The Milestone Card is designed for people rebuilding credit, but it costs money to use and doesn't offer rewards
The Milestone Credit Card, issued by Milestone Bank, is a secured credit card aimed at people with limited or damaged credit history. 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, which means on-time payments build your credit score over time. The trade-off is an annual fee of $95, no rewards or cash back, and an interest rate that starts around 18.9% APR — meaning if you carry a balance, you pay significantly for the privilege.
Whether it makes sense for you depends on what you're trying to do. If you need to rebuild credit and have no other card options, Milestone can work. If you have access to other secured cards with lower fees or no annual fee, those are usually better choices. The card itself isn't bad — it's just expensive compared to alternatives that do the same job.
Key Takeaways
- Milestone requires a cash deposit that becomes your credit limit, and charges a $95 annual fee on top of that.
- The card reports to all three credit bureaus, so consistent on-time payments will raise your credit score if you're rebuilding.
- Interest rates are high (around 18.9% APR), so carrying a balance costs significantly more than other credit cards.
- Other secured cards like the Capital One Secured Mastercard or Discover Secured Card have lower or no annual fees and work the same way.
- Milestone makes sense only if you've been turned down for other cards and need to start rebuilding when ready.
How the Milestone Card actually works
You open an account by depositing money into a savings account held by Milestone Bank. That deposit amount becomes your credit limit — so a $500 deposit gives you a $500 limit. The bank holds your deposit the entire time you have the card; you don't spend it. Instead, you use the card to make purchases, and you pay your monthly bill from your regular checking account, just like any other credit card.
The deposit earns a small amount of interest (currently around 0.50% APY, though this changes), so you're not losing money on that part. But you still pay the $95 annual fee every year, whether you use the card or not. If you carry a balance month to month, you also pay interest at 18.9% APR on whatever you don't pay off.
After 18 months of on-time payments, Milestone may convert your card to an unsecured card, meaning you get your deposit back. This is not automatic — the bank reviews your account and decides. Some people get converted; others don't. Even if you do, you still pay the annual fee on the unsecured version.
What the annual fee really costs you
A $95 annual fee is steep for a card with no rewards. To break even on that fee, you'd need to earn $95 in cash back or rewards — but Milestone offers neither. You're paying $95 per year straightforward to have access to a credit-building tool.
Compare this to the Capital One Secured Mastercard, which has no annual fee and works identically: you deposit money, it becomes your limit, and on-time payments report to the bureaus. The Discover Secured Card also has no annual fee. Both cards have similar interest rates (around 19-20% APR). If your goal is to rebuild credit, paying $95 a year for Milestone when you could pay $0 for Capital One or Discover doesn't make financial sense.
The only scenario where Milestone's fee might be worth it is if you've been turned down everywhere else and Milestone is the only card that will accept you. Even then, you should revisit other options after 6 to 12 months of on-time payments with Milestone — you may may have access to for a no-fee card by then.
Interest rates and what happens if you carry a balance
Milestone's APR of around 18.9% is not unusual for secured cards aimed at people rebuilding credit. But it's still expensive. If you charge $1,000 and pay only the minimum each month, you'll pay roughly $190 in interest over a year before you've even paid down the principal.
The card only makes sense if you use it to build credit, not to borrow money. That means charging small amounts you can pay off in full each month — a $50 grocery purchase, a $30 gas fill-up, then paying the full balance when the bill arrives. This way you build payment history without paying interest. If you need to carry a balance, a personal loan or a 0% introductory credit card would be cheaper.
Comparing Milestone to other secured cards
| Card | Annual Fee | Deposit Range | APR | Conversion to Unsecured |
|---|---|---|---|---|
| Milestone | $95 | $200–$2,500 | ~18.9% | Possible after 18 months |
| Capital One Secured | $0 | $200–$2,500 | ~19.9% | Possible after 6 months |
| Discover Secured | $0 | $200–$2,500 | ~19.9% | Possible after 8 months |
| OpenSky Secured | $35 | $200–$3,000 | ~20.9% | Possible after 12 months |
Capital One and Discover are the strongest alternatives. Both have no annual fee, similar deposit ranges, and slightly higher APRs — but you save $95 per year, and both offer a faster path to conversion (6 to 8 months versus 18 months). If you're approved for either of those, choose them over Milestone.
OpenSky Secured is another option if you have no credit history at all or have been through bankruptcy. It charges $35 annually (still less than Milestone) and doesn't require a credit check. The APR is higher, but again, you're only paying it if you carry a balance.
When Milestone might actually make sense
Milestone is worth considering only in narrow circumstances. If you've been turned down for Capital One, Discover, and OpenSky, and you need a card right now to start rebuilding, Milestone may be your only option. The $95 fee is annoying, but it's a one-time annual cost to access credit reporting — and if you're rebuilding from a very low score or recent default, that access matters.
Another scenario: if you already have a Milestone account through your banking relationship with Milestone Bank, and you're considering upgrading to their credit card, the fee might feel less painful because you're already a customer. But this still doesn't make it cheaper than alternatives — it just makes it more convenient.
In almost every other case, you're better off starting with Capital One or Discover. If you're turned down for those, try OpenSky. Only if all three decline you should you consider paying Milestone's annual fee.
How to use any secured card to actually build credit
The card itself doesn't build credit — your behavior does. Here's what works: charge a small, regular expense each month (a subscription, groceries, gas) and pay the full balance before the due date. This creates a payment history that reports to the bureaus. After 6 to 12 months of this, your score should rise noticeably, and you'll become may be able to access for unsecured cards with better terms.
What doesn't work: charging large amounts, carrying a balance, or missing payments. These either cost you money in interest or actively damage your score. The goal is to prove you can handle credit responsibly, not to borrow money.
Once your score reaches the mid-600s or higher, stop using the secured card and move to an unsecured card with no annual fee and better terms. You'll get your deposit back, and you'll have a cleaner credit profile.
Frequently Asked Questions
Can I get my deposit back before 18 months?
Not while you hold the card. Your deposit stays in the savings account for the life of the account. If you close the card, you get the deposit back, but you lose the credit-building benefit. Some people close after 12 months if they've been converted to an unsecured card, but Milestone doesn't convert automatically — you have to wait for their review.
Does Milestone report to all three credit bureaus?
Yes, Milestone reports to Equifax, Experian, and TransUnion. This is important because it means your payment history reaches all three bureaus, which is how your credit score gets built. Some smaller cards report to only one or two bureaus, which limits how much your score can improve.
What if I miss a payment?
A missed payment will be reported to the credit bureaus and will damage your score. Milestone also charges a late fee (typically $25 to $35). If you miss payments repeatedly, Milestone can close your account and keep your deposit to cover the debt. This is rare, but it's why using the card responsibly — charging small amounts you can pay off — matters.
Is there a way to avoid the annual fee?
Not with Milestone. The $95 fee is built into the card. If you want to avoid it, use Capital One Secured or Discover Secured instead — both do the same thing with no annual fee. If you're already a Milestone customer and want to negotiate, you can call and ask, but they rarely waive it.
How long until I can get a regular credit card?
Most people see score improvements within 6 to 12 months of on-time payments on a secured card. After that, you may be may be able to access for an unsecured card from a mainstream issuer like Chase or Bank of America. The exact timeline depends on your starting score and credit history. Milestone's 18-month conversion timeline is longer than necessary — you can usually move on sooner.