CHAPTER 7: Should I Sign a Term Contract ?

There are basically two types of term agreements. The first is a term agreement stating you will remain a customer of a specific long distance provider for "X" amount of years. This does not lock you into a specific rate plan, thus permitting you to switch to a lower rate plan when and if a new plan is offered.

This type of term agreement can benefit the consumer in some instances.

The second type of term contract, states you are to receive certain rates if you remain a customer for "X" amount of years and should you break the agreement, you agree to be penalized. This type of agreement does not permit you to switch to a lower rate plan for the duration of the contract. Read the fine print carefully!

The latter is basically a sales tactic by some long distance providers. They make you think they have a special rate only if you sign a term agreement. This allows them to lock you into a contract with them for the next year to several years. In many instances, these unscrupulous companies do not even offer you their lowest rate plans..

If a long distance provider insist you sign a term agreement in order to benefit from low rates, run the other way.

For most cases, reputable long distance provider should be able to keep you as a satisfied customer by their merit alone, not by holding an agreement over your head.

Term agreements do not apply to some local/long distance bundled packages offered by some reputable providers. Bundled agreements usually offer a lower monthly fee for local dialtone service, however the long distance rates are usualy higher. You can obtain lower rates usually by signing a term agreement of 1-3 years. The longer the term, the lower your rates.

This does not apply to Dedicated Rates as a term agreement usually of 1 to 3 years does apply under these conditions (See Chapter 16 - Dedicated Long Distance Offers Even Lower Rates) as well as one year agreements with some VOIP services.