What the Milestone Card Actually Does
The Milestone Credit Card is a secured credit card issued by Milestone Bank. You put down a cash deposit—usually between $200 and $2,500—and that deposit becomes your credit limit. You then use the card like any other credit card, make monthly payments, and the bank reports your activity to the three major credit bureaus: Equifax, Experian, and TransUnion.
The card itself charges an annual fee of $95. There is no interest-free period, so any balance you carry will accrue interest at a rate that depends on your creditworthiness at the time you open the account. The bank does not require a minimum credit score to open an account, which is why it shows up in the bad credit category.
The real purpose of a secured card is not to borrow money cheaply. It is to build a record of on-time payments that will eventually let you move to an unsecured card with better terms. If that is your goal, the Milestone card can work—but only if you understand what you are paying for and what happens next.
Key Takeaways
- The Milestone card requires a cash deposit that becomes your credit limit, so you are not actually borrowing money—you are paying $95 per year to report your payment history to credit bureaus.
- The annual fee of $95 is higher than some competing secured cards, and there is no interest-free grace period, so carrying a balance costs you money twice.
- The card reports to all three credit bureaus, which is necessary for building credit, but many other secured cards do the same thing at lower cost.
- Milestone does not automatically convert your account to an unsecured card after a set time, so you may need to request a product change or open a new card to move forward.
- If your only goal is to rebuild credit, a card with a lower annual fee or a higher deposit limit may save you money over the same time period.
How the Annual Fee Compares to Other Secured Cards
The $95 annual fee is the first thing to examine. Other secured cards charge less: the Capital One Secured Mastercard charges $39 per year, and the Discover it Secured card charges no annual fee in the first year and $0 thereafter if you meet a spending threshold. Over three years of rebuilding credit, the Milestone card costs you $285 in fees alone, while the Capital One card costs $117 and the Discover card may cost nothing.
That said, the Milestone card does not require a minimum deposit amount—you can open it with $200. Some competitors require $500 or $1,000 to start. If you have very limited cash on hand, the lower deposit floor matters. But if you have $500 available, the Capital One card's lower annual fee will save you money even though the deposit is higher.
The interest rate also varies. Milestone's rate depends on your credit profile at the time you explore, but typically ranges from 18% to 24% APR. Capital One's Secured Mastercard ranges from 19.99% to 27.99% APR. Discover's secured card ranges from 19.99% to 25.99% APR. None of these are cheap, but they are in the same ballpark. The real difference is the annual fee, not the interest rate.
When Milestone Makes Sense for Your Situation
The Milestone card is worth considering if you have very little cash to start with and need to open a secured card when ready. The $200 minimum deposit is the lowest among major issuers, so if you have $200 but not $500, Milestone is one of the few options available to you. In that case, the higher annual fee is a trade-off you accept in exchange for lower upfront cost.
The card also makes sense if you are already a customer of Milestone Bank and have a relationship with them. Some banks offer better terms or faster product upgrades to existing customers, though Milestone does not publicly commit to this. If you bank there already, it is worth asking whether they offer any advantages to cardholders.
Beyond those two situations, the Milestone card is usually not the best choice. The annual fee is too high relative to what you get, and other cards offer the same credit-building function at lower cost. If you have $500 to deposit, the Capital One Secured Mastercard will save you money. If you have $1,000 or more, the Discover it Secured card may cost you nothing in annual fees.
What Happens After You Build Credit
The Milestone card does not automatically convert to an unsecured card after a certain number of on-time payments. This is different from some competitors: Capital One, for example, reviews your account after six months of on-time payments and may offer to convert you to an unsecured card without requiring you to do anything.
With Milestone, you have two paths forward. First, you can request a product change after you have built a payment history—usually after 12 to 18 months of on-time payments. Milestone may approve you for an unsecured card, or they may deny the request. Second, you can open a new card with a different issuer once your credit score has improved enough. Many people do this anyway because unsecured cards from other issuers offer better terms.
When you close the Milestone account or convert it, your deposit is returned to you. That money is not lost—it was always yours. But you will no longer have that account reporting to the credit bureaus, which can cause a small, temporary dip in your credit score. This is normal and recovers within a few months as long as you keep other accounts in good standing.
