Some will have paid £25 a year for the policies for as many as ten years. So, including interest, they could receive up to £270 each.
The compensation scheme is being financed by 11 top banks and credit card companies, whose customers bought card protection under a stable of brands from Affinion International Limited - brands including Sentinel, Safe and Secure Plus and Card Protection.
The policies offered protection against fraudulent use of a card if it was lost or stolen. But card providers would normally have covered most or all of the losses in any case.
The millions affected will be sent claim forms from later this month, with the first payments made in September.
The Financial Conduct Authority announced in January that there would be a compensation scheme.