Can I Switch Phone Carriers if I Owe Money?

Today, there's very little reason to have brand loyalty when it comes to telecom services in Canada. So many of the major players in the carrier space compete for your wallet and to be the provider for you and your family. Oftentimes, this leads to tantalizing prices and deals that may make you want to swap to a new carrier.  

You may find yourself in a position where a competing carrier is offering a better deal when bundled with the internet. Perhaps another carrier has a lower rate on their premium 5G plan. What happens when you want to switch phone carriers in Canada when you still owe money on your account? 

 Thankfully, you have many options. Let's break down all of the nuances of carrier contracts and your rights as a consumer.

Understanding how carrier contracts work in Canada

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When you sign up for phone services with a Canadian provider, you'll be given a carrier contract. The contract clarifies everything from the carrier's monthly plan price, its services, cancellation policy, etc. A carrier contract can come in different forms, depending on the terms, like device financing or a service agreement. 

Device financing vs. service agreements

In Canada, carrier contracts are regulated by the Canadian Radio-television and Telecommunications Commission (CRTC) and operated in a couple of different ways. Most carriers offer a BYOD no-term service plan option, effectively establishing a month-to-month service agreement. 

Alternatively, carriers offer device financing options paired with a service plan. This option subsidizes the cost of a new device over a period of time, like 24 months. This fixed-term contract involves a credit check and effectively locks you into a billing structure for the duration of the contract or until it is nullified by the consumer. After the term ends, the contract will continue on a month-to-month basis with the same rates.

Past-due bills vs. device balance

A past-due bill is any amount on an account that hasn't been paid by the billing cycle terms. The total represented on a past-due bill represents a figure that must be paid by the account holder as per the carrier contract. Failure to pay past-due bills can lead to late fees, interest charges, and ultimately a suspension of services.

A device balance that appears on an account represents the remaining total owed on a financed device. What's reflected on the account is the remaining subsidized costs of the device, split between the remaining months of the contract. For instance, if you're one year into your two-year term, the device balance will reach $0 by the time the remaining 12 months conclude. If you cancel your carrier contract (or upgrade to a new device early), you'll have to pay the remaining balance.

What happens if you switch providers before paying off your balance

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If you're looking to switch carriers before your carrier contract expires, you'll have to pay the remaining balance first. This balance comes in the form of a final bill, delivered once the contract is terminated and service is nullified. You'll then be responsible for paying that final bill, the same as any other bill from the carrier.

Early termination fees

In nearly every case, a Canadian carrier will calculate the remaining payments per the contract term to determine the early termination fee. If, for instance, your monthly plan costs $100/month and you have three months remaining, you'll be charged $300 plus tax. 

Where it gets a little tricky is if you're financing a device through a carrier under a device return program. Rogers, Bell, and Telus all offer similar programs where you pay lower monthly phone payments by deferring part of the cost until the end of your two-year contract. If you choose to terminate your contract early and keep your device, you'll owe what's remaining on the device as well. Alternatively, you can return the device to avoid additional costs.

Credit score implications

If you're in good standing with paying your bills on time and can afford to pay the early termination fees, you won't be facing any impacts to your credit score. 

The only thing to keep in mind is that when you sign up for a new phone plan when switching carriers, a hard credit check may be performed. It's only here that a credit check report is conducted, temporarily lowering your credit score.

Impact on your phone number portability (keeping your number)

In Canada, you're able to port your number from one carrier to another. The best part is that the entire process is handled by the new carrier. When switching to a new carrier, you can alert them that you wish to keep your number. The provider then takes care of the transfer for you. 

There is one specific caveat to the process. You should not terminate your service with your existing carrier before porting your number to a new provider. If you do, you'll lose the number entirely.

How to switch carriers the right way

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If you're planning to switch carriers, here's an easy-to-follow breakdown of how to do so. This step-by-step process covers the preliminary research into your contract, porting your number over, and changing mobile providers.

Step 1: Review your contract or device payment plan

As you prepare to cancel your existing phone plan early, review your contract and your device financing balance. This way, you can avoid a surprise bill when cancelling your service. 

If you still have a balance on your device, you should decide whether you'll return your device to pay a bit less or keep it and pay off the remaining balance.

Step 2: Pay off your device balance

Once you've determined the final amount you owe, pay off your phone balance if you plan to keep your device. Remember to also pay off your final bill on time to avoid any negative effects to your credit score.

Step 3: Choose your new provider and port your number

Now you can choose a new Canadian carrier. Check out our best phone plans and family plan guides to help you decide. Prior to closing your existing account, contact the new provider and request that it port over your phone number. The new provider will do this seamlessly for you as part of activating your new plan.

Step 4: Confirm account closure with your old carrier

In most cases, porting your number over to a new carrier will trigger a cancellation of services with the original provider. However, it's better to be safe than sorry. Contact your original carrier to ensure the account is closed and that the final bill doesn’t have any surprise fees.

Tips to avoid extra fees when switching

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As you look towards switching carriers, you'll want to reduce costs as much as possible. It's wise to look at your billing cycle to try and line up when you cancel your service. 

Additionally, you can leverage the fact that you're leaving one carrier for another to take advantage of promotions or discounts with the new provider.

Timing your switch at the end of a billing cycle

Take some time to review your bill and figure out when your billing cycle rolls over. If possible, time your switch just before the end of your billing cycle. If you opt to switch during a cycle, the carrier will give you a prorated total for the portion of the service used before cancellation. So, if you're halfway through your billing cycle, you'll be charged a prorated amount for the half of the month before you cancel service.

Asking about promotions

When approaching a new Canadian carrier, use your switch to your advantage. Speak to a representative about the plan you're currently on, the monthly costs you're paying, and more. If you’re lucky, they may offer you extra discounts to help with the switch or better match prices

It'll ultimately be up to the carrier’s discretion if they're able to tack on extra promotions or discounts when you sign up. You won't always be guaranteed an onboarding discount, but it never hurts to ask.

Your rights as a Canadian consumer

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As a consumer within the telecom space, you have a series of rights and protections in place thanks to the CRTC. The Wireless Code, introduced in 2013, offers some broad policies you should know about when switching carriers.

CRTC Wireless Code overview

The CRTC Wireless Code is a mandatory policy and set of standards that wireless service providers must adhere to. They essentially protect consumers from malpractices, preventing unexpected charges and changes made to their plan. 

In the past, the CRTC has implemented regulations that state all devices must be unlocked. Carriers are also required to provide 30-day trial periods of devices with return options. Plus, it puts data overage and roaming limits in place. The Wireless Code also dictates that unexpected costs, such as overages and cancellation fees, must be transparently addressed to the customer.

What carriers can and can’t charge you for

Outside of plan-specific charges—like data pools, talk, and text—carriers can charge you in a couple of ways when switching providers. As mentioned in this guide, carriers have the right to charge you the remaining total on your contract upon termination. They may also tack on a prorated charge based on your billing cycle and when you choose to cancel your service.

In addition, carriers are legally allowed to charge you the remaining balance on a financed device. Whatever costs remain for the phone will be included in your final bill. Alternatively, if you're engaged in a device return program with the carrier, you can opt to return the device early to avoid additional charges.

How to file a complaint if charged unfairly

If you believe you've been charged unfairly at the time you terminate your service, you can contact the carrier directly. Many complaints can be addressed by the carrier. 

Though, if your complaint isn't addressed and needs to be escalated, you can call the Commission for Complaints for Telecom-television Services (CCTS)

, an independent agency to help resolve complaints against Canadian carriers. In this case, have your account information handy as well as copies of your bill available when you contact the CCTS.