How to Prorate an Early Termination Fee

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Cell phone service often has an early termination fee to discourage you from switching service before the end of the contract.
Cell phone service often has an early termination fee to discourage you from switching service before the end of the contract. (Image: NA/AbleStock.com/Getty Images)

When signing up for a service, such as a cell phone or Internet service, the service provider often will require you to sign a contract for a specified period. In the fine print, there may be an early termination fee that discourages you from switching service to another provider before the end of the contract. Sometimes this fee can be prorated, meaning that you only pay the portion of the fee corresponding to the number of months left in your contract.

Things You'll Need

  • Contract
  • Calculator

How to Prorate an Early Termination Fee

Determine how many months are in the contract and the amount of the early termination fee if the contract is broken before the expiration date. This information is usually found in a service contract. The service contract can often be found online or in the material the provider gave you when you signed up for service. You can also find the information by calling customer service for your provider.

The service contract is where you will find the length of the contract and the early termination fee amount.
The service contract is where you will find the length of the contract and the early termination fee amount. (Image: PhotoObjects.net/PhotoObjects.net/Getty Images)

Divide the amount of the early termination fee by the total number of months in the contract. Use the total number of months, not years, in this step. As an example, if the early termination fee is $240 and there are two years in the contract, you can find this information by dividing $240 by 24 months. This gives you a $10 per month fee for canceling early.

You will probably need a calculator to divide the fee by the number of months in the contract.
You will probably need a calculator to divide the fee by the number of months in the contract. (Image: BananaStock/BananaStock/Getty Images)

Multiply the fee amount per month by the number of months remaining in the contract. If six months remain, and the fee is $10 per month for canceling early, you will pay a $60 fee for canceling the contract with six months remaining.

Tips & Warnings

  • Not all service providers allow the early termination fee to be prorated. Make sure this is an option before deciding to cancel a service early.

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