Understanding why phone cards have fees

January 7th, 2013

“Why do some phone cards have fees and others do not?”

When a customer contacts ZapTel looking for advice on the phone card that’s right for them, we ask a few different questions: how long do your calls last; how often per week do you use your phone card; do you prefer a card with a flat-rate or low rates with fees?  This is our way of narrowing down the choices available through ZapTel to find the card that’s best for the customer’s calling need.  Recently when helping a customer with this, I was asked why phone cards have fees.  It’s a valid question and I felt it was one that should be answered in our blog.

Like your regular phone bill or your cell phone, there are fees associated with using the service: taxes, governmental surcharges, governmental fees, sales tax, etc.  All phone cards, no matter if they note additional fees reply or if they have flat-rates, have these associated fees; it’s how they apply them to your phone card that differs.

The flat-rate phone cards are the easiest to explain.  All these fees including the actual rate per minute are built into the advertised rate per minute.  These phone cards are considered clean billing cards as the math to see exactly what you used is simple.  Also, no matter if you talk for a few minutes or an hour, the rate per minute applied is the same.

Cards with fees work just a little differently.  Instead of rolling these fees into one, easy to calculate rate per minute, the fees apply to the total call once it’s completed.  Because of this, the carrier can charge a lower rate per minute.  If you talk for a short amount of time, these fees might not be worth it but if you talk for a long time, these fees may actually make your calls cheaper.

To better see how this works, check out the math.

Let’s say you’re comparing a flat-rate phone card that’s 5 cents per minute with another card that’s 2.6 cents per minute, has a 15% surcharge per call and $0.79 weekly service fee.  You call three times per week for 45 minutes per call.

Here’s how the math works out:


Flat-Rate No Fee Card

45 minutes x $0.05 per minute = $2.25 per call

$2.25 per call x 3 calls per week = $6.75 total charge per week


Additional Fee Card

45 minutes x $0.026 per minute = $1.17 per call (rate only)

$1.17 per call x 15% surcharge = $1.35 per call (rate & surcharge)

$1.35 per call x 3 calls per week = $4.05 per week (rate & surcharge only)

$4.05 per week + $0.79 weekly service fee = $4.84 total charge per week


As you can see, the card with the additional fees is cheaper for this calling need.  If the calling needs were less, say, 20 minutes one time per week, the calling card with no additional fees would be best (flat-rate card would cost $1.00 per week for this type of call while the additional fee card would cost $1.39 per week).

The best rule of thumb I can offer is that cards with fees are best for long talkers while the flat-rate cards are best for short or infrequent talkers.  Make sure to do the math to make sure you’re getting the most for your money with any phone card you choose.

Phone Card Coupon for Week of January 7, 2013

Through January 20th, receive $1.00 off of your purchase of a new PIN or recharge from ZapTel. Use the following code to receive the discount:

HERE2HELP

Enter the coupon code on the Review Your Order page, and be sure to click the “Add Coupon Code” button on the page to apply the discount. Offer expires at Midnight Central Time on January 20, 2013.

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This entry was posted on Monday, January 7th, 2013 at 1:34 pm and is filed under Phone Card Tips. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.

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