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If you want to purchase a phone by signing a contract with a mobile phone carrier, there are many benefits for doing so. However, there are also some things you will need to look out for as well.
Contract basics
A contract phone is a phone that comes either free or at a subsidized cost. In exchange, the user must agree to a service contract for a certain amount of years (typically two).
Benefits
Phones such as the iPhone and the Nexus One cost exorbitant amounts of money when purchased without a plan. Buying the phone under a contract means you can get the latest phones at a cheaper price.
Disadvantages
In order to compensate for the reduced price, you must typically pay a certain amount of money per month for cellular service from a provider. In effect, you pay for the phone in full due to the contract.
Warnings
Should you decide to end the contract before it is up, you may need to pay an early termination fee. This fee can cost up to $350 if you terminate the contract early.
Additional features
Some phones may require you to pay more for additional services, such as web access or text messaging. Usually, you see this with smartphones.
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