Consumer Information:

Today there are literally thousands of phone cards on the market. Phone cards have certain advantages that make them popular. They are portable, they can be economical, and they can help consumers control their spending. However, if you are not careful, phone cards can end up costing you far more than your present long distance carrier.

There are 2 types of phone cards. With the traditional type of calling card, you get a plastic card and pay as you go by the month. You pay a determined rate per minute for all long distance calls. For example AT&T has a plan for 25 cents per minute within the U.S. At the end of the month you pay your bill. The other type of calling card is the pre-paid phone card. With this type of card you purchase a $10, $20, or even a $50 dollar card and use it for long distance calls until the card is used up. The advantage to this type of card is that it its normally significantly cheaper than a regular calling card. They are also readily available and can help you maintain a budget. With both types of cards, keep the following in mind:

-Most cards carry a connection fee. This is a charge just to make the call. This might be bad if you make frequent, short calls. However, if your calls are long, then you may actually save money with a card that has a connection fee. The per-minute rates on cards with connection fees are usually a lot lower than those without a connection fee.

-Some cards offer a low rate, but may have a five minute minimum connection time. So, even if you talk for only 1 minute, you are still charged for five minutes.

-Billing Increments: This is how the company charges your time. They may round off to the next minute, or may charge in 6-second increments. They may also charge in 3 minute increments. So, if you talk for 4 minutes, you are charged for 6 minutes.

-Most prepaid phone cards expire after a certain period of time. Make sure to check how long a card is good for. If it expires in a month, and you know you will not use the card up in a month, then do not buy it.

-There are usually monthly surcharges on cards. Some cards may not even have an expiration date and just rely on these surcharges. For example, if you have a 20 dollar card, and the monthly surcharge is 2 dollars, your card will be used up in 10 months. Again, be careful.

-The Pre-paid Calling Industries biggest secret: Prepaid cards are huge money makers for long distance carriers. Besides the inexpensive billing systems involved, the companies also benefit from an average of 12% throw-away. This is the money left on a card when you throw it away. For example, if you have a card that has a 2 dollar connection charge for each call, and you only have $1.75 remaining on your card, then you can't use the card. And there is nothing you can do except throw it away! If it was a 20 dollar card, the company just made a free $1.75 . There is also a throw-away benefit with cards that do not have a connection fee. If you have a 5-minute minimum talk time, and it is 50 cents/min to call, then you need to have at least $2.50 left on your card to make a call. The only way to avoid "throw away" is to talk on the phone until the end of your card.

As you can see, the phone companies try to make money at every turn. If you can avoid all the tricks and purchase your long distance from a reseller, you will save money. As with all industries, a smart consumer is an educated consumer. Learn all you can about phone cards home long distance service. With this knowledge you can save a lot of money.

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