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Cellphone contracts are often pro-rated. So if you cancel a contract at the 6-month mark and it's a $200 penalty you would owe them $100. If you keep the lowered contract for a year that's a less than $10 difference a month to break even. And many companies let you shift to a more basic plan with no penalty (just a re-start of the contract clock). I would look into this as it could be a big savings, even with the penalty. You would need to run the numbers though.

Both of these points have been true in our experience. We did once reduce the minutes on our plan and it started a new contract period but there was no penalty. Also, recently we were told the cancellation amount on our plan and it does reduce each month. In many instances it can be worth it to cancel and pay any penalty depending on the amount of the penalty versus amount saved.
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