Break free from your cell carrier

It's getting easier - and cheaper - to change wireless plans. Here's how to tell if switching is the right call. From Money Magazine's Joe Light.

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By Joe Light, Money Magazine staff reporter

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The country's five biggest cell phone carriers are loosening the shackles that bind customers to their contracts.

(Money Magazine) -- Cell-phone service providers have long tried to handcuff customers to their contracts. If you switched plans, they'd tie you down to a longer contract; if you canceled, they'd stick you with a larcenous fee.

But now, pre-empting federal investigations, the country's five biggest carriers - AT&T (ATT), Verizon (VZ, Fortune 500), Sprint (S, Fortune 500), T-Mobile (DT) and Alltel - are loosening the shackles. Should you take advantage of your newfound freedom?

Switching plans

What's changing: AT&T, Verizon and Sprint are now letting customers switch plans in the middle of their contracts without having to sign up for new multiyear agreements. (T-Mobile and Alltel already allowed this.)

How to decide: Review your bills for the past three to six months. If you consistently use far more or less than your allotted minutes, you'll likely save by changing plans.

Potential savings: You'll save $40 a month by dropping from AT&T's 2,000-minute two-year plan to its 900-minute one, a $480 savings if you switch halfway through your plan.

Switching carriers

What's changing: The big five used to slap defectors with a flat $150 to $200 fee. Now Verizon prorates the penalty (alas, only for those who subscribed after Nov. 15, 2006); the fee drops $5 every month of the contract. Alltel, AT&T, Sprint and T-Mobile plan to announce similar changes soon.

How to decide: Divide the fee you'd incur by the number of months left on your contract. To come out even, you need a plan from another carrier that's that much cheaper each month.

Potential savings: If you sign a two-year contract with Verizon and cancel 12 months in, you'll pay $115 vs. $175 previously. A new plan at least $9.60 cheaper will save you money.  To top of page

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Market indexes are shown in real time, except for the DJIA, which is delayed by two minutes. All times are ET. Disclaimer LIBOR Warning: Neither BBA Enterprises Limited, nor the BBA LIBOR Contributor Banks, nor Reuters, can be held liable for any irregularity or inaccuracy of BBA LIBOR. Disclaimer. Morningstar: © 2014 Morningstar, Inc. All Rights Reserved. Disclaimer The Dow Jones IndexesSM are proprietary to and distributed by Dow Jones & Company, Inc. and have been licensed for use. All content of the Dow Jones IndexesSM © 2014 is proprietary to Dow Jones & Company, Inc. Chicago Mercantile Association. The market data is the property of Chicago Mercantile Exchange Inc. and its licensors. All rights reserved. FactSet Research Systems Inc. 2014. All rights reserved. Most stock quote data provided by BATS.