Buying time: The facts about phone cards
- By Milt x_Zall
- Oct 13, 2000
For many people, prepaid phone calls offer the ultimate in convenience.
But as the prepaid phone card industry mushrooms, and as more people buy
and use the cards, some problems are coming to light.
First marketed as clever novelties, prepaid phone cards now are sold
at newsstands, post offices, travel agencies, retail stores, and grocery
and convenience stores. They are used mostly by travelers, students, people
who regularly call overseas and those who may not have long-distance telephone
You pay upfront for local or long-distance phone time; the amount of
time you buy depends on the rate-per-minute you're charged. The phone time's
been paid for in advance, the card can be used from any phone, and there's
no need to think about carrying coins or paying a bill later on.
Some prepaid phone cards can be recharged, usually by billing the additional
cost to your credit card. And some cards have advanced features such as
speed dialing for frequently called numbers and an activity report of called
numbers, which may be handy for business purposes. Occasionally, prepaid
phone cards have a hidden cost: Because you've paid upfront, you may be
out of pocket. That's a big difference between prepaid phone cards and traditional
long-distance calling cards, where charges don't appear on your bill until
after you've made the call. Some issuers provide a replacement number on
a separate document when you buy the card. If your card is lost or stolen,
give the issuer the number to recover your unused calling time.
How Prepaid Calling Cards Work
Most prepaid phone cards display a toll-free access telephone number
and a personal identification number (PIN). Prepaid phone card companies
have computers that use your PIN to keep track of your card usage — how
much phone time you have on your card in minutes or units. To make a phone
call, you dial the access number, enter your PIN, and at the voice prompt,
enter the phone number of the party you're trying to reach. A computer tells
you how much time — or how many units — you have left on your card, and
how to use other features your card may offer. Typically, each unit equals
one domestic minute. If your prepaid phone card can't be recharged — that
is, if you can't buy additional minutes by phone for the card — you'll need
to buy another card once you've used up the time or minutes.
The most common consumer complaints are about:
* Access numbers or PINs that don't work.
* Issuers who go out of business, leaving card-holders with a useless
* Customer service numbers that are busy or simply don't work.
* Toll-free access numbers that are constantly busy, preventing use
of the card.
* Rates that are higher than advertised.
* Hidden connection charges, taxes and surcharges.
* Cards that debit minutes or units even when you don't connect with
the party you're calling.
* Poor-quality connections.
Buying Time and Value
You can avoid many of these problems — and buy considerable peace of
mind — by planning ahead. Although many prepaid phone cards are impulse
purchases, you can pre-empt disappointment by checking out a few things
* Ask if the retailer will stand behind the card if the telephone service
* Look for the rate for domestic and international calls on the card's
package or on the vending machine. These rates may vary depending on where
you call. If you can't find the rate, call the card's customer service number.
* Beware of very low rates, particularly for international calls. They
may indicate poor customer service.
* Look for disclosures about surcharges, monthly fees, per-call access,
and the like, in addition to the rate-per-minute or unit. Some cards add
a surcharge to the first minute of use. Others charge an activation fee
for recharging cards.
* Check on expiration dates. Most cards expire one year after first
use. If there is no expiration date, a card usually is considered "live"
until all phone time is used.
* Look for a toll-free customer service number. If the customer service
number isn't toll-free or displayed, it may be difficult to contact the
company if you have a problem with the card. A busy signal on the customer
service line may be a tip off to a rip-off. Be sure the card comes with
instructions that you understand.
* Make sure the card comes in a sealed envelope or has a sticker covering
the PIN. Otherwise, anyone who copies the PIN can use the phone time you've
—Zall, Bureaucratus columnist and a retired federal employee, is
a freelance writer based in Silver Spring, Md. He specializes in taxes,
investing, business and government workplace issues. He is a certified internal
auditor and a registered investment adviser. He can be reached at [email protected]