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How to Affordably Cancel Your Cell Phone Contract

Laid off? Financial hardship? Here’s how to unshackle your contract

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CellSwapper

CellSwapper

Image © CellSwapper
Updated April 24, 2009
While many consumers continue to feel depressed from today’s economic recession, a new question is being increasingly begged and hotly debated: What happens if you’re under contract with your cell phone carrier and you lose your job or otherwise experience financial hardship?

How can you affordably break or cancel your cell phone contract?

While your first thought likely would go to averting homelessness and making rent or being able to pay your mortgage, the increases in bankruptcy, foreclosure, unemployment and credit card debt are all contributing to a burgeoning trend from the cell phone industry to help you if you receive the dreaded pink slip of job death.

Virgin Mobile recently blazed the way by launching on April 15, 2009 a “Pink Slip Protection” plan. The recession-friendly program will waive up to three months of monthly charges if a Virgin Mobile customer becomes unemployed.

While the recently unemployed would likely welcome three months of not having to pay a cell phone bill, many people still spend more than three months to find gainful employment again.

Though you can typically downgrade your plan rather effortlessly and lower your monthly bill, contracts often lock you in and prevent you from quickly jumping ship due to a $150 or $200 early termination penalty imposed by most carriers.

No-contract and prepaid cell phone plans continue to proliferate for this very reason.

Following Virgin Mobile’s lead, consumer interest groups on April 21, 2009 requested for the major cell phone carriers to waive the fiercely debated and often intensely loathed early termination fees for consumers who have lost their jobs.

The Maryland Consumer Rights Coalition and the National Consumers League have both sent letters to Sprint, Verizon Wireless and AT&T on behalf of consumers against the standard U.S. policy of early termination fees.

The reason cell phone carriers say they impose early termination fees is to help recoup their costs for subsidizing cell phones so you can buy them at a lower cost. While most carriers haven’t yet been willing to nix early termination fees entirely, major carriers have recently granted consumers the right to have such a fee prorated so penalties are only levied based on your remaining contract time.

As further validation that consumers are feeling the cell phone pinch and are prepared to react accordingly, a new study by the New Millennium Research Council says 39 percent of Americans will “likely” downgrade their services if they feel the recession will continue over the next six months.

Tip: Sell, Transfer Your Cell Phone Contract

With more than 60 million Americans now having the idea of killing their contracts at the ready, according to the New Millennium Research Council study, that presents a service need for consumers as well as a opportunity for new kinds of businesses.

Instead of paying your carrier such a stiff fine to leave, here’s a concept many people haven’t considered: trading or selling your contract to someone else. Various Web sites have popped up to help you do so for much less than it’d cost you to terminate early.

Celltrade at CellTradeUSA.com is cashing in on people in their time of cellular need with a service that charges you $19.99 to transfer a contract (to “get out”) and nothing at all to take over someone else’s contract (to “get in”). The company supports Sprint, AT&T, Verizon Wireless, T-Mobile, Alltel, Cricket Wireless, U.S. Cellular and others.

CellSwapper at CellSwapper.com is a competitor to Celltrade that charges a little less: $14.99 to transfer a contract and nothing to take over someone else’s contract.

Tip: Ask Your Carrier About a ‘Hardship Policy’

If you can’t get out of your contract or don’t want to try to sell or transfer it, simply call your cell phone carrier and ask them a series of questions to help you lower your wireless bill. You might be surprised how effective one call can be. Here’s what to say.

If you’ve recently been laid off or you’re in some other sort of dire financial situation, you’d also be prudent to ask your cell phone carrier about its “financial hardship policy”. Your cell phone carrier could lower your bill outright, help you downgrade some of your services or grant you a more lenient payment plan.

If you find yourself laid off or in financial hardship, the most important step you can take to make sure your cell phone bill remains in check is to proactively contact your carrier, explain your hardship and lobby for an easement.
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