Tuesday, May 17, 2011

Calling Card (pre-paid phone card) versus Unlimited Long Distance

Like with GoPhone for wireless, you can pay by-the-minute for long distance with a calling card.  Is this a better deal or not?  It all depends on how much you yak, yak, yak.  But for overseas calls, these can be a real money-saver.

I presently have "unlimited" long distance on my AT&T landline for $12.10 a month through AT&T BellSouth.  The actual charge is $9.00 a month, but as you guessed, all those odd taxes and fees that AT&T cannot calculate in advance bring it up to $12.10

By the way, I had a client who wrote most of the billing software for the telcos (they mostly use the old Cincinnati Bell for billing - even the competing carriers and wireless companies).  Yes, they can figure out in advance what the surcharges and taxes are, but like with Cruise Ship pricing, they choose to advertise the lowest fee in the chain, rather than the total.  So $9.00 long distance is $12.00.  Figure on 25% in taxes and surcharges in any telco transaction that is billed monthly.

How many minutes am I using?  Hard to tell, as unlike wireless plans, my landline doesn't itemize phone calls or long distance phone calls, so it is hard to tell if I am using 10 minutes a month or 100 or 1000.  I suspect it is closer to 100 or less.   But many of these may be in-State long distance, which may be problematic, as we will discover.

I also have an AT&T calling card, which I bought before I went to Costa Rica.  Calling cards (pre-paid phone cards) are handy when traveling, as you can use them in many places overseas, and not get socked with surprise bills on your credit card or other payment means (which often have opaque pricing that is not disclosed at the time the call is made!).  Credit card calls in particular, are the most expensive.

Paying by the minute, on the other hand, provides some very low rates - with no taxes, fees, surcharges, etc. tacked on.  And if you are not a person who yaks a lot, these can save you a lot of money.  How much?  Let's explore.

From the AT&T website above, their state-to-state calling rates are as follows:
  • 1,000 minutes of state-to-state calling for $40.00 (4 cents per min.)
  • 500 minutes of state-to-state calling for $25.00
    (5 cents per min.)
  • 300 minutes of state-to-state calling for $18.00
    (6 cents per min.)
  • 100 minutes of state-to-state calling for $7.00
    (7 cents per min.)

International rates can be very competative as well:

  • 5 cents per minute to France, Hong Kong, China, Singapore
  • 6 cents per minute to Mexico
  • Great rates to other countries. Find Rates

 Which is one reason immigrants use these cards a lot.

As you can see, you can get a LOT of calling for not a lot of money.  If we use the "unlimited" plan through AT&T, for $12 a month, that works out to $144 a year or about 3600 minutes a year at four cents a minute.  That works out to about 10 minutes a day, long distance, for each day of the year.

NOTE:  Sometimes you can get better pricing that this.  I think my last "recharge" was 1000 minutes for $30, but I could be wrong about that.

Now for some people, unlimited long distance would be a bargain, if they call their mother-in-law every day for 20 minutes.  Some folks like to yak.  Yakking gets expensive.  But for others, the use of long distance is fairly rare.

For me, it is fairly rare.  Why?  Well, for starters, most of my business is conducted over the Internet - by e-mail.  As I noted before, in today's crazy world, people actually e-mail me asking if it is OK to call.  It is odd, but people have performance anxiety about phone calls and conference calls these days, probably due to our increased reliance on e-mail and other more anonymous means of communication.

So I rarely call clients anymore.  And when I do talk on the phone with a client, I make sure they call me - on their nickel - when I can.

So are there huge savings here?  Maybe, maybe not.  The actual savings will depend on how often you use long distance.  And there are lots of caveats.  Let's explore.

Caveat #1:  You can't yak a lot.  Let's assume we use maybe one (1) 1000 minute calling card a year.  The cards are virtual (although I carry one in my wallet).  All it is, really, is a 1-800 number to call, and a PIN number.  When I was using "poverty phone service" (basic phone service with no gimmicks) my usage was about one 1,000 minute card a year.  However, I was also using my cell phone as a land line, particularly at our summer home,  so this could be a specious calculation.

