Fee - Early Termination

Early Termination

An early-termination fee is charged by a company when a customer wants or needs to be released from a contract before it expires. One example is when a renter leaves an apartment before a year-long contract is over. If tenants rent for a shorter period, or month-to-month, they are instead charged significantly more per month, and are often denied any promotional deals. Mobile phone companies in the U.S. are notorious for huge early-termination fees, typically starting at 175 dollars, and falling by only a few dollars per month, no matter the actual cost of or subsidy to the phone.

Some mortgage companies also charge early payment penalties if the homeowner pays more than is due in order to reduce the interest owed and to shorten the remaining term of the loan. The fees typically negate this advantage at least in part.

There are also fees charged for any type of termination. In the suburban Atlanta county of Gwinnett for example, customers were hit with termination fees of over 23 dollars when the county commission chose not to renew the contracts of the county trash collectors in November 2008. The two companies charged this both in violation of county law and in breach of contract.