New Verizon customers who sign a contract with the carrier are even further on the hook for early-termination fees if they cancel service before the expiration of their contract, according to the company's recently announced change to its early termination policy.
The dreaded phrase "early termination fee" is often the buzzkill that prevents consumers from getting that brand-new device they want, or switching service from a carrier they're unhappy with. To be fair, the carriers have no choice but to charge these fees since they subsidize the cost of their devices through the fees they charge for service over the length of a typical 2-year contract. If early termination fees didn't exist, customers could constantly switch carriers and continue to acquire unlimited new devices.
Verizon, however, has just changed its early termination fee policy to make it even more expensive to back out of one of its wireless contracts prior to the end of the 2-year term. Under the old, simpler agreement, the early termination fee started at $350 and dropped by $10 for every month of service.
Now, however, according to the new policy, if your contract term "results from your purchase of an advanced device on or after Nov. 14, 2014, your early termination fee will be $350, which will decline by: $10 per month in months 8-18, $20 per month in months 19-23, and $60 in the final month of your contract term. For other contract terms entered into on or after Nov. 14, 2014, your early termination fee will be $175, which will decline by: $5 per month in months 8-18, $10 per month in months 19-23, and $30 in the final month of your contract term."
Now, if you were to cancel your contract after a year of service, you would pay an early termination fee of $300, whereas before the fee would only have been $220. Verizon customers who purchased a device prior to Nov.14 can rest assured that the older policy still applies to them.
The good news is, as we recently reported, Verizon Wireless is the top-rated wireless carrier for customer service and is virtually tied with AT&T for the lowest churn rate, which is the number of customers that leave a carrier in a particular quarter. Now, it appears the churn rate may get even lower due to customers who balk at paying the increased early termination fee, but the customer service rating could also take a hit due to consumers who are unhappy with the new policy.