The Real Cost of Using This Card
To understand whether Milestone is worth it, calculate the total cost of rebuilding credit with this card versus alternatives. Assume you keep the card open for 18 months, which is a typical timeline for moving from bad credit to fair credit.
With Milestone: $95 annual fee × 1.5 years = $142.50 in fees. If you carry a $500 balance for six months at 21% APR, you will pay roughly $52 in interest. Total cost: about $195 for 18 months of credit building.
With Capital One Secured: $39 annual fee × 1.5 years = $58.50 in fees. Same $500 balance for six months at 23% APR costs roughly $58 in interest. Total cost: about $117 for 18 months of credit building. You save $78 by choosing Capital One, and that is before factoring in the higher deposit requirement.
If you can afford the higher deposit, the math favors Capital One or Discover. If you cannot, Milestone is a reasonable option despite the higher fee.
Red Flags and What to Watch For
Do not use the Milestone card to borrow money you cannot pay back. The interest rate is high, and the annual fee means you are already paying for the privilege of using it. If you carry a balance, you are paying twice: once in interest and once in the annual fee. The only reason to carry a balance is if you are intentionally building credit and understand that you are paying for that service.
Also watch for the temptation to increase your deposit after opening the account. Milestone allows you to add to your deposit to raise your credit limit, but this is not necessary for credit building. A $200 limit is enough to show payment history. Adding $300 more does not build credit faster—it just ties up more of your cash. Keep your deposit at the minimum unless you genuinely need a higher limit for spending.
Finally, do not assume that opening a Milestone card will fix your credit score quickly. Credit building takes time. You will see small improvements after three to six months of on-time payments, but meaningful improvement usually takes 12 to 18 months. If someone promises faster results, they are selling you something else.
Alternatives Worth Considering
Before opening a Milestone card, look at the Capital One Secured Mastercard, the Discover it Secured card, and the OpenSky Secured Visa. All three report to the credit bureaus and all three are designed for people rebuilding credit. Compare the deposit requirements, annual fees, and interest rates side by side.
If you have no credit history at all—not bad credit, but no history—consider a credit builder loan instead. A credit builder loan from a credit union or online lender lets you borrow a small amount ($300 to $1,000) and make monthly payments. The lender reports your payments to the credit bureaus, and you build credit while also building savings. The cost is usually lower than a secured card, and you end up with cash in your pocket instead of a card with a high interest rate.
If you have a credit union membership, ask whether they offer a secured card. Credit unions often have lower fees and more flexible terms than banks. You may find a better deal there than anywhere else.
Frequently Asked Questions
Can I get my deposit back if I close the card?
Yes. Your deposit is always your money. When you close the account or convert to an unsecured card, the bank returns your deposit to the account you used to fund it. This usually takes five to ten business days. You will not lose the deposit by closing the card.
Does Milestone report to all three credit bureaus?
Yes, Milestone reports to Equifax, Experian, and TransUnion. This is important because you want your payment history to show up everywhere. Some smaller card issuers report to only one or two bureaus, which slows credit building. Milestone does this correctly.
What if I miss a payment?
A missed payment will be reported to the credit bureaus and will damage your credit score. Milestone charges a late fee of up to $35 per missed payment, depending on how late you are. If you miss a payment, contact the bank when ready and bring your account current as soon as you can. One late payment is recoverable; multiple late payments will make credit building much harder.
How long does it take to move from Milestone to a regular credit card?
Most people see enough credit improvement to move to an unsecured card after 12 to 18 months of on-time payments with a secured card. Milestone does not automatically convert your account, so you will need to either request a product change or open a new card with a different issuer. Your credit score at that point will determine what terms you can get.
Is the $95 annual fee worth paying?
Only if you cannot meet the deposit requirements of other secured cards. If you have $500 available, the Capital One card's $39 annual fee saves you $56 per year. If you have $1,000 available, the Discover card's $0 annual fee saves you $95 per year. The Milestone card is a last resort for people with very limited cash, not a first choice.