Calling-Card Anxiety - Brief Article

Kiplinger's Personal Finance Magazine,  July, 2001  by Joan Goldwasser

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PHONES | How to find the CHEAPEST CHOICE for long distance.

As you prepare for your summer vacation, you may be tempted by ads in magazines and on the Internet for prepaid phone cards. A prepaid calling card promises an easy way around the high rates and outrageous surcharges that hotels and pay phones often extract for long-distance calls. The rates also beat the pants off the calling-card charges imposed by AT&T, MCI WorldCom and Sprint. The big three long-distance carriers charge anywhere from 69 cents to 89 cents a minute, plus a surcharge of as much as $1.25 per call if you don't sign up for a monthly plan.

Paying a monthly fee can cut the cost. For example, for $1 a month, AT&T will drop its calling-card rate to 25 cents a minute; $2 a month drives MCI's rate to 15 cents a minute. Sprint offers dime-a-minute calling-card calls--if you pay a staggering $10.95 monthly fee. No wonder prepaid cards with rates of a penny to a nickel a minute sound like something worth phoning home about.

Unfortunately, finding the best deal among the plethora of cards--or even figuring out true costs--is a major challenge. A bargain-basement per-minute rate can easily be obliterated by per-call surcharges.

Consider, for example, the penny-a-minute rate promised by the $10 Wild Card from Bluewater Telecommunications. The catch: The come-on assumes you make a single, 16-hour phone call (that's 951 minutes at a penny per minute plus 49 cents to pay the per-call connection fee). Making a two-minute call to check on the status of a flight costs 51 cents--the per-minute charge plus the connection fee.

Making longer calls can make these cards a bargain. If you use the Wild Card for a half-hour chat, the per-minute cost falls to just 2.7 cents. It might be just the ticket if you're separating a lovesick teenager from her beau till September.

Finding the right card. You can buy prepaid cards at a convenience store, or by calling the issuer (or visiting its Web site) and using a credit or debit card to pay for the card. Each time you dial the prepaid service, a computer voice advises you how much money or how many minutes remain on your card. You then dial the number of the party you're trying to reach. (Yes, you'll wind up punching a lot of numbers on the keypad.)

To find a good deal, check out PhoneShark.com (www.phoneshark.com), which lets you search for both international and domestic cards. Among the cheapest no-connect-fee cards is the $10 Max card from Bluewater Communications. It charges 3.9 cents a minute for domestic long-distance calls, a 25-cents-per-week service charge, and a 50-cent fee if you call from a hotel or pay phone. If you call home and talk for 20 minutes, it will cost you $1.53, including the weekly service charge. That same call would cost $19.05 with AT&T's calling card, assuming you didn't sign up for its monthly plan.

To see the potential savings if you're traveling abroad, assume that you'll be in Paris this summer. Using a $10 Cool Card from CoolCall for a half-hour call to the States would cost 31.6 cents a minute. Using MCI's calling card would cost $2.13 per minute plus a $4.50 surcharge for that call, assuming you're not paying monthly fees to get a cheaper rate.

In addition to watching out for connection fees, note that some cards charge different rates depending on whether you call from an area that has a local access number or one that requires you to call a toll-free, "800" number. The 3.9 Cents Direct prepaid calling card from Net2Phone, for example, charges 3.9 cents if you use a local access number, but 6.9 cents if you have to use the toll-free number.

Also watch for monthly service fees that gnaw at the value of your card--typically at a rate of 99 cents to $1.49 a month. And if you plan to keep the card in your wallet and use it for emergencies, choose one that doesn't expire.

Finally, don't pack big bucks onto a prepaid card, even though some issuers offer discounts for top-dollar cards. There's no guarantee the company will be in business when you pick up the phone months later. --Reporter: COURTNEY MCGRATH

COPYRIGHT 2001 The Kiplinger Washington Editors, Inc.
COPYRIGHT 2001 Gale Group