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Getting the best deal on prepaid phone cards

Buying prepaid phone time is like playing poker: The right card can make all the difference.

But if you want to make the odds work for you, you'll need to shop around.

If you've picked up a phone card recently, you're in good company. Americans use prepaid phone cards to make more than 8 billion calls annually, according to estimates from the International Prepaid Communications Association, an industry trade group.

The cards are especially popular with students, recent immigrants, military personnel, teens and travelers. Senior citizens and small businesses use them to control expenses, while roommates buy them to avoid fighting over phone bills every month.

"I definitely think they can work for people who want to limit toll calls," says Linda Sherry, spokeswoman for Consumer Action, a national nonprofit organization.

But are these callers getting the best deal? That all depends on how well they read the fine print before they buy.

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The price of phone card minutes has dropped dramatically, thanks to increasing competition among providers. But minutes are only part of the equation. Carriers can levy a host of fees for everything from connection charges to weekly or monthly fees simply for maintaining a card.

Shop smart
In a constantly changing marketplace, buyers need to shop around regularly. A Consumer Action study found that discount clubs -- like Costco and Sam's Club -- tend to offer the best buys in prepaid phone cards, according to Sherry. Drug stores and discount stores also offer good deals.

Once you find a good price, start asking questions. Begin by looking for three things: 1) Who is really providing the service? 2) What are the terms and conditions and 3) Is there a toll-free number if you have questions before or after you buy?

"You should not have to buy it and open it up to discover the issuer or the rules," says Howard Segermark, executive director of the International Prepaid Communications Association.

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-- Posted: June 23, 2003
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See Also
9 questions to ask before buying a phone card
Getting a good deal on a cell phone
Frugal U. definitions
More Frugal U. stories

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