Long distance and international calling card rates are much cheaper than most landline and mobile phone plans.

The savings can be extraordinary - calling cards and prepaid phone plans can easily save you 50% off normal international long distance calls and in some cases can save you 90% or more.

In one case we saw recently, the advertised per minute rate from a name brand carrier was 70¢ to an international destination and it was 1.9¢ from a popular calling card - that's a savings of 97%!!! Wow!

Even among calling cards, there are huge price differences. This can be seen most sharply in the per minute rates of cards from name brand carriers vs. cards from generic no-name wholesale carriers.

Why are calling cards so much cheaper?

There are several reasons.

• Lower branding and marketing costs. Most calling cards and prepaid phone plans are sold by 2nd and 3rd tier wholesale telephone carriers set up largely to compete on the basis of low price. Usually, these are companies that the average consumer has never heard of. They operate national or global communications networks similar to brand name retail carriers, but their whole business model is to compete on low cost.

  These companies are often perfectly legit and solid companies - some are even publicly traded in the stock market - but they operate largely in the background of the global telecom landscape.

  The key point is that these companies spend virtually nothing on advertising and brand building which helps keep their prices low.

• Less robust telephone networks. The communications networks operated by the calling card wholesale carriers are not as versatile or robust as the Tier 1 network operated by name brand carriers like AT&T.

  

  Generally speaking, these networks work perfectly fine and carry calls with high call quality. But they are more susceptible to outages or background noise, or other problems. Usually this doesn't impact callers, but from time to time you might experience call quality problems that would be quite rare on a Tier 1 network.

  As you might expect, these less robust Tier 2 and Tier 3 networks are cheaper to operate than the networks of the big players like AT&T.

• Use of VoIP internet telephony networks. Another thing about the wholesale communications networks operated by the calling card carriers is that they often use a different and much cheaper technology than regular phone companies.

  Specifically, much calling card voice traffic doesn't flow across traditional switched telephone networks - which are generally quite expensive and heavily regulated - but instead is carried over the internet using a technology called VoIP (or voice over internet protocol).

  Generally these VoIP networks work fine for most call purposes (eventually most all calling will be done this way), but they are more susceptible to call quality issues, often during periods of peak call loads and other situations.

• Lower customer service levels. Unfortunately, one casualty of low calling card prices is lower customer care as compared to the premier carriers. Much of the time, this doesn't matter, but when/if you have a problem with a card, it can become an issue.

  While no calling card company will provide the kind of gold-plated customer care you get from a top tier phone company, some calling card companies are definitely better than others. And some companies provide downright terrible support.

  One thing we recommend is that before you buy a card, you should call the company's customer support line and ask a few simple questions. That way you know that the line is working and that they are competent to provide at least some level of support.

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