Many people rely on prepaid phone cards for making international calls because the rates can be significantly less than traditional phone service rates. But choosing can be difficult. There are so many cards, each with different rates, fees, and limitations, that you easily can end up spending more than you expected.
We looked at dozens of cards and alternative ways of calling, including international plans from telephone and cable companies. Here's what we found.
The chart accompanying this report provides samples of rates to Spanish-speaking countries, including Mexico and others in Central America and South America, for comparison.
Prepaid phone cards comprise a multibillion-dollar industry. They are sold in convenience stores, gas stations, and department stores. They're also sold on the Internet, at independent websites, and the phone companies' sites. Sometimes you get a physical card; if you're buying online, you may receive only a personal identification number (PIN) for a virtual card service.
While the cards are popular, they also prompt many complaints to government agencies and online forums. Searching the Web, we found customer peeves focused on call quality, access numbers and personal identification numbers (PINs) that don't work, undisclosed fees, higher-than-advertised rates, charges for calls that never went through, and poor or non-existent customer service.
"Typically, the complaints we get are from consumers who are trying to make a call and the card doesn't work," Rigo Reyes, acting director of the Los Angeles County Department of Consumer Affairs, said. "They're told they have run out of money when it really doesn't add up to the amount of time they were supposed to have received."
In 2007, the Federal Trade Commission set up a federal and multistate task force to target deceptive marketing practices in the prepaid-card industry. So far, officials have forced companies to pay more than $4 million in penalties. In May 2010, for example, the New York-based Diamond Phone Card Inc. and its principals agreed to pay $500,000 to settle accusations that the company made false claims about the number of calling minutes its cards deliver, and that it failed to properly disclose maintenance and other fees. The agency accused the company of marketing to immigrants who make calls to a variety of countries, including Mexico, Guatemala, and the Dominican Republic, three countries we selected when examining phone card rates for this report.
The high fees and expiration dates associated with prepaid phone cards aren't illegal, as long as they're disclosed. So the best way to protect yourself is to research carefully. That can be difficult if you're buying in a store. Cards may be displayed behind the counter, where they're hard to get and compare unless you specifically ask. And none of the cards we purchased in one convenience store listed any rates for international calls. For that, we had to check online. (For its prepaid cards, BJ's Wholesale Club had international rate cards you could take with you.) Some cards also omitted specifics about fees, using such terms "up to" or "maximum" to indicate how high the fees might go, with no explanation of how they're calculated. Some cards also list toll-free numbers for information.
You stand a much better chance of getting complete information—and a broader selection of cards—by shopping online, either at independent sites, such as Zaptel.com, or on those operated by the telephone companies. Read all the fine print and the list of frequently asked questions. Don't buy unless you get complete information and understand it. Also, find out what acquaintances think about the card you're considering. Search the Web using the name of the card, the words "phone card," and such terms as "review" and "complaints." Try a similar, separate searche using the name of the card issuer (for example, "Sti" or Entrix) and the independent website, if any, that's selling the card. But don't assume that a lack of complaints means a card is OK. Similarly, be wary about the reviews provided by card-selling sites, which may be intended to promote the card they're selling.
Remember that rates, fees, and other terms and conditions can change at any time, even after you buy the card.
We found big differences among rates, which are shown by country, city, or both, with separate rates for calls to cell phones. Looking at each card's lowest per-minute rate for calls to Mexico, we found prices ranging from 1.8 cents to 32 cents. Calls to the Dominican Republic ranged from 1.5 cents to 27 cents. For calls to Guatemala, rates ranged from 6 cents to 54 cents. In comparison, rates for the $5 monthly AT&T Worldwide Value Calling plan are 9 to 10 cents to Mexico, 17 cents to the Dominican Republic, and 24 cents to Guatemala. When shopping, pay special attention to the rates for the locations you'll be calling most.
Rates are only one of the factors that affect the cost of a call or otherwise reduce your card balance. Another big one is fees. We saw many complaints from people who were shocked at how quickly fees sapped their card's value or the number of minutes. One study of cards by the Federal Trade Commission found that users got on average of only 50 percent of the advertised talk time. Some fees are revealed only online or not at all, according to consumer and federal complaints.
