One of the most confusing things about your long-distance phone service is the fees that are charged in addition to the actual charge for your calls. Understanding these charges and how they are calculated will help you avoid paying more than you should be for your long distance.
For example, you may sign up for a $0.07-cents-a-minute long-distance rate and be pretty pleased with your negotiation skills, but is that really what you'll be paying? Did you read all of the fine print? Did you ask the right questions? There are many things that apply when your long-distance charges are computed. Here are a few things to make sure you ask about and understand.
In-state verses out-of-state calls
You get a great offer of $0.05/minute from long-distance carrier, but do you realize that the rates that are advertised are typically the rates for state-to-state calls only? The long-distance carrier may make that fact obvious, but more often than not this fact is obscured. You have to read the fine print and ask specifically what long-distance calls within your own state will cost. In-state calls are usually anywhere from $0.08 to $0.13 per minute from most carriers. A few may have better deals though, so if most of your calls are made to locations within your state, make sure you ask specifically about in-state rates.
Monthly service fees
You got a $0.07-per-minute rate and feel pretty good about it. However, there's a $4.95-per-month service charge that you have to pay to get the rate. Is that a good deal? Maybe, maybe not. The important question: How many calls do you make? Let's look at an example.
Let's say that you average 150 minutes of long-distance yakking per month. If you are getting a $0.07-per-minute rate with a $4.95 service charge, then you're actually paying a little over $0.10 per minute:
$.07 * 150 + $4.95 = $15.45 / 150 = 10.45 cents per minute
Of course, the more you talk, the more you save... or, at least the lower your per-minute cost will be. The key is knowing your calling habits.
Other aspects that can affect that per-minute fee are things like minimum call length, minimum total long-distance charges, time-of-day rates and billing increments. Let's see how those work.
Minimum call lengths
Let's say you get an advertisement for a long-distance service that says you pay $0.10 per minute for calls. You assume (as would most of us) that this means a three-minute call would cost $0.30. But with some carriers, there is a minimum call length in order to get the quoted per-minute rate. You might be told you get $0.10 per minute, but in the fine print it states that there is a $0.50 minimum-call charge. If you get someone's answering machine and hang up after leaving a 20-second message, you're still paying $0.50 for the call.
Minimum monthly amounts
You may even have a minimum amount you have to pay in calls each month. For example, some long-distance carriers require a minimum in long-distance calls of anywhere from $20 to $30 per month. You pay this amount even if you don't make ANY long-distance calls.
Typically, long-distance carriers break up the day into two rate periods. From 7 in the morning until 7 in the evening is considered the "peak" period and gets the highest charged rates. From 7 in the evening until 7 in the morning is considered "off-peak" and gets the lowest charged rates. There may also be different rates for weekends and weekdays. Just because they say $0.07 a minute doesn't mean you'll get that rate around the clock. This might vary with long-distance carriers, so make sure you know when the best times to call are.
Call billing increments
How long is a minute, anyway? Sixty seconds? Sometimes it is, sometimes it isn't. Check with your long-distance carrier to see what billing increment they use for calculating the length of your long-distance calls. If it's a 60-second interval, then a second minute is billed if you talk for 61 seconds. If it's a 30-second interval, then one minute is charged if you talk for 31 seconds. If it's a six-second interval, then a full minute is billed only after you've talked for 55 seconds. (If you are connected for 30 seconds, you're only billed for half a minute.) From this, you can see that it is obviously better to look for a smaller increment.