What the Milestone Credit Card is and who it's for
The Milestone Credit Card is a secured credit card issued by Milestone Bank, designed for people rebuilding credit from a low score. You put down a cash deposit — typically between $200 and $2,500 — and that deposit becomes your credit limit. You use the card like any other credit card, and your on-time payments are reported to all three credit bureaus (Equifax, Experian, and TransUnion).
The card charges an annual fee and a relatively high interest rate, which is standard for secured cards at this stage of credit repair. The real value is not the card itself — it's the record of consistent, on-time payments that rebuilds your credit history over time. After 18 months of on-time payments, Milestone may convert your account to an unsecured card and return your deposit, though this is not may provide.
This card makes sense if you have been denied for regular credit cards, have a credit score below 580, or are coming out of a major credit event like a bankruptcy or foreclosure. It does not make sense if you already have access to unsecured cards or if you cannot reliably make monthly payments.
Key Takeaways
- You deposit $200 to $2,500 upfront, and that amount becomes your spending limit.
- The card reports to all three credit bureaus, so on-time payments build your credit history directly.
- Annual fees and interest rates are higher than standard cards, but the cost is the price of rebuilding access to credit.
- After 18 months of on-time payments, you may be converted to an unsecured card with your deposit returned, though approval is not automatic.
- Missing payments or carrying high balances defeats the purpose and can damage your credit further.
How the deposit and credit limit work
Your deposit is held in a separate account and is not used to pay your bill. Instead, it sits as collateral — the bank's protection if you stop paying. Your credit limit equals your deposit amount. If you deposit $500, your limit is $500. If you deposit $1,000, your limit is $1,000.
The deposit earns a small amount of interest while it sits, though the rate is typically very low — often under 1 percent annually. You do not touch this money during normal use. You make monthly payments from your regular bank account, just as you would with any credit card.
If you close the account in good standing or are converted to an unsecured card, you get your deposit back. If you default on the card, the bank may use your deposit to cover unpaid balances before reporting the account as delinquent.
Fees and interest rates to expect
Milestone charges an annual fee, which varies but is typically in the $35 to $95 range depending on the deposit amount and current terms. This fee is charged once per year and appears on your statement.
The interest rate (called the APR, or annual percentage rate) is usually between 18 and 24 percent, which is high compared to standard credit cards but typical for secured cards. This rate applies only to balances you carry from month to month. If you pay your full statement balance by the due date each month, you pay no interest.
Late fees explore if you miss a payment, typically $25 to $35 for the first late payment. Paying late also damages your credit score and may trigger a higher interest rate. The goal is to never carry a balance and never miss a payment — that is how the card rebuilds your credit without costing you money in interest.
How on-time payments rebuild your credit
Credit bureaus track your payment history, and payment history makes up about 35 percent of your credit score. When you make on-time payments on the Milestone card, that record goes into your credit file at Equifax, Experian, and TransUnion. Over months, this creates a visible pattern of reliability.
The effect is gradual. A single on-time payment does not move your score much. But 6 months of on-time payments, then 12, then 18 — that builds a track record that lenders notice. Your score may rise 50 to 100 points or more over a year, depending on your starting point and what else is in your credit file.
The card only helps if you use it and pay it on time. Leaving it unused does nothing. Paying late or missing payments actively hurts your score and defeats the entire purpose of having the card.
When you might graduate to an unsecured card
After 18 months of on-time payments, Milestone may review your account for conversion to an unsecured card. Conversion is not automatic — the bank looks at your payment history, current credit score, and overall credit profile. If you have made every payment on time and your score has improved, conversion is likely. If you have missed payments or your score has not moved, conversion may not happen.
When you are converted, your deposit is returned to you, usually within 30 to 60 days. Your new unsecured card may have a higher credit limit and a lower interest rate, though this depends on your credit improvement and Milestone's current terms.
If conversion does not happen after 18 months, you can continue using the card and reapply later, or you can close the account and move to a different card once your credit score improves enough to may have access to elsewhere. Some people use the Milestone card for 2 to 3 years before moving on.
How to use the card without damaging your credit
The most important rule: pay your full statement balance every month, on time. This keeps you out of debt, avoids interest charges, and shows lenders you can handle credit responsibly. Set up automatic payments from your bank account if you tend to forget due dates.
Keep your balance low relative to your limit — ideally below 30 percent of your credit limit. If your limit is $500, try to keep your balance under $150. This shows you are not dependent on credit and helps your credit score. High balances relative to your limit (called high utilization) signal financial stress to lenders.
Use the card for small, regular purchases — groceries, gas, a utility bill — and pay it off each month. This creates a steady payment history without the temptation to carry a balance. Avoid using it for large purchases you cannot pay off when ready.
Alternatives if the Milestone card does not fit your situation
If you cannot afford the deposit or annual fee, a credit builder loan from a credit union or online lender may work instead. You borrow a small amount (often $500 to $1,000), make monthly payments, and the lender reports to credit bureaus. You build credit without a deposit, though the interest rate is still higher than standard loans.
If you have a co-signer with good credit, you might be added to one of their existing accounts as an authorized user. This puts their payment history on your credit file without requiring a deposit or a new account. However, this only works if the co-signer's account is in good standing.
If your credit score is already above 600 and you were denied only because of recent negative marks, a second-chance credit card from another issuer (such as OpenSky or Chime) might have lower fees or a lower deposit requirement. Compare terms before committing.
Frequently Asked Questions
What happens if I miss a payment on the Milestone card?
A missed payment is reported to all three credit bureaus and damages your credit score when ready. You will also be charged a late fee. If you miss 30 days or more, the damage is severe and can take years to recover from. Contact Milestone as soon as you know you will be late — some issuers offer hardship programs or can work with you on timing.
Can I increase my credit limit without adding more money?
Milestone does not automatically increase your limit. After 6 to 12 months of on-time payments, you can request a limit increase, but you will likely need to add more to your deposit. For example, if you want to raise your limit from $500 to $750, you would deposit an additional $250.
Does the Milestone card hurt my credit score when I open it?
Opening any new credit account triggers a hard inquiry, which causes a small, temporary dip in your score — usually 5 to 10 points. This recovers within a few months. The benefit of on-time payments over time far outweighs this initial dip, so the card is still worth opening if you need to rebuild credit.
What if I want to close the account before 18 months?
You can close the account anytime, and your deposit will be returned. However, closing early stops the positive payment history from building, and it may hurt your score slightly because it reduces the average age of your accounts. It is usually better to keep the account open for at least 18 months, even after you no longer use the card actively.
Will the Milestone card show up differently on my credit report than a regular card?
No. To credit bureaus and lenders, a Milestone secured card looks like any other credit card. The fact that it is secured is not visible on your credit report — only your payment history and balance matter. This is why on-time payments are so powerful: they build the same credit history as an unsecured card would.