Saturday, August 15, 2009

Phone Card Purchasing Tips

The phone card market is confusing to most consumers because phone card carriers have been creative in devising hidden fees and other tricks so they can advertise extremely low rates and still make money. In most cases, because of hidden charges, callers end up paying more than they expect when placing calls. We have listed the common hidden fees below and have provided some tips so phone card shoppers can at least make an informed purchase and have a basic understanding of the market.

To avoid many common consumer mistakes, we suggest purchasing phone cards from websites where all of the fees are fully disclosed in an easy to read format and customers rate phone cards. There are websites that provide simple to use tools so users can compare phone cards in a simple to understand format. Websites like display customer ratings for all of the phone cards they sell.

1. Check the rate (usually cents/min) to the destination you want to call. Remember that the rates listed or advertised are normally to house phones (landlines). Calls made to cell phones often have higher rates. Also, the advertised rates typically do not include phone card fees or taxes that can significantly increase the cost of a call.

2. Look for added fees, taxes and hidden costs. These should be listed in an easy to read format but can also be buried in the fine print. Remember you will likely pay more than the advertised rate when using a phone card so the trick is to minimize the added fees. Added fees will be called things like connection fee, disconnection fee, taxes, maintenance fee, pay phone fee and long call fee. These fees will vary between calling cards. Some phone cards will have all or most of these added fees and others will not have any of them.

3. Phone cards will also have different rounding or billing increments. These are often in one, three or 6-minute increments. The billing increment can have a significant impact on the calling cost depending on how the calling card is used. A calling card with a one-minute billing increment will charge a customer 4 minutes for a 3.5 minute call while a calling card with a 3 minute billing increment will charge a customer 6 minutes for the same call. The cost of a call is rounded up to the next billing increment so; in general, a card with a lower billing increment has a lower cost.

4. Phone card fees are typically minimized if calling cards are purchased in smaller denominations and used for one call or over a short period-of-time. In general, phone card fees do not start until it is used the first time. Many companies offer calling cards in denominations of $5, 10, 20, 50 and 100. We recommend trying a small denomination card ($5 to $10) before making a large purchase. In most cases, it is generally better to buy several small denomination cards than to purchase one with a big denomination.

5. The call quality of a phone card depends on the international carrier used and is not always equal between vendors to a given location. There are many international telecom carriers and call quality will vary between carriers. There are generally three levels of call quality (referred to as Tier 1, 2 and 3) with regard to telecom carriers. Tier 1 carriers offer the best quality but they also charge the highest rates. Therefore, in general, calling cards with the lowest advertised rates also tend to have the lowest call quality because they use lower Tier carriers.

6. Check for local access number availability. Many cheap calling cards have low per minute rates but have few local access numbers and charge 1 or 2 cents per minute extra for using a toll free access number.

7. All phone cards carry an FCC imposed fee for using a pay phone in the USA. However, the rate will vary between phone cards (it ranges from around $0.49 to $1) so check this rate if you plan to use a pay phone.

8. Phone cards typically have an expiration date so be sure and use the card before it expires.

9. Purchase phone cards from a vendor that has 24/7 customer service. If nothing else, you may have a question or need some advice.

10. Look for added features. Many phone cards have a full range of useful features that some users may value while others may not. For example, the AT&T phone card has very high call quality (also high rates) but almost no features. Others have features like PIN free dialing, call history, speed dial and automatic recharge, which make the cards easier and more convenient to use.

So, how should a consumer use this information? There are a few things to consider. First, try to compare phone cards on the same basis. When phone card rates are adjusted for hidden fees, taxes and other billing tricks, many calling cards with very cheap advertised rates actually cost as much or more to use than a moderately priced card with higher call quality. Remember, a calling card that cannot be used nor has extremely poor quality is worthless to the user. Any money spent on a purchase is simply lost.

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