Expert: DebiN - 10/15/2010

Question
In September I switched from T-Mobile to AT&T. I canceled my contract with T-Mo earlier, so naturally, I expected $200 cancelation fee. This week I received bills from both, AT&T and T-Mobile. AT&T charged me for 2 months, September and October, I understand they charge one month ahead. But T-Mobile charged me for the SAME period in September as AT&T, plus cancelation fee! My question is how to resolve this problem with double billing and is there tax on cancelation fees, as T-Mobile put about 18% tax on this $200 charge?

Answer
Here's the way it works: T-Mobile bills in arrears and they require you to provide a 30 day notice for cancellation, so they billed you for September. You don't get prorated months with the carriers. You have to cancel effective at the end of the billing cycle, so regardless of when in September you cancelled, you were going to be billed for the month. You also had to pay $200.00 to cancel because you had been on service with T-Mobile for less than 18 months.

With AT&T, they bill in advance. So, when you start service with AT&T, you have to pay the pro-rated first month (it wasn't a full month for September, it was the days in September from when you started service) at the time as well as the month in ahead. Basically, you did not pay AT&T for September, you paid for October and perhaps a couple of days in September from when you started service. At the end of the term with AT&T, they won't bill you for another month, as T-Mobile did, because they are billing a month ahead, i.e, if you had left AT&T in September, you would not have received another invoice, however, you would have paid for September, because you would have been billed for September in August.

In other words, you were not overcharged by either carrier. It's a timing issue. It's a lot of money upfront, I understand, but it works out at the end. You still have to pay the cancellation feea, and the month of service, but as an example, if it had been reversed, you would have paid AT&T a termination fee and no additional months, but would have paid T-Mobile for the month of serivce. You are basically just paying AT&T one additional month upfront becuase they bill in advance, but when you leave, you dont' have to pay an additional month like you did with T-Mobile. You still make 24 payments for 2 years with each company, just with one, the last month is paid after the fact (in arrears) and with the other, it's in advance, not at the end.

Hope this helps. It doesn't make the charges any less, but perhaps it helps explain. Thanks.