The cost to individuals and banks of credit and debit card fraud is nearly �430m each year.

Although new technology designed to beat the fraudsters is in the pipeline, the Association for Payment Clearing Services (Apacs) has urged extra vigilance in the run up to Christmas.

Alarmingly, cardholders are often unaware that a fraud has taken place until a bank statement arrives showing purchases they did not make.

Skimming

Organised criminal gangs are blamed for the dramatic rise in card fraud.

Criminal gangs will probably increase their fraudulent efforts over the next year before the introduction of the chip and Pin system

Mark Bowerman, Apacs

The most common type of card fraud is the use of counterfeit cards in shops, fraudsters are believed to get away with �161m this way.

The most common type of counterfeiting is called skimming, where the data on a card's magnetic stripe is electronically copied and used to make an illegal copy of a genuine card.

Fraud involving lost or stolen cards costs �109m.

Apacs hopes that the introduction in 2003 of chip cards and personal identification number (Pin) payment system in the UK will lead to a significant reduction in most types of card fraud.

In fact, by 2005 the vast majority of face-to-face credit and debit card transactions in the UK will be authorised by the customer keying in a Pin rather than signing their name.

However, Mark Bowerman, Apacs spokesman, warns that : "Criminal gangs will probably increase their fraudulent efforts over the next year before the introduction of the chip and Pin system."

Mr Bowerman adds that card holders need to take some simple precautions to guard themselves against the fraudsters.

• Guard your cards. Do not let them out of your sight when making a transaction.

• Check your receipts against your statements carefully. If you find an unfamiliar transaction, contact your card issuer immediately.

• Do not carelessly discard receipts from card transactions. If possible, shred or at least rip up any documents that contain information relating to your financial affairs.

• Never write down your Pin and never disclose it to anyone, even if they claim to be from your bank or the police.

• Report lost or stolen cards or suspected fraudulent use of your card account to your bank or building society immediately.