Prepaid phone cards make it possible to call overseas at bargain rates, reports Patricia Howard.

The prices seem too low to be real. Call the United States for just a few cents a minute with popular destinations like Britain and New Zealand, selling for even less.

Prepaid IDD international phone cards seem to offer unbelievable value if the brochures at local newsagent and some of the advertisements in the local ethnic newspapers, are anything to go on.

"International prepaid cards do offer very cheap telephone services," says Paul Budde, an international telecommunications consultant. "Most charge about a third of the rate of a normal overseas telephone connection charge.

"The companies that package and sell these prepaid cards have interesting relationships with some of the biggest telecommunication carriers around the world, and they can achieve great cost savings as a result of these relationships," he says.

As the table below shows, using a pre-paid card can save a fortune, especially if you routinely call less popular destinations such as Turkey or Vietnam. For example, a call to Turkey costs $1.10 a minute with Telstra but 0.15 cents with Shout!

Plus, cards are good budgeting tools. If you buy a $10 card, it will allow you to make $10 worth of calls to that specific destination and no more.

However, users should be aware that there can be numerous hidden costs, which can affect their value, says Peter Ciliberto, the chief executive officer of C-Direct, which markets prepaid phone cards.

"Some cards can only be used in city areas for example, and you either can't use them in country locations or [will] have to pay additional STD charges. This can be a big trap for tourists or business people, who might buy a card in Sydney and then find they can't use it in Newcastle," he says.

"There may also be surcharge costs added, particularly where you have to access the card by dialling a specific 1300 or 1800 number. These charges can add up to a significant cost.

"As well, the billing period may vary from card to card. Some cards will charge on a 30-second billing block, while others will charge on a three minute billing block, which may work out to be much more expensive."

Ciliberto says the only way you can find out about these charges is to read the fine print, but that print can be extremely small and extremely difficult to read.

"One of the best cards on the market is the SuperBuzz card offered by Telstra. It can be accessed from anywhere in Australia via a 1800 number. This means you can ring from your office and speak to someone overseas, and the call won't cost your employer a cent," he says.

However, there are a lot of cowboys in the prepaid industry. It is dominated by two big telecommunication companies, Telstra and Telecorp, but there are about 40 smaller players.

As it takes little expertise or money to set up as a prepaid card provider, the smaller end of the market tends to change very rapidly, with many fly-by-night operators.

These are companies that might start up one week, go bust a few weeks later and then re-emerge in a few months as a slightly different company, but run by much the same group of people and providing almost identical products.

Many consumers have bought prepaid cards only to find that they can't use them because the company has gone bust.

"If you are buying prepaid cards from one of the larger, well-known companies in the market, then you'll be safe," says Budde.

"Alternatively, just buy relatively low-value cards that are only valid for a few months and then make sure you use all the value in that card as quickly as possible. Then you're unlikely to get caught.

"If you a want a card that you can use anytime over the next 12 months, though, stick with the bigger companies, even if it means paying a bit more. At least you'll get value from that card."

Staying in touch

"When my boyfriend was still living in London, I would buy a card once a week to call him, but I guess now that he's home I would probably buy a card a month, so I can keep in touch with friends there," Eva says.

"They are much cheaper than a normal [international] phone call. That's the biggest attraction of using them. It also means you can talk for longer and not have to worry about how much the call is costing you.

"Once I spoke to a girlfriend in the UK for about four hours, but that was using a $20 card. Still, it was great to have the luxury of just being able to have a really good chat with someone and not have to worry about the cost."

While Eva used to buy Telstra cards, she has recently switched to using the Coles Super Saver Card as she believes it offers the best value for calling England.

"I've never had a bad experience [with] the card and they are very simple to use," she says. "You just dial a local number and follow the instructions. Usually there's a PIN number that you have to dial and a connection fee of about 25 cents.

"When I was living in Spain I would buy international prepaid cards to ring friends and family in Australia, using them [at] the local telephone box. I found them really easy and cheap to use.

"I think they are definitely the way to make overseas calls. It means you never have to worry about suddenly being hit by a big telephone bill at the end of the month, just because you've called a few friends overseas."

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