But assuming the premise is valid (and again, always attack the premise in any argument!) the savings of $144 a year for "unlimited long distance" versus $40 a year for 1000 minutes is about $104 a year.  Not a lot of money to be sure.  But a nice night out at a restaurant with the spouse - with a pretty decent bottle of wine, no less.

And as I noted before, you can dismiss the savings, saying it is "only $100" and not worth doing.  But over a decade, that is well over $1000 with interest.  And if you dismiss every savings in your life on the basis that it is "only $100" then cumulatively, you are walking away from thousands of dollars in savings, which over time can be tens of thousands of dollars in savings.  Enough to buy a car.  That's worth doing, right?

But again, the entire savings is based on the premise that you will yak no more than 10 minutes a day long distance. 

Caveat #2:  Minutes may Expire.   Some cards have minutes that expire over time.  My card does not, for some reason.  But some AT&T calling card minutes expire after a year (like GoPhone minutes) and if you do not use them, you lose them.  So if you don't yak at all, you lose the minutes.  But on the other hand, you still save that $100 a year.

Caveat #3:  In-State Long Distance.  While it may cost 4 cents a minute to call Hawaii, or 5 cents a minute to call France, calls to a county on the other side of your own State may be more - sometimes a lot more.  So calling Atlanta from my home cost more than calling Hawaii, Mexico, or France.  And the in-state rates don't appear to be advertised anywhere.

You can go online and ask for a rate calculation for a particular call, however.  If I was to call the Atlanta DMV from my home in Coastal Georgia, the rates would be as follows:

  • 3 minutes will be deducted for each minute of talk time used.
  • Based on the Card's current balance, the maximum talk time for this call is 282 minutes. This maximum talk time is based on your FROM/TO calling information, and also includes a 15 minute surcharge which will apply ONLY if you make your call from a U.S. pay phone. If your call is NOT made from a U.S. pay phone, then the pay phone deduction is added into the talk time.

So our rate here will be three times that if I made the call from, say, South Carolina - or about 12 cents a minute.  This puts a real crimp in our savings plan.  Although, even at that rate, if you are not a big yakker, you may spend less on a calling card than $144 a year in long distance.

Note also the "pay phone deduction" of 15 minutes (!) of talk time.  This means the initial call will run at least 60 cents from a pay phone, in addition to your 3x charge for talk time.  It also means that even from a home phone, this call will cost a minimum of 60 cents.

In-State long-distance is the real screw job of the calling card.  But if you are aware of this from the get-go, it isn't necessarily a deal killer.

On the other hand, if you yak with your Mom who is two Counties away, for 15 minutes a day or less, you are going to come out $75 behind by using a calling card, compared to unlimited long distance.

Score:  Unlimited 1, Calling Card 0 - at least for that sort of scenario.

Caveat #4:  Overseas Calls:  Overseas calls are a little higher - or a lot higher - depending on the country than the vaunted four-cents-a-minute State-to-State.  But on the other hand, these rates may be a lot lower than your base rate from your US landline.  A heck of a lot lower!

AT&T has a confusing panoply of rates to choose from for overseas long distance.  If you sign up for the "occasional" plan, which costs $1.29 a month, a call to France is a staggering $1.67 a minute.  Compare this to the 5 cents a minute with the calling card, and you'll realize why every immigrant in this country, legal or not, has a calling card in their pocket.

If you sign up for the Worldwide Calling plan, however, the fee goes to $5 a month, but the rates drop precipitously - to 9 cents a minute for our example of France.  This is still a lot higher than 5 cents a minute, and that $5 a month comes to $60 a year - whether you use it or not.

For me, who makes maybe 3 or 4 calls a year overseas, the calling card is a clear winner.

Score:  Unlimited 0, Calling Card 10 - there is a real savings if you call overseas.

