A prepaid phone card is a small card that resembles a credit card, and is primarily used for paying telephone services. Such cards may either utilize prepaid credit systems or credit card style system of debiting expenses.

The exact method of payment, and the way in which the card is used to place a telephone call, however are depend on the overall telecom system. Currently, the most common phone cards have built-in pre-paid credits, wherein the card is purchased with a specific balance, from which the cost of calls made is deducted.

Pre-paid phone cards are disposable. When the balance is already consumed, users simply buy a new card. Most cards purchased can often be refilled. The other main type of card involves a card with a special PIN printed on it that allows one to charge calls to a land-line telephone account

The US Has Seen A Rapid Rise In Phone Card use

Due to mass advertising and word-of-mouth, the use of prepaid phone cards has already mushroomed in the US, and is driven by the lure of low rates and convenience. These cards, which were first sold in the United States in 1992, were invented in Italy in 1976, as a way to eradicate pay phone vandalism.

These cards can be used virtually anywhere and are easily available in convenience stores, hotel lobbies, post offices and delivered door-to-door in some communities. Currently, sales in the continental United States is expected to approach $4 billion this year, nearly double the amount five years ago, according to the Atlantic-ACM research firm.

Most Telecom Operators Now Offer These Cards

Many telephone service providers offer pre-paid phone cards that can be used from pay phones or ordinary telephones.

Access to these services is often through a toll-free telephone number that can be called from most phones without charge. However, users need to be aware that some pay phones and hotel phones make charges for toll-free calls. These call providers may exploit regulatory loopholes in telephone rates, therefore it's important to read the fine print first, to make sure when and how you can get the lowest rates.

There may also be particular times or days that different rates apply. At present, the lowest-cost prepaid cards could be found at US warehouse clubs like Costco and Sam's Club, and these are often co-branded with AT&T and MCI, respectively. These cards have rates at under 3 cents per domestic minute.

How Rates Differ With Each Card Provider

Call rates, i.e., price per minute charges with prepaid phone cards, may greatly vary, as do the number of additional fees that might be involved. A phone card may advertise that you can talk for 120 minutes; however that may be under very specific circumstances.

While there are certainly cards that offer good deals, and the convenience of the cards is perfect for some situations, there are still some illicit providers out there that take advantage of unsuspecting buyers. US FCC regulations require pay phone providers to be reimbursed for toll-free calls by the toll-free number provider, so a small surcharge, or some additional minutes may be deducted when using your card from a pay phone.