A woman whose teenage children were running up $400 monthly phone bills found a way to curb their costly chatter.
She bought each child a $25 phone card, giving each of them 100 minutes of long-distance calling time. When they used up the time, they had to wait until the next month to get new cards.Ingenious parents aren't the only ones who are discovering the virtues of pre-paid phone cards, which originated in Italy in 1976 but didn't begin to catch on in this country until 1993.
Now the cards are popular with college students, savvy travelers and collectors, but most Americans don't know what they are, said Tom Keene, consumer affairs director for the International Telecard Association, a trade group based in Washington, D.C.
They are, simply, cards for which you pay $5, $10, $20 or more in advance in return for long-distance calling time. Most cards guarantee a certain number of minutes. A few base their charges on distance and time of day. To make calls, you dial an 800 number and enter an authorization number, both of which are found on the back of the card. When the card's face value is used up, you either throw the card away or, if it is designed to be reactivated, you can add more time by calling a number on the back of the card, paying with a credit card.
A few years ago, only a dozen cards were available in the United States. Now there are hundreds.
"Right now you can buy them at just about any convenience store," said Keene.
- They're convenient. They can be used with any phone - a pay phone or a phone at a friend's home, for example.
- They provide some security. If you lose a card, your loss is limited to the card's face value. If you lose your regular calling card (one that bills calls to your home phone), your loss could be much greater.
- Maybe there will be some savings. With most cards, you pay the same rate per minute - generally 25 to 50 cents, considerably more for international calls - regardless of when or where you call.
Depending on the rate, the pre-paid card calls are likely to be more expensive than calls made from your home phone, but they can be cheaper than a regular calling card, for which you pay a surcharge on each call. And they're almost certain to be cheaper than making collect calls or using pay phones or hotel phone systems.
But because every card is different, consumers need to examine them closely before buying.
For example, you can buy a Michael Jordan or Goldie Gopher card for $10, but you get 30 minutes of calling time with Jordan and only 12 minutes with Goldie. (The Goldie card is intended to be a souvenir card, and a portion of the proceeds goes to the University of Minnesota).
Questions to ask:
- How many minutes does the card offer, and what is the cost per minute? Some cards are sold with units rather than minutes. A unit usually is a minute.
- What is the expiration date? Most cards are good for six months or a year from first use.
- Is the card good only for calls within the U.S. or can it be used to call other countries? Are international calls limited to calls originating in the U.S. or can they be made from other countries?
- Can the card be reactivated? If so, at what rate?
- Is there an activation fee? Such charges are rare, but you should check.
- Is the caller charged from the time the phone is dialed or the time the call is connected? This is an important feature. Many minutes can be used up while the phone is ringing.
"I wouldn't use a card that charges me when I dial," said Keene. "A fellow called me just this week. He tried five different times to call a friend. It was busy each time, and he was charged each time."
Keene offers this additional advice:
- If a card offers a fantastic rate, be leery. One man bought a card offering calls to India for 59 cents per minute, but the rate was good only for three days. On the fourth day, it went up to $2 a minute, which Keene said is about the cheapest rate a company can charge for many international calls and still make a profit.
- Go to a convenience store and ask to see a card. Take the 800 number and the customer service number off the back. Go home and try them both. (They may not let you see a card if an authorization number is printed on the back. On many cards, an area has to be scratched off to reveal the number. However, the cards generally have to be scanned at the store in order to be activated.)
- If in doubt, buy the cheapest card and try it out.
- Don't buy a card that doesn't have a customer service number on the back.
- If the customer service number doesn't work or you have other problems with your card, call the consumer hot line at the Telecard Association: 1-800- 333-3513.
"We can't guarantee them we'll be able to give them a refund but we will at least try to find out what happened and give them information," Keene said.
While most people use these cards for their intended purpose - making phone calls - growing numbers of people collect them. Promotional cards that are printed in limited numbers are especially valuable.
"We estimate there's over 2 1/2 million people worldwide who collect the cards just like baseball cards," said Randy Tada, telecard marketing manager for US West. "A lot of these cards never get used because they're worth more unused than they are used."
In fact, some cards have fetched more than $1,000 at auctions, Keene said.
US West makes cards with 43 different images, including three-card sets that, when the cards are lined up, show the skylines of Minneapolis and other cities.
US West's cards are intended to be local calling cards in the cities where the company operates, Tada said. As a result, a local call is 25 cents, regardless of its duration, while long-distance rates depend on which carrier provides long-distance service for the phone being used. Other cards charge the same per-minute rate for U.S. calls regardless of whether the call is local or 3 long-distance. With such cards, it's cheaper to use coins for local calls.
US West also has a computer chip on its cards that is a precursor of things to come. "We have a vision whereby five years down the road this card will be used by other things besides pay telephones," Tada said. Among them: vending machines and parking meters.