Caveat #5:  Hassle Factor.  You have to dial a 1-800 number, and then enter a 10-digit PIN.  You can program your phone to dial these, using the stored number capability, if you are clever, of course.  But if you have a spouse who whines every time the power goes off, because they can't program the clock on the coffee maker, well, this is going to create a marital issue, to be sure.

Score:  Unlimited 1, Calling Card 0

Caveat #6:  Call surcharge.  There usually is a setup cost of a minute or so, tacked onto each call, so it does cut into your minutes.  Calls to cell phones also have extra charges attached, particularly if made to overseas wireless phones.   So again, your vaunted 4 cents a minute may be costing you more than initially thought.

But even with these surcharge minutes added on, the overall cost for the occasional caller can be a lot less.  For me, it is a wash.  For the frequent caller, another reason to go with unlimited.

Overall Score: TIE

So the calling card is a good idea, if you are going to call overseas, or if you make long distance calls only occasionally.  And in fact, having BOTH unlimited long distance (for US calls) and a calling card (with minutes that don't expire) for overseas calls, makes a lot of sense.  And that is how I am playing this right now.

In addition to low overseas rates, the calling card has some other options which makes it worthwhile to have in your wallet:

1.  Pay Phones:  While the charges for using a pay phone can be a bit steep (60 cents in the example above) they are not much less than the cost of putting coins in a pay phone.  Yes, I know, no one uses pay phones anymore - they hardly exist.  But in the few instances where you need to use one, having a calling card in your wallet means not having to scrounge for change or having to be screwed by some crackpot pricing scheme, particularly with 3rd party pay phones.

2.  Hotel Phones:  Often hotels will sock you with staggering charges if you use their house phone to make a long-distance charge.  And often, your cell phone might not get good reception inside the hotel.  The calling card allows you to control costs without being ripped off.

3.  Monitoring Costs:  Like with GoPhone, which displays the amount of money available on your phone at the beginning and end of each call, the calling card says how many minutes you have left before and after each call.  This puts you in the mindset that these calls do cost money and discourages yakking.  And since you know the costs and how many minutes you have left, you know in advance what the charges will be.  No unpleasant surprises at the end of the month when the bill comes.

As I noted in the beginning of this post, I bought my AT&T card to take a trip to Costa Rica.  It worked well there and I kept it in my wallet for "emergencies".  When we were snow-birding, it was cheaper to have a poverty land-line service (no long distance) and use the calling card for our Georgia phone and use a wireless phone as a landline in New York.  Now that we are full-timers in Georgia, the unlimited long distance makes a little more sense, although the calling card might save $50 to $100 a year, depending on where you are calling (the in-state long distance caveat really dampens my enthusiasm!).

But for overseas calls, the calling card rocks.  I just go off the phone with the PCT/IB branch of WIPO in Switzerland, and the cost of the call was about 6 cents a minute.  Not too shabby, and I knew in advance what the charges would be.

For the occasional overseas caller, a calling card is far better than an overseas calling plan that charges you $5 a month.  Just be sure that the minutes on your calling card don't expire.

It could be, that, over time, I may drop my "unlimited" long distance in favor of the calling card.  Time will tell.

In the meantime, I still have 833 minutes left on my card, and they never expire...

NOTE:  There are other calling cards out there besides AT&T.  I am using them as an example, as they are a big player in the card business and they are also the company I use.  I am sure some readers may know of better cards out there with cheaper rates.  If so, let me know.

If it sounds like I am a cheerleader for AT&T, I am not.  But I do use AT&T (BellSouth) for my landline, my cell phone (GoPhone), my long distance, my DSL, and my calling cards.  I also have a number of AT&T office phones (10) scattered throughout my house.  Like it or not, I am an AT&T customer.  And while the company is a bloated bureaucracy, they seem to be getting better in terms of internet website service and customer service in general.  I recently bought stock in the company.  Maybe its just because my last name is Bell?  No relation, by the way.  I wish!