3 Ways to Escape a Cellphone Contract

Scary early-termination fees help keep cellphone customers locked into multiyear contracts. AT&T’s top fee is $325; Verizon’s and Sprint’s are each $350.

The fees usually drop based on how far along you are in the contract, and they supposedly help keep the carriers from losing money on the fancy phones you purchase at less than retail price. (That’s how they justify the fees to the Federal Communications Commission.) Of course, many consumers want to upgrade to newer technology within a couple of years, and the carriers encourage it with more discounts that lock in new contracts.

It’s a vicious cycle, but one The Wall Street Journal says you might be able to break — without breaking the bank in the process. Avoiding contracts in the first place is one cheaper option, but here’s what you can do if you’re already stuck in one:

  • Transfer your contract. All major carriers allow it, the WSJ says, and there are matchmaking websites to help. CellTradeUSA.com charges nothing to post an ad but does charge $20 to see responses from interested parties. CellSwapper.com charges up front instead, from $3 to $11 to post an ad.
  • Make a move. While there are probably very few people desperate enough to relocate just to escape a phone contract, if you’re moving anyway it could be an opportunity. One woman who moved from Massachusetts to Vermont was able to leave a contract for four family plan lines because her carrier had no towers there. Military members who relocate for 90 days to an area without service are allowed to terminate their plans without penalty, too.
  • Report bad service. The WSJ says that “few customers likely get free passes from early-termination fees because of service issues,” but it’s worth a shot if you have serious problems with coverage. The carrier will likely want to try a phone software upgrade and other troubleshooting steps first, but at least this one costs nothing to try.

Have any other successful tactics for dropping a contract? Let us know on our Facebook page.

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  • L. Wright

    Each summer my job takes me to an area that is not served by an Alltel signal. Alltel refused to let me out of my contract, and never offered assistance (antenna booster). Wrote a letter to Alltel to explain my situation in detail. Never received a response. Called customer service to ask for the name and contact information of the CEO of Alltel. They refused to give it to me per “company policy.” Finally paid the $200 to get out of the contract and to avoid a blemish on my credit report. On the same day, I bought a no contract phone with Verizon and have gotten excellent service in my summer location, as well as my home location. I’ve learned my lesson. Will never sign up for a contract phone again. Goes without saying, will not do business with Alltel in the fututre, due to the poor customer service I received.