The Money Report . Sorry You Tossed Out That Phone Card?

MOST delegates attending the Democratic Party's 1992 presidential convention in New York City were more focused on Bill Clinton than on the local utility company, New York Telephone. As a result, few noticed the tiny telephone cards tucked into their official delegate packs. Printed as a promotional giveaway, the cards provided the delegates with $1 in free telephone service. Since $1 didn't go very far then - and travels even less now - most of the 20,000 cards found their way into New York City trash cans. Today, those $1 freebies sell for up to $1,400 among collectors.

Telephone cards - small pieces of paper or plastic decorated with everything from historic monuments to soft porn images - have long been collected outside the United States. Of nearly 2.5 million collectors around the world, an estimated 1 million are in Japan. About 750,000 collectors are in Germany, where cards have been issued since 1983. Australia, Singapore and Britain are also collector hotspots.

However, in the United States, where the first telephone cards sold to the public did not appear until the late 1980s, only a few thousand people have started phone card collections.

One of the first U.S. collectors to discover the craze was Lin Overholt, a former math teacher living in Florida. Nearly two years ago, he placed an ad in a European magazine to trade old credit cards. In response to his ad, Overholt received over two dozen letters from around the world, including Italy, Hong Kong and the Seychelles Islands. "I even got a call from a guy in the Caucasus," said Overholt. His monthly publication, Lin Overholt's Card Trader, now has subscribers in 25 countries.

For most Americans, telephone cards are the numbered pieces of plastic issued by Baby Bells and long-distance companies. These cards allow traveling customers to bill calls to their home address. Outside the U.S., however, most telephone cards are so-called "debit" cards issued for specific amounts. Once the amount on a card has been used up, a new card must be bought.

In most cases, the local telephone monopoly issues the cards and sometimes sells the face of the cards as advertising space. Alternatively, a telephone company may treat the cards like stamps, creating thematic designs such as aerospace or tropical plants.

There are two types of telephone cards: stored memory cards and remote memory cards. The former, cards containing silicon chips, magnetic stripes or optical bands, must be inserted into a telephone in order to be used. Most cards produced in Europe and Asia are stored memory cards.

In the United States, nearly 170 companies now issue telephone debit cards, according to Steve Hiscocks, publisher of International Telephone Cards, a bimonthly publication with subscribers in 65 countries. More than 90 percent of those cards are "remote memory" cards which do not need to be inserted into a telephone but do require the holder to dial an access number followed by an identification code.

"There is some snobbery among collectors that stored memory cards are the real thing as compared to these bits of paper issued in the U.S.," said Mr. Hiscocks. "But that'll change once remote memory cards start catching on outside the U.S." Five companies have already started issuing such cards in the United Kingdom, he added.

Though American phone cards have only recently entered into the collecting spotlight, most collectors say U.S. cards present some of the best deals available. A 10-year old German phone card can cost over $6,000. On the other hand, an AT&T card decorated with a hamburger, french fries and a soft drink that was initially given away by McDonald's can be had for $125 to $250.

Among collectors, the value of the cards is not determined by the beauty of the design but rather by the rarity of the cards and their condition. "A lot of times the cards issued on a trial run or limited basis are the ones that appreciate the most," says Chris Garibaldi, one of the leading U.S. telephone card dealers. "Those are the cards that end up in the trash can fastest and so they become quite hard to find."

Cards from two of the first American companies to issue telephone cards, Phoneline U.S.A. and Amerivox, are now quite valuable. Early cards issued by Amerivox and decorated with an American eagle trade for $2,000 to $3,000.

Cards issued on campuses, military bases and in prisons prior to 1990 are also of high value although they may be quite boring to look at. A set of 3 cards issued to inmates of Manning prison in Columbia, South Carolina, now trades for $200 although the cards have no graphic or design.

In Germany, where over 70 million cards have been issued, few collectors can afford to buy samples of each card. As a result, most have moved into thematic or topical collecting. "Any transport theme such as cars or airplanes is quite popular," said Hiscocks. "The Japanese, on the other hand, have a strong tendency toward the cute. They tend to like bunny rabbits for some reason."