Prepaid phone cards have driven the cost of international calls as low as one or two cents a minute, but cheap talk can still burn a hole in your pocket, experts warn.
About half of the companies offering rock-bottom rates in the competitive phone card market “come and go” and might leave their customers holding worthless cards, says a telecommunications analyst, Paul Budde.
“At the bottom end, the calling card market [continues] to operate like a revolving door, with basically as many new players entering the market as there [are] exiting,” he says. “Customers are at risk of being caught out by marginal operators.”
However, Charles Britton, of the Australian Consumers Association, says that while “some small operators have not been behaving as well as they might”, there was a limited downside for phone card consumers, given that most cards are sold in denominations ranging from $5 to $50.
“People are punting reasonably small amounts of money, so you don’t lose very much [if the company folds],” he says.
Calling cards, or prepaid phone cards, allow holders to make calls, up to the value of the card, by dialling a local call access number, or a 1300 or 1800 number, and entering a PIN.
The significant savings to be made over international direct dial rates are the big attraction, says Kenneth Ting, founder of the website http://www.phonecardselector.com.au
“Typically, on international calls you can save over 80 to 90 per cent over your home or business phone,” he says.
For instance, Telstra HomeLine Complete customers pay 38c a minute to call the UK direct, which equates to $11.40 a half hour (or $6.60 if they opt for the company’s capped-rate 30-minute block). But choose the Lime Phone Card, Click, Go Bananas, No Frills or eStar cards, all of which are listed on the phonecardselector.com.au website, and you’ll pay 3c a minute, or 90c a half hour, to call the same destination.
If those cards sound too “out there”, bear in mind that even Telstra’s own calling cards offer discounts on its standard rates.
For instance, customers using the carrier’s “Say G’Day” card pay 3.9c a minute to phone the UK, putting the cost of a half-hour call only a fraction above that charged by the more obscure operators.
Budde estimates that at least 70 per cent of all international calls are now made using these cards.
They can be bought at newsagencies, convenience stores and even online suppliers, yet with hundreds of different products on the market, all with different call charges, surcharges, connection fees and conditions, it’s important to shop around.
The first thing to bear in mind is that some cards only allow you to dial the local access number from capital cities or other card-friendly locations.
Outside those defined areas, you need to dial a 1300 or 1800 number instead and doing so incurs an additional surcharge of between 4c and 25.7c a minute (for the companies listed in our table, left).
Ting points out that companies make their money by offering cards that are cheaper to some destinations and more expensive to others, so first figure out which countries you phone most.
He says people who call the Philippines regularly often have friends or family in the US as well, so card companies will entice customers with a low rate, say, for the US, but recoup some of that by charging a higher rate for calls to the Philippines.
For example, to call the US, Chili card holders pay a connection fee of 49c and then 3c a minute. The connection fee to call the Philippines is the same, but the per minute call rate is nearly eight times more expensive, at 23c a minute.
Ting advises card users to also examine the connection fee, or flagfall.
If you plan to talk for hours, a flagfall can be a good option because it usually comes in tandem with a cheaper per-minute rate. If, however, you like to keep your conversations short and sweet, then opt for the slightly more expensive rate with a zero connection fee.
For example, if you want to call the UK, the Day & Night card would cost just 2c a minute. You’d need to talk for more than 25 minutes before it made financial sense to switch to a provider with a flagfall and a cheaper per-minute rate, such as Budget Card, which charges a connection fee of 49c with a 1-cent-a-minute rate.
You’ll also want to watch the flagfall if your calls are often answered by a machine or mother-in-law. The connection cost is still imposed even if you’re only on the phone long enough to roll your eyes and say you’ll try calling again later.
