Ask Lifehacker: Getting Out Of A Phone Contract

Ask Lifehacker: Getting Out Of A Phone Contract

Dear Lifehacker, I’m in a bind. I am after a new phone. I’ve decided on the HTC HD2 but the problem is I’m still on a Vodafone contract. I have 10 months left on it and don’t really want to wait!

I know Vodafone used to have a deal when you wanted to terminate your contract early where you would pay out half the remaining months (so if you had 10 months you would pay 5). But they have cancelled it, so now I’m stuck with the full price. If Lifehacker or any of my fellow readers can suggest ways of getting my phone without waiting that long and as cheaply as possible it would be appreciated. Thanks, Desires A New Phone

Picture by Gary Cheeseman

Dear Desires,

This kind of problem is exactly why we always advise people to think carefully before signing up to a 24-month phone contract. The savings can appear substantial — and there are ubdoubtedly savings to be had if you do wait out the contract. But new phone models come out much more often than every 24 months, which means that gadget lovers are often either left waiting in frustration or end up paying out their contracts. In the latter circumstance, buying the phone outright and paying for mobile service separately sometimes ends up cheaper.

The carriers have no incentive (and generally speaking no legal obligation) to make it easy for you to exit your contract. They’ve subsidised your handset cost in return for getting a long-term contract; if they let you out early, what exactly is in it for them?

The answer to that might be: a long-term customer. So one strategy might be to wait until the phone in question becomes available through your carrier and then ask them if you can swap your plan onto it. There are two disadvantages to that approach: your carrier might never get around to selling the phone, and if they do agree to transfer you they’ll probably extend your contract.

Claiming a defect in your phone has occasionally been a popular strategy — there were a rash of iPhone-related complaints just before the iPhone 4 appeared — but it’s more than a little unethical, and it’s still not going to get you out of your contract. Also, while several carriers now offer two year warranties on contract phones, different conditions might have applied when you bought your original phone.

The other broad option you’ve got is to order your phone of choice online as an outright buy, and transfer your existing SIM into it. You’ll still have to pay for a handset (and might need to hunt a bit to find a suitable supplier who will offer a completely unlocked phone), but at least the money you’re paying on your contract won’t entirely go to waste.

If readers have any specific strategies to offer for ending a contract earlier, we’d love to hear them in the comments.

Cheers Lifehacker


  • This is interesting.. i have come across this quite a fair bit recently with friends and family. And surprisingly and successfully have been able to exit these contracts! When signing up to a contract, the company, shop or whatever, are obliged to provide you with a coverage map to determine you can receive covered where you live and that you are satisfied with this. I can guarantee 1 in 10 have come across this..

    Now my point is.. My gf moved houses to a further suburb in the west side of Melbourne (Truganina) and had changed her details with her phone provider. However.. her reception was terrible, and she would only receive a bar or two outside the front of her house, or in her backyard. This became EXTREMELY frustrating having to try contact her and not being able to, not to mention her business partners,family AND friends were finding it annoying. SO, i rightfully advised her to contact her provider and explain this to them..

    They shut her down and told her – quote “deal with it’ and hung up on her.. nice one optus.. oops.. =O

    So i asked her to call back and explain the situation and mention that if they were unable to release her contract, then she would contact the ombudsman… So within minutes, the contract was cancelled and she was asked to send her phone back.. Done..

    Now i know this may seem like a far shot.. but truth is, communications companies are not always right, and you pay for a service monthly rightfully. The least you can do is use the service. Hope this helps 😉

  • I recommend all of you call your telco and ask them to send you a copy of your contract.

    I’ve purchased a mobile and wireless broadband from a Very large provider and 6 months later learned that no contracts were available. I’d bought them in different stores, a couple weeks apart.

    The point is if they can’t produce it, it doesn’t exist. I haven’t skipped out on them, but it’s still good to know.

    • Coverage issues generally will not get you out of a contract, especially if you have had the new plan/phone for a number of months.

      Optus does have the ability to cancel a contract without penalties on coverage issues, however this is only applicable in the first 30 days. This is part of their Mobile Coverage Satisfaction Guarantee for GSM Mobile Services.

      Otherwise, like all mobile carriers and service providers, their terms and conditions cover that they cannont guarantee coverage and not an reason to cancel a contract.

  • What I’ve done.. is basically found the plan that suits me best. Then purchase an accompanying phone on that plan that will sell for the most on eBay.

    Then with that cash just buy your desired phone outright from where ever you like.

    Also pretty much all carriers will let you upgrade to a new handset around 18months in and waive whatever fee was left.. So you should be good to rinse and repeat then…

    It’s still not a 12monthly upgrade cycle.. but 18 is still heaps better and you can always sell your old handset too and by that time it’s still not that old.

  • I’m almost certain both Vodafone and 3 have a 3 month transition where in the last 3 months of your contract you can cancel your current contract if you are taking out another one.

    It’s not much but 7 months instead of 10 is a little bit nicer.

  • I currently have a purchased HTC Desire on 3 Mobile and I never intend to sign a contract again. I’ll combine saving and selling old phones if I want to upgrade to a new one (although the Desire will probably last me a while).

    In the past for myself and others I have successfully exited contracts through pure persistence. One tactic is to keep calling and calling until it becomes cheaper to oblige you than it is to pay people to talk to you on the phone (this doesn’t take long as long as you ask that you be put through to a local office).

    The other successful way I found is to go through the steps of cancelling your contract. At some point you will usually be asked what will make you stay which is when you know you have leverage. Only once has this not worked for me (see next option).

    The other way, and I’ve only done this once, is to get commitments from other telco’s to cover the cost of your contract to change over. This gives you leverage over the one you’re with and a fall back if you want to change. In this case I had my phone upgraded at no cast and my contract wasn’t extended.

    Because of these methods I now have a drawer full of old phones. Don’t let the telcos treat you like they’re doing you a favour, you are paying them (a lot).

    Also remember the people answering the phones only work there, yelling and throwing insults will get you nowhere.

  • A few days ago I recently got out of my Vodafone contract.

    I’d logged several faults with reception issues in my suburb and surrounds and finally had enough with zero resolution, spoke (calmly) to a very reasonable person in the termination team who has allowed me to port to a different provider with no penalties.

    So if you’re having any reception issues in your area you could always log faults now, if you don’t get resolution then you have a good reason for switching carriers & getting out of your contract.

    They did say they do sometimes make people give back the phone, but since I was only 7 months out of the end of my contract I kept mine.

    On the flip side, I got my previous handset by cancelling my contract, paying a lesser amount for termination, and signing up for another contract with the same person. Because I did it that way they only charged me 1/4 of the buyout for my contract.

  • I don’t really understand what motivates people to buy the absolute latest phone every 6 months anyway. Was your old phone really that bad? Is it really just a pathological need to keep up with fashion?

  • Hi Angus,

    Understanding this is probably a little late for the initial reader, but hopefully it can help others. We’ve launched a new start-up to effectively match buyers and sellers looking to transfer ownership of the phone contract.

    In the case of your reader we generally recommend a fair incentive to prospective buyers – say 50% of the termination fee as an incentive. In addition we offer targeted marketing campaigns to promote to our lists of buyers, mainly students, travelers and those happy to pick up shorter term contracts.

    If your readers are keen on exploring this and you think it would be valuable I’m happy to explain in more detail.


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