish to cancel your contract after 6 months of usage, then your cancellation charges will be:
- For TELUS: $400 (early termination charge) + $100 (data early cancellation fee) + $45 (one month of cancellation charges) = $545
- For Rogers: that’s $400 (early termination charge) + $100 (data early cancellation fee) + $45 (one month of cancellation charges) = $545
- For Bell: $400 + $200 (data service price adjustment) + $45 = $645
It seems that the best time to cancel your contract is with 5 months remaining, since the minimum applies of $100 + $25 (if on a data plan with Rogers) = $125, providing that you give 30 days notice of course. These fees are staggering and ridiculous!