In a few cases, the fees we saw on websites differed from those shown on the same cards we bought in a convenience store. That left us wondering which ones apply, whether one or both disclosures were out of date, or whether there are separate sets of charges depending on where the card is purchased, as with the AT&T PrePaid Phone Card. One independent website we checked acknowledged that some of its rates may be outdated. Similarly, the cost of some international calls for the Sti Clarito card differed on two websites we checked.
Generally, cards with very low rates have the most or highest fees—and they can be complicated. The fees to watch out for include a call connection or completion fee of 30 cents to 50 cents. One card charges a post-call disconnect fee of 10 cents and a post-call fee of up to $3.99. There also may be surcharges. The Precision World Card adds a 10 percent surcharge to the cost of every call. All the cards we reviewed charge a per-call fee when using a pay phone, ranging from 65 cents to $1.
Also look for maintenance or service fees, which are charged monthly, weekly or more frequently, in some cases starting with the first call. We've seen fees of as much as 40 cents a day. Some cards charge an additional fee for long calls, such as those 20 minutes or longer. (At least one card automatically disconnects you if you talk for more than 30 minutes or so.) Finally, some cards may deduct additional time for the cost of various regulatory fees, including for the Universal Service Fund and federal excise tax.
Another factor affecting the cost is the "rounding" method used to calculate the duration of the call. As with most traditional phone services, phone-card calls usually are rounded up to the nearest minute. We found cards with rounding of as little as six seconds and as much as three minutes. If you make a lot of short calls, all that rounding can take a big cut from the number of minutes you'll get for your money.
Some of the cards we examined have expiration dates; others have expiration periods, becoming useless in as little as three months after you begin using them. Some have both. Cards that say they don't expire may expire anyway if you don't make any calls over some period, such as six months or a year. For some cards, it's hard to tell if or when they expire. The Rico Rico New York card we bought in a store said rates may change after the "advertised expiration date." But there was no expiration date on the card. When we checked online, one site said the Rico Rico card expires 24 months after the first use.
Consider buying directly from a phone service provider or a major retailer, such as Target or Walmart, advises acting director Reyes of the Los Angeles County Department of Consumer Affairs. "Certainly it's a lot more reassuring than walking into a liquor store and getting a no-brand card and you don't know who is behind it," he said. But even then, he said, carefully consider all charges and other terms and conditions. If you're often calling internationally, he recommends forgetting prepaid cards and going with alternatives, even if they're a little more expensive. To reach his family in his native Mexico, Reyes has signed up for an international plan with his cell phone provider.
If you're simply looking to pay a few dollars for a card you'll use up in a single call, then expiration dates, maintenance fees, and minute-rounding methods don't matter very much. So buy a card with the lowest rates you can find, though watch for connection, call completion, or hang up fees. On the other hand, if you plan to hold onto the card and use it for many phone calls, go for one with the fewest or lowest fees. Also look for cards that are rechargeable, though watch out for recharge fees, such as the 15 percent fee for the MinutePass Prepaid Long Distance Card. One standout is the Pingo (www.pingo.com) a prepaid calling card service. It has low rates, a low pay phone fee, and a good selection of features such as speed dial and PIN-less dialing (see Features to look for). Its website is not available in Spanish (Spanish customer service is available by phone at 888-878-8838), and it has a 98 cent monthly maintenance fee. A credit card or Paypal account is required.
There are many phone card features worth looking for. Here are some of the most useful.
Some cards feature PIN-less dialing from a phone that you register in advance. Also, with many cards, you don't have to re-enter your PIN if you're immediately making another call. When the other party hangs up, you can dial the next number and press #. Find out whether a card you're considering has this feature and how to use it.
You can associate a list of frequently called numbers with your account so that you don't have to redial them every time. With the Penny Talk Global Card Save-orite feature, such calls are eligible for a 20 percent discount on the rates and connection fee.
Some cards have Spanish instructions, and providers have a separate toll-free number for instructions and prompts in Spanish, in case you're not fluent in English. Zaptel Mexico's Best also provides technical support. Some companies provide an extensive list of frequently asked questions online, including in Spanish. We found them very helpful. Download the list of FAQs and keep it for future reference. (If you buy a card in a store, keep the packaging, which provides additional information.)
Look for a card that lets you review your calling record, either by phone or online. That way you can at least try to figure out how much you're being billed and detect erroneous charges.
We found some cards that have satisfaction guarantees or are otherwise refundable.