How to dump your cell phone contract for the iPhone

For some cell phone fanatics, the iPhone is love at first sight: a cool touchscreen, a slim design, promising simplicity. The only thing standing between you and that dreamy device is your contract with another carrier. Is there a way to break the relationship without paying a penalty of $150 or more? Yes.

First, in a few situations, you can dump or suspend a contract without enduring too much hassle: You can end a contract early without paying fees if the carrier makes changes that have a significant negative effect on your service or your subscription rate. For example, if your carrier raises its fees for text messaging, you can use that as your get-out-of-jail card. Still, you'll have to plead your case to the carrier -- it won't let you go that easily. You'll need to convince the company that the change applies to you and that it has seriously and negatively affected your service.

Carriers will also suspend your wireless service during active-duty military deployment. That doesn't free you from your obligation entirely, but it's better than paying for something you can't use at all. In the most extreme situation, a contract is terminated if the customer dies -- though this circumstance does put a crimp in the deceased's future iPhone enjoyment.

Trade it in

Another way to lose your current contract is to transfer your account to someone else.

How do you find that someone? Either on your own (through a network of friends or by posting an ad at a community site such as Craigslist.com) or via an online trade-in service such as Cellswapper.com and Celltradeusa.com. These sites provide a place for people to buy, sell, or trade their wireless contracts.

"Consumers see the account transfer as a fair resolution," says Eric Wurtenberg, co-founder of Celltradeusa.com. "With our service, people can get a provider that works better in their area, and the carrier gets someone to fulfill the contract. Our core customer has always been and will continue to be the person who wakes up one morning and finds the service doesn't work in his apartment, or a college student who finds the phone doesn't work on campus."

Good time for a deal?

With the upcoming release of the Apple iPhone on AT&T, the number of people buying AT&T contracts on Celltradeusa.com has increased by about 33 percent in the past two months, said Wurtenberg. "We see equipment envy as increasing the demand for our service."

Likewise, Adam Korbl, co-founder and CEO of Cellswapper.com, says that "thousands of potential Apple and AT&T customers have recently flocked to Cellswapper to get out of their contracts and be ready to sign with AT&T when the iPhone launches at the end of the month."

If the iPhone is a little too expensive for your tastes but you still want to upgrade your phone, this might be a good time to pick up a used smartphone on the cheap. "We have seen that in order to get the iPhone, people are not only selling their used phones, but even willing to give them away as incentive for someone else to take over their contact," Korbl says. "Many people are offering great phones and big cash incentives just to break free of their contract in time for the iPhone." For example, in a recent search on Cellswapper, I found the Nokia 5300 XpressMusic offered for free (a brand-new version costs $150 at T-Mobile's site) for assuming a three-month contract on T-Mobile at $50 a month. Not bad.