Many times people question whether being in a contract is bad?  I do too. I can see both sides of the argument and yet I have no issues with being in a contract personally.  But really why is being in a contract bad or is it?

I think the deciding factor in determining whether a contract is bad, is if people understand the contract for services provided before they sign up.  You are promising a $x for Y services from the company.  Typically the company will give you deal for the term for the term of the contract.

But why have a contract?  Well for me personally, I don’t like to pay the setup fee for cable, internet, or cellular phones.  Thus I don’t mind having a contract because I plan on keeping the services long term.  One way to veiw it, is if you wouldn’t pay $200 to buy your cell phone, then you should probably not have one.  Why?  Because it costs $200 on average to buy a cell phone without a plan or $200 to cancel a 2 year cell phone contract.

But one consideration is that cancellations of contracts typically are prorated.  Thus if you kept your cell phone for 12 months you might only have to pay $100 to cancel.  So in that sense having a contract can actually save you money because there is no out of pocket costs and you pay less than you would have to not have a contract.

But not having a contract gives you the freedom to cancel your service at any time without consequence.  But you might have to pay more for your cable service. Or you might have to pay a setup fee for your service.  So though there is flexibility in not having a contract it does come at a price.

Personally I usually sign contracts because I like the deals offered to me. Also I prefer to have a prorated cancellation fee than paying 100% of the setup fees up front.

Thus I guess my question is are contract bad?  Or is it the lack of consideration people put into before actually signing into a contract that is bad?