Milestone is designed for people rebuilding credit, but it has real costs you should understand before you sign up

Milestone is a secured credit card issued by Milestone Bank. You put down a cash deposit (usually $200 to $2,500), and that deposit becomes your credit limit. The card reports to all three credit bureaus, so on-time payments can help raise a low credit score. But the card charges an annual fee, a monthly maintenance fee, and interest rates that are higher than cards for people with established credit. Whether it makes sense for you depends on whether you need to rebuild credit history and whether those fees fit your budget.

Key Takeaways

  • Milestone requires a cash deposit that matches your credit limit, so you cannot access that money while the card is open.
  • The card charges both an annual fee and a monthly maintenance fee on top of standard interest, making it expensive to carry a balance.
  • Your payment history reports to credit bureaus, which can help raise your score if you pay on time, but only if you actually need to rebuild.
  • You can move to an unsecured card after 5 to 7 months of on-time payments, at which point you get your deposit back.
  • Other secured cards and credit-builder loans may have lower fees or work better for your situation.

How the deposit and credit limit work

When you open a Milestone card, you choose a deposit amount between $200 and $2,500. That deposit sits in a savings account at Milestone Bank and becomes your credit limit. If you deposit $500, your limit is $500. You cannot use that $500 for anything else while the account is open — it is held as collateral.

The deposit itself does not earn interest. Milestone does not pay you anything on the money you deposit. This is different from some other secured cards, which hold your deposit in an interest-bearing account. Over time, that difference adds up.

You get your deposit back only when you close the account or when Milestone converts you to an unsecured card. Conversion usually happens after 5 to 7 months of on-time payments, though Milestone does not may provide a specific timeline.

The fees you will pay

Milestone charges an annual fee of $95 and a monthly maintenance fee of $10. That means you pay $215 per year in fees alone, before you charge anything to the card or carry any balance.

If you carry a balance, you also pay interest. Milestone's APR (annual percentage rate) is typically in the range of 24% to 29.99%, depending on your creditworthiness at the time you apply. That is much higher than cards for people with good credit, which often charge 15% to 22%.

The combination of fees and high interest makes this card expensive if you plan to carry a balance. For example, if you charge $300 and pay only the minimum each month, interest and fees will add significantly to what you owe. If you can pay your full balance each month, you avoid interest charges, but you still pay the $95 annual fee and $120 in monthly maintenance fees.

How it affects your credit score

Milestone reports your payment history to Equifax, Experian, and TransUnion. This means on-time payments show up on your credit report and can help raise your score over time. The effect depends on how damaged your credit is to begin with. If you have no credit history or a recent bankruptcy, consistent on-time payments will help. If your score is already in the 600s, the improvement may be slower.

Your credit utilization — how much of your limit you use — also affects your score. If you have a $500 limit and charge $450, your utilization is 90%, which hurts your score. Keeping your balance below 30% of your limit (so under $150 in this example) helps more.

The card also adds to your credit mix if you have only one type of credit account. Having both revolving credit (like a credit card) and installment credit (like a loan) can slightly improve your score.

When Milestone makes sense and when it does not

Milestone works best if you need to rebuild credit history and can pay your full balance every month. In that case, you pay $215 per year in fees but avoid interest charges, and your on-time payments help raise your score. After 5 to 7 months, you may be able to move to a card with lower fees or no annual fee.

Milestone does not make sense if you plan to carry a balance. The combination of $215 in annual fees and 24% to 30% interest makes the card very expensive. A credit-builder loan from a credit union might cost less and build your credit just as well.

Milestone also does not make sense if you already have decent credit (a score above 650). You likely have access to unsecured cards with lower fees and lower interest rates. Using Milestone when you do not need to rebuild credit wastes money.

Other secured cards and alternatives to compare

Other banks offer secured cards with different fee structures. Capital One Secured MasterCard has no annual fee but charges a $39 initial setup fee and has a similar APR range. Discover it Secured has no annual fee and no monthly maintenance fee, though it requires a $200 minimum deposit. If you can get approved for one of these, they cost less than Milestone.

A credit-builder loan from a credit union is another option. You borrow a small amount (usually $500 to $1,000), and the lender holds the money in a savings account. You make monthly payments, and the lender reports your payment history to credit bureaus. When you finish paying, you get the money back. Credit-builder loans often have lower fees than secured cards and work just as well for rebuilding credit.

If you have access to a credit union, ask whether they offer credit-builder loans before you apply for Milestone. If you do not have a credit union, compare Milestone to Capital One Secured and Discover it Secured side by side. Calculate the total cost over 12 months, including all fees and any interest you expect to pay.

What happens after you build credit

Milestone's goal is to be a stepping stone. After several months of on-time payments, the bank may convert your account to an unsecured card, which means you get your deposit back and the monthly maintenance fee goes away. You would still pay the annual fee, but the card becomes less expensive to use.

Once you have an unsecured card or your credit score improves, you can apply for cards with better terms. A card with no annual fee and a lower APR will cost you less going forward. Some people use Milestone for 6 to 12 months, then close it and move to a better card once their score improves enough to get approved.

Keep in mind that closing the Milestone card will affect your credit score slightly — your average age of accounts will drop, and your total available credit will decrease. But if you have moved to other cards by then, the effect is usually small and temporary.

Frequently Asked Questions

Can I get my deposit back before closing the card?

No. Your deposit stays in the bank's account as long as the card is open. You get it back only when you close the account or when Milestone converts you to an unsecured card. Some banks allow you to increase your deposit to raise your credit limit, but you cannot withdraw part of it.

Does Milestone may provide I will get an unsecured card?

No. Milestone does not promise conversion to an unsecured card. The bank reviews your account periodically and may offer conversion if you have a strong payment history, but there is no set timeline or may provide. Some customers convert after a few months; others never do.

What if I miss a payment?

A missed payment will be reported to credit bureaus and will hurt your score. Late fees apply (typically $25 to $35 for the first late payment). If you miss payments repeatedly, Milestone may close your account and keep your deposit to cover what you owe. This is why the card only makes sense if you can afford to pay on time.

Is Milestone better than a regular credit card?

Only if you cannot get approved for a regular card. Unsecured cards have no deposit requirement and often have lower fees and interest rates. If you have any credit history at all, try applying for a regular card first. If you are denied, then Milestone becomes an option.

How long does it take to rebuild credit with Milestone?

It depends on how damaged your credit is. If you have no history, you may see improvement within 3 to 6 months of on-time payments. If you have recent negative marks like late payments or collections, rebuilding takes longer — often 12 to 24 months or more. Milestone is one tool, not a quick fix.