How To Choose A Phone Card

It's the piece of plastic showing up in more and more wallets these days. Sales of prepaid phone cards will top $3 billion this year. But before you buy one, you've got to know what you're doing or you could be in for some unpleasant surprises. CBS This Morning Consumer Correspondent Herb Weisbaum filed this report on the popular prepaid cards.

They're incredibly convenient and they can save you a bundle of money. Because I'm on the road so much, I use one all the time. It's easier than feeding coins into a pay phone, and cheaper than using my regular phone company calling card.

Prepaid calling cards are sold everywhere these days, from supermarkets and drug stores to your neighborhood post office.

Some cards are good for a few minutes, while others are good for many hours. They're simple to use: just dial your account number and the computer tells you how much time you have left. You'll get a warning if your time is about to run out while you're talking. But once you're out of money, the call is cut off.

To find the best deal, you should do some homework:
Get answers to a bunch of questions:

• Price: How many minutes do you get for your money? Some cards say they're good for so many units. Don't assume that a unit is a minute. Find out and if necessary, do the math. You want to know price per minute!
• Billing: How do they bill? Do they round off to the nearest minute or nearest 6 seconds as some companies do? You'll get a lot more talk time with a card that rounds off to the nearest 6 seconds. You also want to know if there's a minimum charge per call. And will you be charged if the line is busy or if no one answers?
• Surcharges: Some cards put a surcharge on the first minute. Most cards slap one on every time you call from a pay phone, and at 30 to 60 cents a call those surcharges can really add up. So if they don't tell you about a surcharge, ask!
• Expiration date: Is there one? Some cards are only good for 60 or 90 days after you make the first call. You'd better find out, otherwise you could get stuck with an expired card that's worthless.
• Customer assistance: Is there a toll-free customer assistance number you can call? Is it printed on the card? If not, whom will you call if there's a problem?

In that case, you need to make sure you buy a card with the least amount of time possible, so you can check out the service and won't be out a lot of money if there is a problem. Remember, different cards use different long-distance carriers.

And, the price per minute does vary a lot from card to card. We comparison shopped at just 4 places and found prepaid calling cards ranging in price from 15 cents a minute to 40 cents a minute.

When the card is out of money you can throw it way or have it re-charged with more time. If you do that, many companies will give you some free bonus time. So, if you're getting a good deal it makes sense to recharge the card rather than buy a new one.

But watch out for bogus cards. Earlier this year, a New York company sold cards promising rock bottom rates. But New York's attorney general says the calls cost far more than advertised and in some cases, these prepaid cards didn't work at all!

Also, look out for "get rich quick" business schemes that involve prepaid cards. Just last week, a California company, Destiny Telecom, was fined more than $3.5 million for running a nationwide pyramid scheme involving Destiny phone cards. According to the attorney general's office, more than 7,500 people fell for this scam just in New York alone.

The bottom line: investigate carefully before you invest.

If you have a problem with a prepaid phone card that you need to address, you can telephone the International Telecard Foundation Consumer Hotline at 1-800-333-3513. Also, if you feel you've been victimized in New York, you can call the New York State Attorney General's office at 1-800-771-7755 to obtain a complaint form. You can also go to the New York State Attorney General's website for information.

By Herb Weisbaum
©1998 CBS Worldwide Corp. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed