Do you know enough about early exit fees?
They can cost hundreds, but knowing about your contract terms will help you avoid them.
If you leave the contract within this minimum term, you’ll be charged for doing so. However, new research from Switcher.ie shows that two-thirds of electricity, gas and broadband customers either don’t know if they would incur a penalty for leaving their contract early, or are unsure of the amount they would be charged for doing so.
This could lead to a fear of these fees - or of signing a new contract - which has been seen to put people off switching. But, with a little bit of homework, these fees are avoidable - so don’t let uncertainty about exit penalties stop you from shopping around.
What can I be charged early exit fees for?
Most providers of household services charge early exit fees if you leave your contract within the agreed minimum term.
However, it’s important to remember that you will always have a 14-day cooling-off period with these kinds of contracts, so if you sign up and the service is not suitable for you, you can cancel within this time without any penalty.
Also, if the service is not as described, or there is a fault with it, you’ll likely be able to cancel it within the minimum term without a charge. And many companies will waive your fee if you’re moving house and sign up with them again at your new premises.
How much are early exit fees on broadband, energy and phone contracts?
For gas and electricity, customers are usually charged €50 per fuel for cancelling a contract early, so it’s pretty straightforward.
However, charges for cancelling telecoms contracts - like broadband, TV and home phone - tend to be a bit less straightforward.
In many cases, you will be charged the remainder of your contract value - i.e. your monthly charge for the service, multiplied by the amount of months outstanding on your contract - while other providers have a set fee, depending on the amount of months remaining on your contract.
It’s important to read your contract carefully before you sign up, to make sure you’re aware of your minimum term and any charges you might face for cancelling early.
Are there any contract-free options for me?
Although signing up for a contract - and potentially paying early exit fees if you cancel within the minimum term - may seem daunting, you can easily avoid these fees and still shop around by making sure you’re aware of your contract terms when you sign up.
However, if you really want to avoid longer contracts, there are some options available for broadband, TV and mobile phone plans with 30-day contracts.
The Freedom plans from Virgin Media are a good option if you’re looking for a broadband or TV deal for a short-term lease. You don’t have a lengthy contract, and will simply need to give 30 days notice when you want to cancel.
Meanwhile, if you go for a SIM-only mobile plan you’ll get a much cheaper deal than by signing up for plan which includes a handset. And you will generally only have to sign a 30-day contract, too.
Don’t let the fear of fees put you off switching
Speaking about early exit fees, Switcher.ie’s Managing Director, Eoin Clarke, said: “We’ve already seen that many consumers are being put off switching by the fear of getting tied into a contract - it’s crucial that fear of early exit penalties is not allowed to act as a barrier to getting a better deal.”
He said consumers should have all of the information they need to empower them to engage in the market, saying: “If consumers are better-informed about when their minimum term or discounted period ends, they’ll be free to shop around for better deals on their household essentials, in what is a highly competitive market.”
It’s possible to save hundreds by moving to discounted deals, so don’t let fear put you off - if you’re unsure when you signed up for a service, check with your supplier, and they’ll be able to tell you if you’re out of the minimum term.