So you've had some debt problems - maybe due to something outside your control such as a divorce. Now you're getting your life back on track, but there's a problem. Because of your bad credit record, no-one wants to lend you money any more.

Well, don't despair! With prepaid credit cards, no credit checks will be made against your name when you apply. As long as your age, residence and social security number check out, approval is normally guaranteed.

Here's how prepaid credit cards work. You apply just like any other credit card, but with prepaid credit cards you also deposit a sum of money in a linked bank account. Initially at least, the amount of money in this account then becomes your credit line.

Obviously this means that, to start with anyway, you can't use a prepaid credit card to borrow money. However, the best cards report to the three main credit reference agencies (Experian, Equifax and TransUnion) every month. As long as you use your card responsibly, your actions will help to repair your credit record, or indeed to establish one for yourself if you haven't had credit before.

Within a few months, if you have shown that you can use your card responsibly, you are likely to be offered a bigger credit line by your card issuer. With your ever-improving credit history, you may also be able to apply successfully for a standard credit card or other forms of credit, such as a bank loan.

Your prepaid card can be used just like any other credit card to buy things, whether on-line, over the phone or in person. There is nothing on the card to reveal that it is prepaid. The only people who will know this are you and your card issuer. So if you need to buy things using a credit card and can't otherwise get one, a prepaid credit card could be the ideal solution for you. And all the while you will be rebuilding your credit history as well!

One drawback with prepaid credit cards is that, unlike ordinary credit cards, you may be asked to pay a processing fee when you apply. This is in addition to the money you will have to deposit with the issuer as security. If you regard this as a stepping stone to establishing a good credit record, however, this one-off fee is literally a small price to pay.

Prepaid credit cards are available from a growing number of issuers. One example is the New Millennium Bank, which offers a prepaid Platinum Visa? or Mastercard?. As well as the benefits mentioned above, the NMB card offers $100,000 travel accident insurance, extended warranty protection, and a special high introductory savings rate on your deposit.

As with all credit cards, however, it is important to shop around and not simply apply for the first prepaid card you see. Different cards offer different combinations of terms and conditions, and the best card for one person may not be the same as for his or her neighbor. Independent credit card comparison sites make this easier for you by listing all the best current credit card offers, and also have a range of articles offering unbiased advice and information.