The 411 on Prepaid, Traditional Phone Cards

Prepaid phone cards are hot and getting hotter. Their prices are falling, according to Frost & Sullivan, a consulting firm in Mountain View, Calif. For many consumers, they're the lowest-cost way of making long-distance telephone calls.

There are two kinds of phone cards: traditional and prepaid. Traditional cards (often called "calling cards") are issued by your long-distance company. You're billed every month for the calls you've made.

Prepaid cards are sold by about 500 national and local firms, reports the Chicago trade paper Debit Card News. They buy time from the major long-distance carriers at wholesale rates, mark up the price and sell to you. The local and long-distance ...