1.1) Definition
A prepaid phone card is basically exchanging money upfront for minutes to make long distance phone calls. A customer pays a certain amount in exchange for telephone time. The amount of minutes is based on the rate table that illustrates what the current rate (cents/minute) to a particular destination is. The balance of the phone card is tracked through the use of a pin number so that the service carrier can record the calls you make and the appropriate amount to deduct from your phone card.

1.2) Buying Minutes

1) Cheaper than "regular" rates
Phone cards have much better rates than a traditional long distance company. This is possible because phone card companies provide higher volumes of traffic for the service carriers. Higher volumes translate into lower prices for businesses and the customer.

2) Budget Control
Phone cards are also an excellent way of controlling your budget. Rather than worrying about high phone bills, phone cards provide limits in spending. A $20 phone card is good for only $20. You cannot spend anymore than you have already prepaid. Consequently, customers do not have to constantly worry about expensive phone bills.

1.3) Usually a time limitation for using minutes
Almost every phone card has an expiration date. If the balance on the phone card is not used up before the expiration date, then the remaining balance is lost.