Many consumers along the eastern seaboard are still trying to put the pieces back together after they were hit hard by Hurricane Sandy a few weeks ago, and New Jersey’s top government official recently signed an executive order that might help to expedite that process.
New Jersey Gov. Chris Christie’s order allows insurance companies regulated by the state to issue claim payments through prepaid cards instead of by checks or other means if the policyholder so chooses, according to a report from NJ Biz. Experts believe this move could be crucial to many of the storm’s victims, who may be underbanked and therefore do not have a traditional checking account into which they can deposit their claims.
“Branded prepaid cards, including MasterCard, are widely accepted by retailers, contractors and others, and also allow online and telephone purchases to be made,” Ron Hynes, group executive of global prepaid solutions at MasterCard, told the news site. “This was a good call by the governor that will benefit people all across our state.”
Further, it’s also believed that the controls Christie put into place in signing the order will add even greater protection, the report said. Among these provisions are that insurers are required to let consumers choose for themselves how they would like to receive their payouts, as well as preventing the companies from charging consumers for any of the fees associated with such a card — as many usually come with account maintenance fees and so forth — and granting policyholders the ability to convert the amount on the card into cash if they so choose.
Credit card issuers have also stated their hope that, if the process goes well, Christie will allow claim payments to be issued in this manner on a more permanent basis, the report said. Some have also advocated for the state to start issuing income tax returns in the same way.
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Prepaid cards can be a boon for consumers who generally do not have access to traditional banking services because these cards may grant them greater flexibility in dealing with the various financial transactions they face every day. Further, it might also provide some financial security because many of these cards have their funds backed in similar ways to a checking account.