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READER QUESTION

EXPLAINED: Can I terminate my Swiss telecom contract early?

When you sign up with a telecom provider in Switzerland, your fate is sealed: you must remain with that company until your agreement expires. But what if you want to get out of the contract ahead of schedule?

EXPLAINED: Can I terminate my Swiss telecom contract early?
Premature cancellation of your telecom contract could mean hefty fees. Photo: Pixabay

On July 24th, 2024, Switzerland’s largest telecom operator, Swisscom, has abandoned its inOne Home package, which includes the telephone, Internet and television, and replaced it with another service, Basic Home.

But the cost of the subscription increased from 50 francs a month to 59.90 francs.  

If you happen to be one of the Swisscom customers affected by this change, but did not cancel your subscription on time (read more about this below), you were ‘migrated’ to the new bundle automatically — and will be charged accordingly.

What happens if you don’t want this more expensive service but have not cancelled your contract in time?

More specifically, can you terminate your telecom subscription — whether with Swisscom or another company — at any time?

The simple answer is yes, but it will cost you money.

That’s because telecom contracts typically have a minimum term — usually 12 or 24 months, but this can vary — as well as the required cancellation notice period.

Each of Switzerland’s three main telecom providers — Swisscom, Sunrise, and Salt — have a two-month termination notice period, at calendar month’s end.

This is the usual notice period for smaller providers like Yallo, Wingo, Coop Mobile, LidlConnect, and M-Budget Mobile as well.

On the other hand, prepaid mobile services don’t require notice periods and can be terminated at any time.

What are the penalties for early termination?

If you cancel your service within the contractual notice period, then you are in the clear.

However, failing to do so can be expensive.

The reason is that telecoms will not just let you off the hook and wish you well while you contract with one of their competitors.

Most likely, you will be faced with one of two scenarios: the company will charge you penalty fees or continue to bill you for the plan until the notice period has expired.

Also, according to Moneyland consumer platform, “a practice that is widespread among Swiss telecom companies is to continue charging you the basic fees for your plan until the contract term expires… Regardless of whether you are terminating ahead of the contract term or just the notice period, telecom companies will require you to pay the full outstanding amount in both cases.”

In terms of actual amounts, they vary from one provider to another.

Swisscom charges the highest penalty fees for breach of contract — up to 4,800 francs.

Other mobile service providers impose penalties of several hundred francs, according to Moneyland.

Exceptions to the rule(s)

You are allowed you to terminate your contract early without penalties when a ‘negative’ change is made to your plan — that is, telecom provider reduces or drops services that were previously included.

Penalties can also be waved if you cancel your subscription early because you move out of Switzerland.

If you relocate within Switzerland, you won’t have to pay penalties, but only if your new home is completely uncovered by your provider’s mobile network.

Additionally, even though Swiss telecoms have a contractual right to raise their prices once a year to match changes in the consumer price index, these increases do entitle customers to terminate their contract early without penalty fees.

And, last but not least, death is also deemed a justifiable excuse to wave penalties.

As Moneyland put it, “all Swiss telecom companies take a customer-friendly approach in the case of death, allowing relatives to terminate the deceased’s contracts immediately without paying penalty fees.”

Can you just refuse to pay the early termination fees?

Unless you move out of the country, or go to live in an extremely rare place in Switzerland where there is no wi-fi coverage (like a cave), or die, then you do have to pay the penalties — unless you come to an amicable agreement of some sort with your telecom provider.

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For members

MONEY

What does the latest interest rate cut in Switzerland mean for you?

The Swiss National Bank (SNB) announced on Thursday its second interest-rate cut of 2024. What does this mean for consumers?

What does the latest interest rate cut in Switzerland mean for you?

After cutting the interest rate in March 2024 — from 1.75 to 1.50 percent — Switzerland’s central bank slashed the rate by another quarter percent to bring it down to 1.25. 

Is this a good sign?

Mostly yes.

Firstly, it signals that inflation has fallen — which is definitely a positive development.
 
The SNB, did, in fact, lower its average annual inflation forecast for the rest of 2024  — to 1.3 percent, from 1.4 percent previously.

How will you be able to benefit from this move?

Much depends on whether you are planning to spend your money or save it.

If you are looking to buy big-ticket items that are usually purchased with credit — like homes or vehicles, for instance — then you are in luck.

That’s because when a central bank lowers its interest rates, loans become cheaper. So if you qualify for a loan, this is a good time to apply for one.

In terms of mortgages, they are likely to become cheaper as well when interest rates drop.

This, however, is only the case for new mortgages or ones that are due for renewal.

If you have a fixed-rate mortgage which is not up for renewal, then you will not be able to benefit from lower interest rates.

What about rents?

With the interest rate turnaround — and given a positive forecast on the inflation front — there will probably be no further hikes in the reference interest rates that determine rents in the immediate future.

As to whether you are eligible for rent reduction, that depends on whether your rent is tied to the interest rate — as some 54 percent of contracts are in Switzerland.

If that is the case, and your costs went up when the interest rate did, you can normally seek a reduction.

Keep in mind, however, that factors other than the interest rate come into play in determining rents.

Such factors could include an increase in the cost of building maintenance or insurance, for example.

When is a lower interest rate not a good thing?

If you have money in the bank and depend on it ‘growing’ — that is, yielding profits, you are not in luck.

As the interest rate dwindle, so do returns on your assets.

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