Tuesday, February 23, 2010

Phone Card Connection Fees

Connection fees can be one of the more onerous and tricky hidden fees charged by phone card service providers. Some phone card suppliers advertise enticingly low rates for making calls but charge a connection fee which is a hidden charge that is not included in the advertised rate. This fee is charged whenever a call is connected so it is a charge for each call that is made and is not based on the duration of the call.

Consumer Tip: Read the fine print when purchasing a phone card so that you fully understand the fee structure before making a purchase.

A connection fee can significantly increase the cost of a call. This is especially true for short duration calls made to low cost locations. The following example highlights the impact of this cost. The information used in this example is based on actual information obtained from the website of a major virtual phone card provider.

Example: Connection Fee Impact on the Cost of a Call

Assume an international call is made from the USA to Germany. The advertised rate is 2 cents per minute and the connection fee is 49 cents. The call duration is 10 minutes.

The total cost of the call at the advertised rate would be 20 cents (10 x 2) while the actual cost of the 10 minute call including the connection fee would be 69 cents (10 x 2 + 49). Therefore, the effective per-minute rate is actually 6.9 cents rather than the advertised rate of 2 cents per-minute. This is a whopping 245% increase in cost.

There are many phone cards that do not charge connection fees. Most charge a surcharge, tax or a maintenance fee but these, in most cases, will be lower than a connection fee. Tel3Advantage is a virtual phone card that can be used to make long distance calls (international or domestic) from Canada or the USA and it does not charge any hidden fees. Therefore, Tel3Advantage offers the lowest actual rates on calls to many destination because their advertised rate is the actual rate charged for each call. They offer one of the few prepaid calling products that does not charge any hidden fees.

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