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.

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