PHONE CARD RATES FALL AS SALES GROW.

Byline: Deborah Adamson Daily News Staff Writer

Prices of prepaid phone cards are dropping because of competition, according to a survey released Wednesday by a consumer group.

In a survey of 33 phone cards, Consumer Action of San Francisco found rates ranged from 14 cents to 45 cents a minute this year compared with 25 cents to 50 cents a minute in 1996. Prices were 6 percent to 62 percent lower for seven of the cards that were most expensive last year: Pacific Bell, AT&T, Sprint, MCI, LCI, Western Union and ConQuest.

But while prices have dropped, consumers may not always get a good deal. They need to find out the price per minute - which can be inconvenient since most rates aren't disclosed on a card's packaging.

``You just have to do the math,'' said Linda Sherry, editorial director for Consumer Action.

Prepaid phone cards are used to make calls from any telephone at a set rate per minute. They look like credit cards and are sold by retailers and grocers, usually in increments of $5 and $10.

Unlike telephone company calling cards, phone cards are prepaid. That means that each card's rate per minute is set for use at any time, anywhere.

In 1995, only 1 percent of U.S. households used phone cards. Today, 15 percent buy them, according to International Telecard Association.

Industry revenues for last year topped more than $1 billion, the Washington, D.C.-based trade group said. Sales are expected to grow to $4 billion by the year 2000.

Consumer Action's survey showed the best rate for calls within the continental United States offered by International Long Distance, at 14 cents a minute. The worst was a version of the MCI Prepaid Calling Card at 45 cents a minute.

The best rate for calls to Mexico was 29 cents a minute from one version of F/X Phone Card while the worst rate was $6.69 a minute from UNI-Net and UNI-Pass.

As demand has grown for prepaid cards, more companies have entered the market and raised the level of competition, leading to lower prices, Sherry said.

But having more competitors also means an increase in business failures as well, leaving some consumers holding worthless phone cards, she said.

Sherry advised consumers, before buying cards, to find out whether the retailer that sells them will refund customers' money if the phone card company fails.

Sherry also said consumers probably should buy phone cards from large, reputable companies, although that doesn't guarantee them the best rate.

For more information about phone cards or to resolve a complaint, call International Telecard at [phone].

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Chart: (Color) LOWER RATES ON PREPAID PHONE CARDS

This chart shows how much it cost to talk for one minute using a prepaid phone card in January 1997 compared to January 1996.