What is A Phone Card?

Long distance and local

Phone cards are essentially a way of establishing an account with a long distance or local telephone service provider. You can then access this account via telephone, and have your calls charged to it. As such, it isn’t the card that’s valuable so much as the Personal Identification Number (PIN) which is typically written on the back, along with local access numbers for various localities, and typically a toll-free number (which has higher charges associated).

Prepaid phone cards, for both local calling and long distance, saw their start in Italy in the late 1970s and early 1980s, and were used partially as a means of preventing payphone vandalism. At the time, Italy was experiencing a shortage of coins, and the theft of payphones was relatively common. These new prepaid calling cards were made to operate with specially-designed phones, and would remove the incentive to steal the phones because there would be no money inside. The cards immediately became popular worldwide, and still see much more use overseas than in North America. In the United States, the first phone cards arrived in the early 1990s. At the time, these cards were mostly given away as promotional items, with company logos on them or even marketing messages played back to callers before a call would be connected.

Although direct retailing of phone cards to consumers is fairly recent, it has grown from less than $30 million US in 1992 to over $6 billion US in 2005. The cards are now manufactured by thousands of businesses worldwide, including major multinational telephone companies and credit card companies, garage-scale startups, and many organizations lying in between. Cards are most readily available in small denominations of $5 - $25, and can be purchased anywhere from gas stations to post offices, as well as travel terminals of all kinds.

Phone cards were practically unheard of in North America as little as ten years ago, but now they seem to be available nearly everywhere. These cards allow people to make telephone calls while away from home or office telephones - and even for many people with cellular phones, phone cards offer an economical alternative to the often-exorbitant long distance rates charged by cellular carriers. Prepaid phone cards can also be used at nearly all touchtone telephones, whether they be mobile phones, pay phones or private land lines.

Phone cards obviate the need for loose change to make a pay phone call, and usually cost less than a collect or telephone service account to make calls. In fact, they generally cost less than traditional collect calls or telephone company calling cards, which often charge payphone or long distance usage to a home phone bill. The savings, however, do depend on choosing the right card for the right occasion [Types of Phone Cards]. There are less expensive plans available on a per-minute basis for use with home phones, but these do not generally have the travel flexibility of prepaid phone cards. That’s what has made the cards so popular with students, frequent travelers, business people, and military personnel posted overseas.