Learn Italian: La tessera della biblioteca? Ce l'ho sempre nello zaino. - The library card? I always have it in the backpack.

In spoken Italian, the verb avere (to have) is often combined with the particle ci to emphasize possession, creating the informal verb averci. When ci is followed by a direct object pronoun like la (it), the ci changes to ce. So instead of just saying l'ho, Italians naturally say ce l'ho (I've got it).

Does the l' in ce l'ho stand for lo or la here?

It stands for la, referring back to la tessera (the card), which is feminine. Before forms of avere that start with an h (like ho), both lo and la drop their vowel and become l'.

Why does the sentence use nello instead of nel before zaino?

Nello is the combined form of the preposition in (in) and the definite article lo (the). We must use lo (and therefore nello) for masculine words that start with z, like zaino, as well as those starting with s plus a consonant, ps, gn, or y.