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Taming the Cellphone Termination Fee

Q. How can I get out of my cellphone contract without being socked with a huge early-termination fee?

A. Those hefty cancellation fees—$175 per line for AT&T customers, $200 for Sprint and T-Mobile users and up to $350 for certain Verizon plans—prevent many cellular callers from leaving their contract-based plans for less expensive prepaid accounts. But because each company now prorates its penalty over the life of a two-year contract, you may owe much less if you’ve been signed up for a while. Your provider can provide the details.

While you’ll likely pay some fee for breaking a contract, Ken McEldowney of Consumer Action says you may save in the long run. For instance, a $150 early termination fee could be paid off in about three months by switching from a contract costing $90 a month contract to a comparable unlimited prepaid plan costing $45 per month—with no contract needed. After that, you’d save $45 each month compared with your contract plan.

There are also third-party services, such as TradeMyCellular, CellSwapper and CellTradeUSA that help cellular subscribers find someone willing to assume their contract. Figure on paying $20 for these services, and possibly the cost of one month’s service as an incentive for someone to assume your contract. 

Sid Kirchheimer writes about health and consumer issues.