Taking the sting out of losing your credit cards

Card protection companies can help make a difficult time less stressful

Until I learnt the hard way, I had no idea that a practised card thief could work so quickly and efficiently Like an idiot, I had put my handbag down in the shopping trolley in Sainsbury's and turned my back on it for a moment. When I thought about it again, I was at the checkout and my bag - complete with house keys, car keys and purse full of cards - had disappeared up the road on a £1,000 spending spree.

Until I learnt the hard way, I had no idea that a practised card thief could work so quickly and efficiently Like an idiot, I had put my handbag down in the shopping trolley in Sainsbury's and turned my back on it for a moment. When I thought about it again, I was at the checkout and my bag - complete with house keys, car keys and purse full of cards - had disappeared up the road on a £1,000 spending spree.

But what really made me gasp in grudging admiration was the subsequent revelation that by the time I realised the bag had gone - which must have been no more than 10 minutes after I put it down - the thief had run up a cool £170 on a switch card within that very shop. She had passed twice through the checkout, taking out £50 cashback each time.

Luckily for me, my partner was present, and armed with wallet, car and house keys. But because my driving licence, with my address, was in the purse, the house and car locks would have to be changed. In the face of that additional hassle, not to mention police reports, phone calls to the insurers and so on, it was a great relief to be able to cancel all my credit, debit and reward cards with a single phone call to a card protection service.

There are two main card protection companies in the UK - the York-based Card Protection Plan (CPP) and the Portsmouth-based Sentinel; the services of one or the other are offered to cardholders by most banks and building societies, or you can sign up independently. There's also TravellersSOS, which is geared specifically to the needs of overseas travellers (though it will assist in the cancellation of cards lost in the UK).

CPP and Sentinel offer much the same basic service. You register the details of all your bank cards, plus any documents such as passport and driving licence. You are given a single free phone number to call at any time, in the event that your cards go missing or are fraudulently used. If the worst happens, they cancel everything immediately and order new cards for you.

They also reimburse you for fraudulent transactions both before and after you report the problem. However, in practice this guarantee is something of a red herring, says Sandra Quinn of the Association of Payment Clearing Services (Apacs).

"If your card details are copied and used then you're not liable," she says. "If your card is lost or stolen, then the bank or credit card issuer is obliged to meet all but the first £50 spent on it before you report the loss - but I have never heard of a bank levying that £50 charge."

The big attraction in these schemes is that they reduce stress. You do not have to try to remember which cards you were carrying, dig out the account details for each one, or find the emergency phone numbers for the card issuers. That is all taken care of, leaving you free to worry about everything else.

Such schemes are particularly valuable if your belongings are lost or stolen when you are abroad, as they operate on a worldwide basis. In addition, they will provide cash advances to meet the costs of hotel bills, lost travel tickets and lost cash while you are away.

It is a relatively inexpensive service. CPP charges £15 per year for a single Classic policy, or £25 for all the members of the household; a three-year plan costs £35 or £55 respectively. That level of cover includes contributions towards the costs of replacing cash, wallets and bags, and advances totalling £5,500 to help you out if you are overseas. Sentinel's charges, at £16 per year or £39 for three years, include everyone at a given address, with slightly more generous emergency advances.

CPP also offers Premium Protection with higher levels of cover and assistance, but the extra cost of the policy is probably worthwhile only if you do a lot of travelling overseas.

TravellersSOS is cheaper than the other two: £9.95 per year for a single policy, £14.95 for a couple, and £19.95 for a family, but the levels of cover and assistance are lower and apply only to overseas losses. The cancellation process works differently too, in that the company does not hold details of your cards but connects you to each card issuer to stop the cards yourself.

Finally, remember: whether you are at home or abroad, you will still need to report the loss to the police, not least because you will need an incident reference number if you subsequently make a claim on your household or travel insurance - for example, for the costs of getting your house locks changed, or to replace the contents of a handbag.