Break free from your cell carrier

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

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(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?

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.

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.