AT&T Will Make You Pay For “Cold Feet”

I’ve warned you many times (on TV and my blog) about cell phone fees, and here’s another “watch out!”  AT&T is drastically raising its early termination fee (ETF) for so-called “smart phones” (like the iPhone).  If you want to escape your two year contract before its over, it’ll cost you $325.  That’s up from $175.  Ouch!  Verizon did the same thing a few months ago.

Why such a cruel punishment penalty?  This is from an AP story:

AT&T charges customers $199 for the latest model of the iPhone, but pays Apple Inc. far more than that. AT&T makes the subsidy back through the customer’s service fees over the two-year contract period. AT&T likely loses money for every customer that breaks a contract and pays a $175 termination fee, but may break even with the new, higher fee.

The new ETF begins June 1, and doesn’t affect current contracts.  But it will affect a lot of iPhone users (including myself) thinking of picking up the new, updated iPhone this summer.  So if you get “cold feet” after signing that contract, it’ll cost you.

AT&T also said it will lower the ETF on its basic phones (dumb phones?)  by $25, to $150.
The fee on smart phones will be reduced by $10 each month of the two year contract, while the basic phone fee will decline by $4 a month.

Something to think about the next time you we want to buy another smart phone, and the contract that comes with it.

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