NEW YORK (CNN/Money -
With so many phone companies competing for your dollar, you'd think dialing long distance would be practically free. The fact is most of us are paying more, up to 70 percent more, than we should be.
The main reason is ignorance and/or laziness. "Some people still don't realize how much and how easily they can save on their long-distance bills," says Bill Hardekopf, CEO of SaveOnPhone.com, a Web site that rates long-distance service plans.
When SaveOnPhone rates service providers, it takes into account both customer service as well as phone service quality. The biggest single component of its rating system is cost. It lists dozens of low-cost providers that charge much less than what your provider may be costing you.
Going up against the "Big Three"
In a nutshell, the easiest way to save on long distance is to avoid the "Big Three" -- AT&T, MCI, and Sprint. Hardekopf points out that hundreds of low-cost providers have sprung up in recent years that charge no monthly fees and have per-minute rates as low as 2.75 cents.
An average customer making only 120 minutes of long-distance calls a month would pay about 7 cents a minute in a good Big-Three plan and pay a flat fee of $4.95 or more. That adds up to at least $13.35 compared with only $3.30 a month from a low-cost provider.
The quality of the phone service is just as good with low-cost providers, according to Hardekopf, as they use the same infrastructure as the big companies. There are plenty that have good customer service as well.
Web sites such as that www.billsaver.com, www.billzilla.com, and SaveOnPhone have calculators to help you find the least expensive carriers in your area.
All you have to do is put it your home state or area code, hit a button, and a list of low-cost carriers and their rates comes up. BillSaver even calculates an annual savings over the most expensive rates.
Where the Big Three compete more successfully is in their flat-rate plans. These are plans that "bundle" local and long distance services for a fixed, monthly fee.
People who make a lot of long-distance calls every month can save money with a flat-rate plan, which start at about $50 a month, plus taxes and other charges that bring it up to a total of about $65.
BillSaver and SaveOnPhone both recommend MCI's Neighborhood plan ($49.99 a month) for people who make more than $60 a month in long-distance calls. Sprint has a similar plan that costs from $49.99 to $59.99 a month. Qwest has an unlimited long distance plan for $20 to $35 a month.
There are also less expensive plans that allow a certain number of minutes each month and only charge extra when the customer exceeds that limit. MCI's Neighborhood 200 plan, for example, provides local service and 200 long-distance minutes anywhere in the country for $29.95 a month. Any usage over 200 minutes costs 5 cents per minute. Qwest has a similar plan that covers 200 minutes of in-state, state-to-state, and local toll calls for $14.95.
Other saving strategies
If you or another family member make a lot of long distance calls home, you might consider getting a toll-free number. Jeff Holley, president of Enhanced Communications Group, one of SaveOnPhones top-rated low-cost providers, says his company provides toll-free numbers to its customers for no extra charge. Your homesick freshman can call anytime without worrying what the dorm phone's service plan would charge; his or her calls are billed at your regular outgoing rate.
Another convenient way to save on the road is to use a non-prepaid calling card, available through your long distance provider, rather than calling collect or dialing through a hotel switchboard. You'll get a monthly bill and rates run from about 6.9 cents to 13.9 cents a minute. Make sure that the card comes with no surcharges. The FCC does mandate an extra fee if you use these cards at a payphone.
If you're making what will be a multi-minute phone call from outside the home, using a 10-10 number might save you some money. These often have a very low per-minute charge (10-10-834 charges just 3 cents a minute). They do, however, impose a connecting charge for each call of 39 cents.
Pre-paid calling cards, which you can buy in various denominations, can have very low per-minute rates, sometimes under 2 cents. But they do have the disadvantage of loosing money each month in maintenance fees; if you use the card up quickly, it may be a good deal.
Shopping help
When shopping for a provider here are a few more things to keep in mind:
- Monthly Fees: When an ad promises a low per-minute rate, make sure that you don't have to pay monthly fees or surcharges to get it. Only accept a monthly fee if you think you're usage will be so high that the savings on your per-minute rate will offset it.
- Minimum Charges: Look for minimum charges for each call. If there's a 50-cent minimum, even a brief call costs 50 cents. 10-10-220 offers "up to 15 minutes for a 99 cents." That means a one-minute call costs a dollar.
- Climbing Rates: What happens after you exceed the 15 minutes? For 10-10-220, the rate is 15 cents a minute so prolonging the call15 minutes costs $2.25, more than double what the first 15 minutes cost.
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