It seems today that almost every type of phone card has been brainstormed. We now have niche phone cards, for calling to a specific region, or even more so a specific country. We have international phone cards, domestic phone cards, prepaid phone cards, post paid phone cards, etc. Accompanying each phone card are its own rates, billing details and charges. Continue reading to find out about the different charges that can be applied to your prepaid phone card. Similar to the early cell phone commercials when they would discuss being billed on or off peak minutes, roaming and out of area charges, and whole bunch of jargon you could never understand.
Certain charges are universal, and applied to calling cards, while other phone cards have additional built in fees. Taxes and per minute charges are both considered universal, with the exception of unlimited domestic cards. Wholesale rates are the same for all calling card suppliers, with the exception of the major players such as AT&T, MCI, Verizon, etc who purchase more bulk airtime and sell time to smaller companies. Calling cards displaying a higher poster rate per minute generally do not have fees associated with it. What the industry calls a “clean” card.
Standard Per Minute Charge
Almost all phone cards, with the exception of flat rate domestic phone cards, charge a predetermined rate per minute. Every destination has its own set of rates. In many cases rates may vary from city to city within the same country. The rate at which you are charged for a phone call can be determined by:
minutes talked * rate per minute = bill for call.
Generally you can find the standard rate per minute charges on the web site you purchased the card from. If you bought the card in a store, look around for in store posters that might display the rate deck. Or, look on the back of the card and go to the web address labeled on it.
Taxes
Like all commercial products taxes must be paid on phone cards. Usually taxes are not included in the rate per minute charge. Therefore the rate displayed in the rate deck is the poster rate. Simply put, the poster rate is the rate per minute to a destination before taxes have been applied. Think of it similar to purchasing other products in a store. To make the items seem cheaper, items are priced at $44.99 before tax. Which really means $47.23, with taxes added (based on 5% Massachusetts sales tax). Thus the post tax rate is refereed to as the actual rate (= rate per minute + plus taxes).
Taxes are paid to the FCC, state government and locally, where the call originates. Taxes deducted from your phone cards are identical to the taxes paid every month on your regular phone bill. Like on a calling card, the taxes are calculated after the phone call is completed. Telephone usage taxes cannot be charged up front, because each country has different rates. Therefore the rate taxed per call is based on the standard rate to the country, plus the talk time. Also note, there is no sales tax charged from the store at the time of purchase.
Connection Fees
Connection fees are the most basic fees applied to calling cards. These were the first types of fees of many to come that were applied to a phone card. Connection fees charge a standard rate for every connection made. Quickly depleting the balance of the card.
Using a five-dollar domestic calling card as an example; with a rate per minute of 3.5 cents and a 69 cent connection fee. Excluding taxes, making one phone call for fifteen minutes will cost $1.21 ($0.035 (rate per minute) * 15 (minutes) = .525 + .69 (maintenance fee) = $1.21). Making four, fifteen-minute phone calls on this card will deplete the balance beyond use. Leaving a remaining balance of $0.16 ($1.21 (fifteen minute call) * 4 (number of calls) = $4.81). Resulting in a smaller balance then the connection fee, and unable to terminate the call.
Cards incurring fees generally have lower rates per minute. It is a way of reeling a customer in by using an artificially low rate. Connection fees have slowly diminished, as more consumers have become aware and slowly transitioned into other types of fees.
Pay Phone Charge
Almost all phone cards incur a pay phone fee. This is a standard flat fee that is charged every time a calling card is used from a pay phone. Fees range anywhere from .69 cents to over a dollar per call.
Initial Fee / Maintenance Fee / Service Fee
The fees listed above are additional fees that are not a required part of a phone card. Fees such as taxes, pay phone charges and the rate per minute can be found on almost every calling card. However, initial fees, maintenance fees and service fees are a sneaky tactic companies employ to display lower rates per minute.
Initial fees are billed once, on the first use of the card. They can range anywhere up to a dollar or more.
Maintenance fees and service fees are additional made-up fees as a way of providing a lower poster rate per minute. Maintenance fees are generally charged on a schedule, of once a week, twice a month, or monthly.
Service fees are usually calculated as a percentage of the cost of the total phone call. Similar to how taxes are calculated.
Conclusion
It is important to determine your needs before selecting a calling card. Frequent callers, or short-term callers should select cards that have few fees. Frequent callers, may be better off selecting a card with a low rates and other fees. Learn more about selecting the right calling card and save yourself money.
Garrett Friedman is a well-known and respected published author of numerous telecom articles. Read about prepaid calling cards, Prepaid Mobile Phones, and other telecom products from Long Distance Post, LLC. Your number one telecom provider.
