If you are one of the millions of card holders in the UK who are paying for credit card repayment protection insurance (also known as card repayment protection or payment protection insurance) you are likely to be paying for more than necessary. If you are unsure as to whether you're paying for this, simply check your credit card statement.

Credit card repayment protection (CCRP) protects a borrower's ability to keep up the payments in case of accident, sickness or unemployment and will pay off your remaining debt if you die.

Although CCRP sounds like valuable protection, it is regarded by many as a complete rip off, mainly due to widespread over-charging, poor policy design and low claims payouts.

It is estimated that around a fifth of the UK's total credit-card debt of £66.5 billion is protected by CCRP. This will generate premiums totalling £1 billion in 2006, the majority of which will be pure profit for card issuers.

According to figures produced by MoneyFacts, the average cost of this protection is 0.8% of your statement balance per month, with rates ranging from the modest 0.45% charged by the Post Office to the ridiculously expensive 1.5% charged by many store-card issuers. Therefore, on average, CCRP will cost £40 a month, or £480 a year, to protect a balance of £5,000.

The Citizens Advice Bureau's report last year called PPI a "protection racket", and this market is presently under investigation by both the Office of Fair Trading and the Financial Services Authority.

CCRP is massively overpriced and claims are considerably lower when compared to other insurance products. CCRP is an optional insurance policy and you should ask yourself whether you really need it. It may be better to put the £40 a month or so in a high interest savings account to give yourself an emergency fund, or if you really would like the security you should shop around for a standalone policy from companies such as Burgesses, Paymentcare and the Post Office, as these tend to offer much better value for money.

Article added: 22/07/06