Thursday, May 24, 2007

Phone Card Fees: Connection Fees

Most people understand that they use phone cards by dialing an access number which by-passes their high cost carrier in order to make low cost domestic or international long distance calls. Phone card users also know that they will usually pay a higher rate than the per-minute rate advertised because of so called hidden fees and taxes. What a lot of people don't realize is that these hidden fees vary significantly between phone card suppliers, can take on different forms and, in some cases, they can be hard to spot when making a purchase and be just plain "tricky". We don't like these marketing practices and feel that hidden fees should be fully disclosed by phone card marketer's in an understandable manner so a consumer will truely understand what it will cost to make a call. Therefore, we try to uncover and explain these "tricks" when we find them so consumers can spot them when making a purchase. A case in point is a "connection fee".

As the name implies, a connection fee is a fee charged when a call is connected. Most phone card companies do not charge a connection fee these days but we found one major marketer (PennyTalk) that still charges a connection fee. When using these cards a caller will be charged a per-minute rate plus a connection fee for each call. PennyTalk advertises that international calls cost as little as 2 cents per minute but they also charge a $0.49 connection fee for each call and a 99 cent monthly service charge for each account. The connection fee may not sound very high but consider the following. If a 25 minute call is made from the USA to Germany the cost will be 50 cents (2 cents per minute) plus a 49 cent connection fee so the total cost will be 99 cents or almost 4 cents per minute. This is not cheap for a call from the USA to Germany these days. The same call made with a high quality phone card will cost between 2 and 2.5 cents per-minute (including all fees and taxes) and Tel3Advantage (prepaid long distance) only charges 2.5 to 3 cents per minute. So, in this case, the advertised 2 cent per-minute rate is one-half the actual charge and is deceptive. To be fair, PennyTalk includes a toll free access number at no additional charge but the other providers have a wide network of local access numbers that are also free.

Another problem with a connection fee is that it is charged for each call connected. It is fairly common for international calls to be disconnected during a long conversation and the connection fee will be charged everytime the number is redialed and connected. It will also be charged if the wrong number is dialed and connected or if the party being called is not available and the phone is answered. In other words, a seemingly small connection fee can add significant cost to the calls actually completed with a prepaid calling product. For this reason, we suggest consumers should not purchase a prepaid calling product that charges a connection fee.

Wednesday, May 23, 2007

Calling Kazakhstan

We know that several prepaid international calling products have not been working well for making calls to Kazakhstan. For example, users of Tel3Advantage have not been able to connect with landlines or cell phones for several months. One product we know of that has been working well is Continental Phone Card. It has been reliable for either land lines or cell phones and it provides very clear connections and good rates. We suggest using Continental for calls to Kazakhstan.

1010 Dial Around Plans

10-10 Dial Around has been around forever. In the past it was a convenient method of by-passing the high cost monopoly phone company and make cheap long distance calls over a low cost network. It is still around but there are much cheaper methods of making domestic or international long distance calls today that are just as convenient. Prepaid long distance is a far cheaper option that offers the same convenience and more features than 10-10 dial around.

10-10 dial around is used by dialing an access number that starts with the numbers 10-10. The long distance call is than placed over a low cost network and the cost of the call is automatically billed to the phone used to make the call. We reviewed these plans and found that the per minute rates to make calls were very high (up to 20 cents per minute for domestic long distance) and the plans are loaded with hidden fees and taxes. Most 10-10 dial around plans charge a connection fee and/or have a minimum call length that is essentially the same as a connection fee. The only advantage of these plans is that the charge for a call is automatically billed to your phone. However, in most cases this is more a trick than an advantage. A caller will not see the charge for a call until they get their next phone bill and they may have placed several calls before they realize they have been ripped-off. In our view, 10-10 dial around should be avoided.

Many consumers use 10-10 dial around because they think it is the most convenient method of making low cost long distance phone calls from their home phone. They do not realize that prepaid long distance offers the same convenience, more features and much lower rates. A good prepaid long distance service can be used from multiple phones by dialing an access number and placing calls over a low cost network without dialing an account number or PIN code, just like 10-10 dial around . However, a good prepaid long distance plan will also include other features like on-line call history and speed dial at no additional cost. Rates can be as low as 1 or 2 cents per minute for domestic or international calls. Many service providers feature quality plans that have very low or no added fees or taxes. Another advantage of prepaid long distance is that you know the charge for each call and you cannot be charged more than you prepaid so you can easily control your long distance expenditures. Many prepaid products can be purchased for as little as $5 so a consumer can try a service without risking very much money. In contrast, one short call using 10-10 dial around can easily cost $5. We wonder how 10-10 dial around stays in business with all of the high quality prepaid calling products on the market today. Visit Phone Card Shop for a wide selection of prepaid products for making either domestic or international phone calls.

Sunday, May 13, 2007

Phone Card Fees: Rounding Interval

Most people already know that phone cards have hidden fees and they will pay more than the advertised rate when they make calls with phone cards. Experienced phone card shoppers look for cards with low per minute rates, good call quality and minimal added fees. Phone card companies use a wide assortment of added fees in order to increase revenue. These range from connection fees to maintenance fees and taxes or other surcharges for making calls. They use these added fees so they can lure consumers with low per minute advertised rates. Many high quality phone card providers have reduced or eliminated hidden fees over the past few years as consumers have become wiser and often shun phone cards with excessive fees. However, hidden fees associated with a phone cards rounding interval is still widely used because it is difficult to calculate and poorly understood by many consumers.

The rounding interval defines how the length of a call is rounded in order to determine the cost of each call made with a phone card. Rounding intervals are normally 1, 3 or 6 minutes but they can be as high as 12 minutes or more. The length of a call is rounded to the next interval in order to determine the minutes used in calculating the cost of the call. For example, a 1.5 minute call will be rounded to 2 minutes if the rounding interval is 1 minute, it will be rounded to 3 minutes if the rounding interval is 3 minutes and it will be rounded to 12 minutes if the rounding interval is 12 minutes. For phone cards with high rounding intervals, it is easy to see how it can significantly increase the cost of a call so the user almost always pays more than the advertised per minute rate for each call. The rounding interval provides a built in hidden fee that is not well understood by most consumers but the trick goes even further.

What happens if there is no answer or the phone being called is busy? Most phone cards will start timing a call as soon as it is dialed so consumers should expect to pay at least one rounding interval for a dialed call even if the phone being called is busy or not answered. These charges can add up to a significant added cost, especially if the rounding interval is 6 or 12 minutes.

This hidden fee can be minimized by choosing a phone card with a short rounding interval. In general, phone cards with rounding intervals higher than 3 minutes should be avoided unless it is a small denomination card that is going to be used to make one phone call. Tel3Advantage is another way to avoid this and other hidden fees charged by most phone cards. They use a one minute rounding interval and do not charge for unanswered calls.