Prepaid calling cards are those cards you see being sold everywhere that give you $5 to $50 (or more) worth of long-distance calls. You buy the card and use it with any phone to make long-distance calls. The card has a toll-free access number that you dial when you want to make a call. You then enter a Personal Identification Number (PIN) that activates the card's account in the company's computer system. You'll then be prompted to enter the number you wish to call. It may be a lot of numbers to dial, but if you do your homework you can save money.
The retailers that sell these prepaid cards are just one player in the game. There are actually many players.
- There is the long-distance carrier who sells blocks of time to resellers.
- These resellers sell to or work with card issuers who set the card rates, set up access numbers, provide customer service, and maintain the PIN numbers and account information.
- Distributors and retailers then sell the cards to their customers.
You won't usually know who the long-distance carrier is behind your card.
The price per minute with prepaid phone cards varies greatly, as do the number of additional fees that might be involved. The card may advertise that you can talk for 120 minutes, but that may be under very specific circumstances. While there are certainly cards that are good deals, and the convenience of the cards is perfect for some situations, there are still a lot of scams out there that take advantage of unsuspecting buyers.
The most common scams involve:
- Unadvertised (or non-obvious) call connection charges
- Unadvertised (or non-obvious) monthly fees
- Unadvertised (or non-obvious) minimum call lengths
- Unadvertised (or non-obvious) quick expiration dates
- Unadvertised (or non-obvious) activation or setup fees
These fees eat into the total dollar value of the card, making that 120 minutes you think you're getting turn into a lot fewer. If you made a single call for 120 minutes, perhaps you would get the advertised deal. Making several shorter calls that each racks up connection fees and builds up higher charges because of the minimum call lengths, however, will result in getting far fewer minutes for the card.
Some other things to watch out for with prepaid phone cards include:
- Pay-phone fees - In addition to the per-minute charge, connection fees and any other charges you may be paying, if you make your call from a pay phone you should expect to pay an additional surcharge. While the FCC approves an extra charge, card issuers vary greatly in the amount they charge.
- Large billing increments - These can be as high as five-minute increments, meaning that even calls under one minute use five minutes of the card's value. Any call less than 10 minutes, but more than five minutes, uses 10 minutes of the card's value.
- Delivery charges - If you order your card from the Internet or another source, you may also be charged a delivery charge. You also stand the chance of not receiving your card or not receiving a valid PIN.
- No quality guarantees - Look for quality guarantees, as well as contact information for any problems you may have.
- Invalid PINs - There have been instances of PINs that don't work.
- Card issuers that go out of business - This makes your card useless and gives you nowhere to go for a refund.
- Minute usage beginning as soon as you dial - Logically, you would think it would begin when a connection is made, but sometimes it doesn't.
- Busy access numbers - If you can't connect to the access number, you'll never get through to make the call in the first place.
- Higher rates for calls made to wireless or cellular phones
- Instant calling cards - These services allow you to purchase the card online, get an access number and PIN and begin using it right away. While this can work fine and be a good deal, you may also find that buying a prepaid card this way leads to more problems with PINs not working or cards never being received.
Regardless of the type of card you use, if you use a pay phone you'll be using an Operator Service Provider (OSP) -- the long-distance service provider for pay phones. Unless you dial a special number to connect to the long-distance carrier of your choice, you'll be billed at that OSP's long-distance rates. AND, even if you use a calling card, if that card includes your phone number as part of the card number, the OSP may be able to bill you for the call at its rates.
The only way to be sure you'll be connected with your chosen long-distance carrier and billed at its rates is to follow the directions on the pay phone to call a different long-distance carrier. These directions are required by the FCC, so every pay phone should have them prominently displayed.
According to the Federal Trade Commission (FTC), there are four questions you should always ask before you buy a prepaid phone card:
- What is the connection fee for each call?
- Is there a service fee?
- Is there a maintenance fee?
- Is there an expiration date?
In addition to these questions, you should make sure that you have a valid customer service number.
Call the International Telecard Association at 1-800-333-3513 to request an informational brochure.